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Most sponsors require a budget justification or budget narrative to explain and justify the expenses requested in a proposal budget. The budget justification is a critical component of a proposal as it demonstrates the importance and necessity of project costs in meeting the aims of the proposed project. It is the financial parallel to the project narrative. A well-written and thorough justification should follow the sponsor’s guidelines, address the necessity of requested funds in each major cost category, and explain what will be accomplished with the requested funds.


Tips for writing budget justifications

  • Organize the budget justification in the same order and format as the sponsor’s budget categories.

  • Check the sponsor’s guidelines for any page limitations, special formatting instructions, specific content requirements, and allowed or disallowed expenses.

  • Develop the budget justification with input from your departmental research administrator (Grants & Contracts Specialist).

  • Numbers in the justification should match those in the budget. For example, if the budget requests $3,255 for travel then the justification should specify the same amount; do not round to $3,250.

  • All costs must be reasonable, allowable, and allocable:

    • Reasonable means that a prudent person would pay the amount requested for cost component.

    • Allowable means that a cost may be charged to the grant or contract.

    • Allocable means that the cost is necessary for the success of the project.


Common mistakes

  • Using an incorrect indirect cost rate. Reference the funding opportunity guidelines to confirm any indirect cost rate limitation. Then confirm the correct university rate with your grants contact. Be sure to use the same rate in the budget and budget justification.

  • Making unnecessary cost sharing commitments.

  • Weak justification of atypical project costs.

  • Providing too much or too little detail. Some sponsors prefer detailed budgets and justifications. Others want a little less information. Familiarize yourself with sponsor-specific preferences. 

  • Using a single justification template for all sponsors.

  • Using a template without ensuring that its content is applicable to your project.

  • Exceeding page limits.


Budget justification templates

Download a budget justification template here. Carefully review and edit templates to ensure appropriateness for your project at hand. 


sample language for unique budgeting scenarios

Administrative Support

Salaries of administrative and clerical staff should normally be treated as indirect costs (Uniform Guidance 200.413(c)). However, the Uniform Guidance provides outlines the criteria under which administrative and clerical salaries may be direct charged to federal awards. If the Principal Investigator deems administrative support as a necessary component of the budget, then the budget justification should provide a strong explanation for the request. 

Justifying Administrative/Clerical Support

Under 200.413(c), Uniform Guidance states that administrative and clerical salaries may be included as direct charges on federal awards ONLY when they meet the following criteria:

  • Administrative or clerical services are integral to a project or activity;
  • An individual or specific role can be specifically identified with the project or activity; AND
  • Such costs are explicitly included in the budget or have the prior written approval of the sponsor.
Sample 1:

$25,000 is requested to support a Project Coordinator at 50% effort over 12 calendar months. The nature of the project requires a significant time commitment of a Project Coordinator to perform support services beyond routine administrative duties of institutional support staff. The Project Coordinator will be responsible for coordinating teams of investigators from consortium institutions including making travel and meeting arrangements; processing travel reimbursements as necessary; entering significant amounts of data collected throughout the project; and managing material transfer between consortium institutions.


Computer and Electronic Devices

Changes in federal regulations have made computing devices allowable as direct costs on Federal awards if they meet certain conditions.


Prior to the release of Uniform Guidance (2 CFR 200) in December 2014, the Federal government considered computing devices as general-purpose equipment unallowable on Federal awards. Principal Investigators were required to demonstrate an extraordinary need for computing devices and that the devices were not administrative in nature. However, technological improvements have helped to lower the costs of computing devices below the Federal equipment threshold of $5,000 enabling these devices to be treated as supplies. Uniform Guidance, 2 CFR §200.453, part (c), states that in the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of the Federal Award.

What is considered a computing device?

As defined in Uniform Guidance, 2 CFR §200.20 and 2 CFR §200.94, a computing device is:

  • a machine used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting and receiving, or storing electronic information, and
  • categorized as a supply if the acquisition cost is less than $5,000, regardless of the length of its useful life

Examples of computing devices include but are not limited:

  • if the acquisition cost is less than $5,000, regardless of the length of its useful life
  • tablets, iPads, e-readers
  • printers and external hard drives
Justifying Computing Devices

Your budget justification must explain why a computing/electronic device is essential and allocable to a project! Do not simply state, “ The budget requests funds for a laptop computer which is essential to the project.” Include in the budget justification:

  • Quantity and unit price, if appropriate
  • A detailed description of WHY the device is essential and necessary to the performance of the project (Consider how the project would be negatively impacted without the device.).
  • Describe WHO will be using the device and WHAT they will be doing with the device.
Sample 1:

Funds are requested to purchase a laptop computer which will be used by a Research Associate for experiment design, analytical software interface, and data collection, storage, and analysis.

Sample 2:

We request funds to purchase five tablet computers estimated at $300 per tablet. GRAs will use these tablets to collect data from human subjects in the field as necessary for completion of Specific Aim 1. 


Cost of Living Adjustments / Merit Increases

Note: Not all sponsors allow cost of living adjustments and merit increases. Check opportunity guidelines and sponsor policy guidance to confirm allowability of such an increase.   

Sample 1:

All salaries and wages were estimated using the University's academic and staff salary scales. The anticipated cost of living increase is [___%] per year for the PI. Where appropriate, merit increases are included in the calculations. Merit increases for other personnel are estimated at [___%].

Fringe Costs

Fringe benefits are a direct cost to a sponsored project, charged as a percentage of the salaries and wages to be paid, and are shown as a separate entry in the budget.


Historically, sponsored projects have been billed for the actual cost of fringe benefits. Effective September 1, 2018, the University will transition from the actual cost model to a flat rate model for fringe costs. Under the flat rate model, sponsored projects will be billed a flat percentage of each salary to cover employee benefits according to three pooled fringe benefits rates based on benefits eligibility (full-time, part-time, and benefits ineligible). The flat rates are established by agreement with the US Department of Health and Human Services. 

Budgeting Policy 

Beginning immediately, all proposals for sponsored projects should use the following rates for Fiscal Year 2018-2019 (9/1/2018 - 8/31/2019):

  • Full-time benefits eligible employees, including Graduate Research Assistants: 29.00% 
  • Part-time benefits-eligible employees: 39.60%
  • Benefits ineligible employees (such as undergraduate students): 5.80% 

Per the Vice President for Research's policy, multi-year proposal budgets should assume a 0.5% increase annually for full-time and part-time fringe rate categories. Please note that the full-time benefits eligible rate is expected to increase to 31% for Fiscal Year 2019-2020 (9/1/2019 - 8/31/2020). The rate for benefits ineligible employees can be left at a flat rate of 5.80%. Refer to the table in Sample 2 below for rate projections.

Sample 1:

Fringe benefits rates are based on The University of Texas at Austin's current federally negotiated rates for the appropriate employee benefits level at the time of proposal submission. Effective September 1, 2018, negotiated rate for full-time benefits-eligible employees is 29.00% fringe costs, for part-time benefits-eligible employees is 39.60% fringe costs, and for all benefits-ineligible employees is 5.80% fringe costs. FY19-20 benefits eligible full-time employees are calculated at 31%, benefits-eligible part-time employees are calculated at 40.1%, and benefits ineligible employees are calculated at 5.80%. All future fiscal years are increased by 0.5% fringe in the part-time and full-time categories for anticipated increases. View negotiated fringe rates here: https://research.utexas.edu/wp-content/uploads/sites/5/2018/08/UT_FA_Rate_Agreement_FY19.pdf

Sample 2:

Fringe rates for The University of Texas at Austin have been federally approved by the Department of Health and Human Services (DHHS) for use by all fund sources for FY18-19. Rates beyond August 31, 2019 are estimates and are provided for planning purposes only. Future rates are subject to review and approval by DHHS on an annual or bi-annual basis. Fringe benefits are assessed as a percentage of the respective employee’s salary. The benefit rates are as follows:



Projections for Planning Purposes ---------->








Full-time (including GRAs)






















Indirect Costs (IDC)


Indirect Costs, frequently referred to as Facilities and Administrative (F&A) costs or Overhead, are real costs to the University which support sponsored activities. Budgets of proposed sponsored projects must include Indirect Costs (IDC) at the University's federally-negotiated rates unless otherwise specified by the sponsor via published solicitation or statutory policy requirement, or a waiver of IDC has been approved by the Vice President for Research. Review our Cost Sharing, Matching, and Indirect Cost Waivers webpage for more information about IDC reduction requests. 

The current negotiated rate agreement expires on August 31, 2018. At this time, the future rates are not yet finalized. Continue to use the appropriate rate per the current rate agreement until we are notified of approved rates beyond September 1, 2019.

Salary Exceeding Sponsor Mandated Cap


Some sponsors, such as NIH and CPRIT, have a mandated limitation to the direct salary an individual may receive under a grant. Carefully review sponsor-specific guidance to ensure you've budgeted correctly. Often, PIs whose salary exceeds the cap elect to budget using the salary cap while explaining in the budget justification that their salary in excess of the cap will be covered by an alternative source. It is important to confirm that the alternative source is accessible to the PI.

Sample 1:

Dr. Einstein will serve as the Principal Investigator and will contribute 1-month effort to the research activities of the project. Dr. Einstein's annual salary from The University exceeds the FY 2017 NIH Salary Cap. Therefore, funds are requested from NIH at the current maximum rate; Dr. Einstein's salary in excess of this rate will be provided by the institution.  

Salary Requested in Hourly Rates

Salary costs are normally written as person-months (2 calendar months) and a percent of full-time effort (10% effort). Occasionally, a sponsor will request cost per hour. Because the university does not track expenses on a time and materials basis, it should be made clear that any hourly breakdown is done so for the sponsor's convenience.  

Sample 1: 

The hourly breakdown in the spreadsheets is provided solely for the convenience of [sponsor name]. Salary costs are calculated using a percentage of effort based on employee contracts; faculty appointments at UT are based on a 9-month academic year; and full-time staff appointments are based on a 12-month calendar year. As an institution of higher education subject to 2 CFR 200 and the University Accounting Standards, we cannot certify to any effort expressed in the number of hours and/or hourly rates.