A strategic, accurate budget is a cornerstone of any sponsored research proposal. As you develop it with your PI, it should be created in full consideration of the sponsor’s requirements, as well as Princeton’s internal guidelines.
The budget is a financial representation of the detailed statement of work. It must be entered into our proposal management system (Princeton ERA) as part of the proposal development process. This budget module automatically calculates F & A (overhead) and fringe-benefit rates, assuring the budget captures the required additions.
The budget is reviewed by ORPA for compliance with University and Sponsor guidelines when the full proposal is routed for approval.
Facilities and Administrative costs—also known as F&A, indirect, or overhead costs—are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.
Examples of F&A costs include
- Depreciation and interest costs associated with the University’s physical plant.
- Operating and maintenance expenses, such as utility, security, and custodial costs.
- Common administrative functions, such as payroll and purchasing.
Because it is impractical to account separately for such costs, F&A costs are normally not charged directly to sponsored agreements.
CALCULATING INDIRECT COSTS
Princeton has a federally negotiated indirect-cost rate agreement for on- and off-campus activities. This rate, which can be found on the Institutional Information page, should be included in all budgets, as applicable.
Based on sponsor specifications, the base for indirect costs may calculated using modified or total direct costs.
Modified total direct costs (MTDC)
This base is used when the sponsor accepts the University’s federally negotiated rate. This rate is applied to all budget line items, except equipment, tuition, and subawards beyond the first $25,000 (for each subaward). Princeton permits the use of 50% tuition when our federally negotiated rate is used in a budget.
Total direct costs (TDC)
This base is used when the sponsor does not accept the University’s federally negotiated rate. The indirect cost rate permitted by the Sponsor is applied to all budget line items with no exclusions. Full tuition rates should be used in this instance.
OFF-CAMPUS WORK
If significant portions of project work will occur off campus, please review the University’s Off Campus F&A Rate Policy for more details to confirm whether the off campus rate can be utilized.