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Beyond Scope: Considerations for Creating Federal Grant Budgets

March 10, 2020

“How much should we request?”

This is a common question in preparing grant proposals. In an ideal world, this would be a reflection of project scope and costs. But it is never that simple, and for federal grants and cooperative agreements, there are also some specific considerations in setting your “ballpark estimate” for developing a detailed budget.

  • Award Ceilings and Floors: Federal awards typically have a maximum request amount for awards and many also have a minimum request amount. For some federal awards there are different limits within the same grant program, depending on selected activity types, applicant type, program areas selected, geographic scope, or other considerations. This information is listed in the instructions and is also included in a grants.gov listing under the Synopsis area. Falling outside award ceilings and floors will usually get your proposal kicked out for non-responsiveness before anyone even reads the contents. For more modest requests, proceed with caution on requesting small amounts, given the administrative burden of federal awards. In researching a recent grant from the Department of Justice, Bureau of Justice Assistance, I looked at past awards and saw a cooperative agreement in the amount of $2,500. It was probably a rude awakening to the recipient to realize they would spend just that much in staff time on negotiating and setting up the award, before even getting to the time demands of reporting or the mandatory trip to D.C.!
  • Indirect Costs: Unless they have a regulatory exception, federal agencies are required to allow applicants and sub-grantees to include indirect or overhead costs in their budgets. Most commonly, this is done through an allowed percentage/rate for indirect costs that is applied to the proposed direct costs. This percentage for indirect is set via a rate previously established with a federal agency (a Negotiated Indirect Cost Rate Agreement) or through the 10% de minimis rate that agencies without an agreement can use. Applicants don’t have to include indirect or the full indirect amount, but if included, the cost reduces the amount of funding left for direct expenses. Also note that if you include sub-award recipients, those agencies have the sole discretion to decide whether and how to take indirect. In other words, you can’t tell them to skip indirect in order to keep more money available for other uses.
  • Match/Cost-Share Requirements: Some grants require, and some allow, the applicant and any sub-grantees to include non-federal dollars as cost-share. For example, the Economic Development Administration typically requires 50% cost-share for awards, meaning that every dollar in EDA funds must be matched by a dollar of cash or in-kind value from non-federal sources. When including match dollars in the budget of a federal grant, securing this cost-share becomes a required obligation of the grant. For reimbursement grants, drawdowns of federal funds then often require the proportional match to be secured and demonstrated prior to accessing grant funds. This need for match can limit the overall amount an applicant is comfortable requesting from the federal agency.
  • Federal Awardee Performance and Integrity Information System (FAPIIS): Per 2 CFR 200 of the Uniform Guidance, Federal agencies are required to review and consider any applicant information in FAPIIS before making any award that is more than the federal “simplified acquisition threshold” for the period of performance. Currently, this threshold is $250,000. You can view public information for your agency here: https://www.fapiis.gov/fapiis/index.action. A federal agency will also review the non-public integrity and performance FAPIIS records segment, which may include things like performance reviews for prior grants and contracts. An agency that has encountered significant problems with prior grant delivery may want to stay under this cap for review purposes and to get a new, successful award delivery completed as the most recent performance record.
  • Federal Single Audit: Per Subpart F of the Uniform Guidance, an entity is subject to a “Single Audit” if it uses $750,000 or more in federal assistance within a single year. This could be one grant or a combined total from various federal funds, grants, and cooperative agreements. These audits focus on a single award/contract and are performed by a third-party accounting firm that follows specific federal guidance. These can be useful for new federal awardees needing to establish or improve grants administration and tracking practices. These can also be a hassle for agencies with solid established processes and it may make sense to avoid the trigger by requesting a little less or by spreading annual costs in a multi-year grant differently. Note that there are other reasons that a federal award recipient may be required to undergo an audit.
  • Capacity and Capability: A less defined consideration can be summed up by the adage: “Don’t bite off more than you can chew.” Federal financial and performance reporting are significant tasks and the complexity often increases with the size of award. Further, some items may simply not be worth including. For example, if your staff does not currently track time-and-effort using methods that would satisfy a federal agency, it may not make sense to request funds for employees who will only have a little bit of their time dedicated to a proposed project.

The items above are considerations for thinking about overall size of a federal request. Much more goes into building and detailing federal and non-federal requests. Check out Maren’s piece But First, Build Your Budget and for the nuts-and-bolts of building out the details, check out this video primer from Foundation Center.

Contact: Aly Sanchez, Director of Organizational Strategy and Learning, aly@thegrantplantnm.com

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