3.12 The Budget Justification

1. Overview of Budget Justification

A budget justification is the narrative explanation of the budget. Each line item in the budget should have a justification.  A good budget justification will help minimize a sponsor’s questions and avoid harmful budget cuts. It is a narrative explanation of the budget that helps the sponsor evaluate the reasonableness of the budget. It is required for all proposals. 

You can use our downloadable sample budget justification as a starting point to create your budget justification. You can download it here.

Purpose

The primary purpose of a justification is to provide support for the funds requested to ensure adequate funding. Experience has shown that including budget justifications in the proposal increases the likelihood that the sponsor will award the cost. The amount of detailed information in the budget justification should be tailored to sponsor-specific requirements and the specific project or activity. When costs are explicitly listed and justified in the sponsor-accepted budget, grant/contract administrators, auditors, and sponsoring agencies can easily understand the nature of the costs and their allowability under the regulations. 

When writing the budget justification explain and defend each major budget category and identify the indirect cost and fringe benefit rates used in the budget. For personnel and other expenses, explain the function of the position or cost as it directly relates to and benefits the project. A budget justification is required for direct charging administrative salaries that are integral to the project.

For Vacation Disability and Sick Leave

For budget purposes, assume that the vacation earned and used will offset each other every year. Continue to budget only the full salary (not the vacation burden or the credit for vacation used). Do not budget additional expenses to cover vacation/disability sick leave expenses. Do explain that we charge the rate. View rates

Add this statement to the budget justification:

Stanford's agreement with the Office of Naval Research provides for xx% vacation accrual/disability sick leave (DSL) for exempt employees and yy% for non-exempt employees.  The vacation accrual/DSL rates will be charged at the time of the salary expenditure.  No salary will be charged to the award when the employee is on vacation.

 

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2. Justifying Proposed Administrative Salary as Integral

Write a budget justification for each administrator or clerical staff member included in the proposal budget. The purpose of the justification is to increase the likelihood that the sponsor will award the administrative cost and to ensure adequate funding.

An adequate budget justification helps administrators, auditors, and sponsoring agencies to easily understand the nature of the costs and why they are allowable under the regulations. 

The justification should include the following.

  • A description of the administrator’s role tailored to sponsor specific requirements and the specific project or activity
  • Why the activity qualifies as integral to the project
  • How the administrator’s effort relates to and benefits the project
  • The level of effort expressed as a percentage FTE or person months per sponsor instructions
  • The time period(s) in which the person will be working
  • Any other information that will aid the sponsor in evaluating and funding the proposed salary
  • In addition, you must establish that the project being proposed meets the Stanford policy requirement for integral costs

NOTE: Although NIH modular grants or similar grant instruments do not require line-item justifications, the personnel, including administrative salaries, do need to be described in a modular budget justification. 

Sample Budget Justification

The PI has included effort for administrative salary that is integral to the project, and not for general support of the academic activities of the faculty or department.  Effort charged to this project can be specifically identified to the project.

Then you proceed to describe how the administrative role is integral to the project.....

 

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