When budgeting for any project, all costs associated with the project should be taken into consideration.  In addition to direct cost elements, such as salaries and wages, fringe benefits, equipment, travel, materials, etc., indirect costs should be budgeted as well. Indirect costs (a.k.a., Facilities and Administrative costs) are costs incurred for common or joint objectives that cannot readily be identified with a particular project or activity. For example, costs associated with keeping the heat and lights on in a laboratory or general administrative support for sponsored research are part of our Federally-negotiated indirect cost rate. Such costs are real costs that have already been born by the Institution. Including indirect costs in the budget, using the University’s negotiated rate, ensures that we are recovering or recuperating a portion of those costs.

When presenting a budget to an industry or corporate sponsor, we need to be mindful that our practices are in line with budgeting for federal assistance awards. In other words, we should not be undercutting budgets to corporate sponsors by offering voluntary cost share or by not including the Institution’s full indirect cost recovery rate. Consistency in how we budget for and manage funds is important, and it is important that we are not subsidizing the indirect costs (or any costs) of non-federal sponsors.

Bottom line: Be consistent in budgeting practices when building budgets for federal and non-federal sponsors.

Industry Budget in KR

In order to create an industry budget in KR, create a detailed budget including full indirect cost recovery. After your detailed budget has been created, including both direct and indirect costs, select the “Print” button under “Actions” in the Budgets screen. When prompted, select “Cumulative Industrial Budget,” in order to create a budget version suitable for industry sponsors. This action will create a budget that industry is used to seeing, in that labor and other rates will be fully burdened and will include associated fringe and indirect rates by cost categories.

OSP is happy to meet with faculty at any time they are discussing a potential project with a commercial sponsor. Having the opportunity to learn about the project and its goals as soon as possible will help the PI effectively budget for and manage the process of developing and negotiating an agreement with the non-federal entity.

If you have questions, just give us a call!