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Prepare Your Budget

Well-planned budgets reflect carefully thought-out projects. Budgets are road maps showing how your project will be implemented and managed.

Most funding organizations require that a proposed budget be based upon a good faith estimate of the anticipated costs. Three things to keep in mind in preparing your budget:

  • Is it necessary? Is it required to successfully complete the project?
  • Is it allowable? Is it permitted within the application guidelines or has it been explicitly approved  by the funding agency? Only include things the funder is willing to support.
  • Is it reasonable? Does the amount reflect a prudent estimate of the costs? Cost estimates cannot be made up. They must have a reasonable basis. Project your expenses as accurately as possible.

Before you submit, review your budget to make sure it is:

  • based on real costs – not too high or too low
  • carefully aligned with the proposed activities
  • fully justified with sufficient detail and explanation
  • sufficient for the successful completion of the project

It may be helpful to review examples of budgets and budget descriptions for AAUW, AERA, AIR, Fulbright, NSF, and Spencer.

Typical Budget Categories

Many funders provide mandatory budget forms that must be submitted with the proposal.  Others specify the budget categories that they will approve.  The following budget categories are commonly used. These are general guidelines. For specific proposals, please consult the agency's request for proposal.


Stipend (i.e. salary) Stipend rates and ranges can be calculated using information from Michigan State’s Human Resources Department.
Undergraduate Student You may choose to hire an undergraduate student (e.g. to manually enter data).
Tuition and Fees Tuition and fees can be calculated using Michigan State’s tuition and fees calculator.
Faculty Advisor’s Salary Buying out your faculty advisor's time may be necessary if your advisor serves as a primary investigator or co-PI to the project.
Interpreter For example, hiring an interpreter for international projects.
Employee Benefits
Health insurance Health insurance can be calculated using Michigan State’s graduate student stipend information.
Supplies & Services
Supplies List any special items that will be consumed by the project, such as office supplies; video/audio tapes. All items should be listed separately and based upon current prices.
Copying & Printing Estimate the number of photocopies to be made by the project and compute the cost based upon the current prices.
Postage Estimate the number of items to be sent by first class and/or bulk rate and compute the expected cost.
Communications For example, phone cards for use on international trips, renting a satellite phone, etc.
Incentives for participants For example, offering gift cards, refreshments for focus groups, etc.
Transcription fees
Travel All travel needs to be itemized, such as specific trips to research sites or conferences. Airfare rates can be obtained from airlines directly. Mileage to/from sites can be determined with Michigan State's published mileage rates.
Lodging/Meals Lodging costs can be obtained from hotels directly. Food costs can be computed from Michigan State's per diem allowances or the U.S. State Department's Foreign Per Diem Rates by Location.
Other Additional costs for items such as tips, taxi, parking, and conference rooms should be included.
Equipment/technology All equipment purchases must be itemized with current market prices listed. Some funding organizations do not allow the purchase of equipment, others require specific approval for equipment purchases, and others require equipment be turned over to the funding agency at the end of the grant period.
Indirect costs Most graduate student research grant programs do not allow indirect costs. For indirect cost percentages, visit Michigan State’s Current Facilities & Administrative Cost Rates.


Preparing Competitive Budget Requests

Many applicants struggle to prepare a competitive budget request. Some people inflate the budget because they are concerned that the funding agency will cut the proposed budget and give them less than they need for their project. Other people ask way too little because they think cost-conscious reviewers will be impressed with an extremely low, bare-bones budget proposal – and a lower budget might increase their chances to be awarded the grant. Neither approach is effective!

Reviewers know what things cost.  A competitive budget requests the amount needed to complete the proposed project – no more, no less. The budget request should be realistic for the project and align with the goals of the project.  It should request sufficient resources needed to successfully carry out the project, but it should not be excessively high.

If you tend to be a cost-conscious person, remember the funder can choose to negotiate costs. They may draw a line through an item they choose not to fund OR provide partial funding of your total budget request. In other words, don’t hesitate to let them know what you really need to do the project well!

In addition to making sure everything you need for your project is in the budget, make sure and be reasonable about the actual costs of each line item. For example, if you "low ball" the cost of a flight in your proposed budget and then the cost of the flight goes up or the "cheap fare" you found disappears, you will not be able to go back and request the difference from the funding agency.

One Final Note

Although you may prepare the budget last, remember many reviewers look at the budget first!

Jane Geever, author of The Foundation Center's Guide to Proposal Writing, conducted interviews with a number of grantmakers and found that many do, in fact, consider the budget to be the best way to get a feel for the project without a lot of verbiage and hype. When asked the question, "How do you usually read a grant request?" here's what some of the respondents said:

"I look at the budget. Over the years I've learned that narrative can be enriching, but the numbers are stark and straightforward. I want to see that the money is doing the job described in the proposal."
Joel Orosz W.K. Kellogg Foundation

"I skip around the document in the following way: first the budget, to see if the request is appropriate and to see the agency's financials; then the project section, to see what they want to accomplish; then the board list."
Lynn Pattillo The Pittulloch Foundation, Inc.

"I often look at the budget and then read the proposal backwards."
Michael Gilligan The Henry Luce Foundation, Inc.

Source: The Foundation Center

Income Tax

There are two primary ways to receive most grant awards: personally and through the university. You will be taxed on any awards that you receive personally. If run through Michigan State University or your department, the university will withhold taxes when necessary.