A budget justification, or budget narrative, is a categorical description of proposed costs and cost sharing contributions. A good budget justification will explain the necessity of the costs requested in the budget and those proposed as cost share, along with the basis for the proposed costs. The budget justification is considered a part of the budget and together they provide a complete picture of the proposed work.

Everything that appears in the budget and justification should appear in the proposed scope of work and vice versa. The budget justification should:

• Follow sponsor guidelines.
• Explain why each item requested is necessary to accomplish the proposed scope of work.
• Be organized in the order of the sponsor’s budget template, using sponsor headings.
• Make clear that all requests and cost share commitments are reasonable and consistent with the sponsor and organizational policies.

Below are categories that you will find in most budgets with an explanation of what should go into the justification for each. As stated before, follow the sponsor’s budget and guidelines to come up with the category headings and justification criteria.

Salaries and Wages

List all people or positions that appear in the budget, estimated number of person-months for which funding is requested, along with their respective roles on the project.

Indicate if an organizational inflation factor has been applied beyond the first budget period and the amount of the inflation factor (e.g., It is the practice of Western Carolina University to apply 3% to salaries after the initial budget period).

Fringe Benefits

Fringe benefits are an extra benefit supplementing an employee’s normal salary, including health insurance, workers’ compensation, retirement, and unemployment.

Provide a statement indicating that fringe rates are based on organizational rates and provide a breakdown of the specific components by percentage (i.e., 13.69% retirement, 7.65% social security, 1% unemployment, and $8,095 annual health insurance premium). Also indicate the rate used per job category (i.e., full-time, part-time).

Equipment

Equipment is tangible property with more than two years of useful life and a per-unit acquisition cost that equals or exceeds the federal capitalization threshold of $10,000. Describe the equipment to be purchased and how the purchase will benefit the project. Include price quotes or cost estimates for fabrication.

*Note: Equipment used throughout a project should be budgeted in an early budget period to ensure full benefit.

Travel

Include the destination, number of people traveling, dates/duration of stay, and an explanation of how this travel is directly related to the proposed research/project (e.g., to collect data, to meet with collaborators, conference travel to disseminate results, etc.).

Participant Support Costs

Indicate the number of participants to be supported and the relevance to the project. Some sponsors request that participant support costs be itemized by stipends, travel, subsistence, and other associated expenses.

Materials and Supplies

Itemize by category and justify basis for cost. Describe how these materials will benefit the project.

Consultant Services

A consultant is an individual who provides expert advice or services for a fee. Consultant services are typically temporary and highly specialized or technical. Describe the consultant’s role on the project and include total costs.

Subawards

State the subrecipients on the project, summarize their scope of work, indicate if they are domestic or foreign, and list their total project costs.

Publication Costs

Cite the journal and per-article publication costs. Detail other publication costs such as conference posters.

Indirect Costs

List the rate applied (e.g., 52%) and the base to which the rate was applied (e.g., MTDC, S&W, TDC). Indicate if the rate used is a federally negotiated rate, de minimis rate, or sponsor-mandated rate. Some sponsors may require a listing of items excluded from MTDC.

Indirect cost bases include the following:

• Modified Total Direct Costs (MTDC): An indirect cost base with a select group of direct costs that typically excludes capital equipment, the portion of each subaward over $25,000, participant support, tuition, charges for patient care, rental costs, and capital expenditures.
• Salaries and Wages (S&W): This approach calculates indirect costs only for the salaries and wages requested on the grant.
• and fringe benefits offered to your employees.
• Total Direct Costs (TDC): The Total Direct Cost base includes all direct costs without exclusions.

Read this blog post to learn more about indirect costs: https://beyondauthority.blog/2025/03/18/what-are-indirect-costs/

For more budgeting resources, including sample budget justifications, please visit Research Cat, a site that is designed to provide support resources for research & scholarly activities at WCU.