Grant Writing FREE Grant Writing Grant Budget Formulation Questions and Answers 2 — Questions and Answers
Question 1: When preparing a grant budget, which cost category typically includes expenses such as office rent, utilities, and administrative staff salaries?
- Direct costs
- Indirect costs (Correct answer)
- In-kind contributions
- Cost sharing
Correct answer: Indirect costs
Indirect costs (also called facilities and administrative costs) cover overhead expenses like rent, utilities, and administrative salaries that support the project but are not directly attributable to it.
Question 2: What is the primary purpose of a budget justification narrative in a grant proposal?
- To list all personnel involved in the project
- To explain why each budget line item is necessary and how costs were calculated (Correct answer)
- To summarize the project's expected outcomes
- To provide the organization's financial history
Correct answer: To explain why each budget line item is necessary and how costs were calculated
A budget justification narrative explains the rationale behind each line item, demonstrating that costs are reasonable, necessary, and directly tied to project activities.
Question 3: A federal grant application requires a 20% cost share. If the total project cost is $500,000, how much must the grantee contribute from non-federal sources?
- $80,000
- $100,000 (Correct answer)
- $120,000
- $150,000
Correct answer: $100,000
A 20% cost share on a $500,000 total project cost equals $100,000 that the grantee must contribute from non-federal sources.
Question 4: Which federal regulation establishes the principles for determining allowable costs under federal grants?
- 2 CFR Part 200 (Uniform Guidance) (Correct answer)
- OMB Circular A-21
- FAR Part 31
- 26 CFR Part 1
Correct answer: 2 CFR Part 200 (Uniform Guidance)
2 CFR Part 200, known as the Uniform Guidance, consolidated previous OMB circulars and establishes cost principles, audit requirements, and administrative standards for federal grants.
Question 5: What distinguishes a modified total direct cost (MTDC) base from a total direct cost base when calculating indirect costs?
- MTDC excludes equipment, capital expenditures, and subaward amounts exceeding $25,000 (Correct answer)
- MTDC includes all costs without any exclusions
- MTDC only applies to state-funded grants
- MTDC excludes personnel costs from the calculation
Correct answer: MTDC excludes equipment, capital expenditures, and subaward amounts exceeding $25,000
The MTDC base excludes equipment, capital expenditures, patient care charges, rental costs, tuition remission, scholarships, and the portion of subawards exceeding $25,000.
Question 6: In a multi-year grant budget, what is the most appropriate method for projecting personnel costs in future years?
- Keep salaries identical across all years
- Apply an annual escalation rate based on historical salary increases (Correct answer)
- Double the salary each year to account for inflation
- Use the minimum wage rate for all positions
Correct answer: Apply an annual escalation rate based on historical salary increases
Applying a reasonable annual escalation rate (typically 2-4%) based on the organization's historical salary increase patterns provides an accurate and defensible projection of future personnel costs.
Grant Writing FREE Grant Writing Grant Budget Formulation Questions and Answers 2
When preparing a grant budget, which cost category typically includes expenses such as office rent, utilities, and administrative staff salaries?