Grant Writing Budget and Financial Planning 2 — Questions and Answers
Question 1: What does the term 'cost sharing' mean in the context of a grant budget?
- The funder splits costs equally with all applicants
- The applicant contributes non-federal resources to the project (Correct answer)
- Two or more grantees pool their award funds
- Administrative costs are shared across multiple grants
Correct answer: The applicant contributes non-federal resources to the project
Cost sharing (or matching) means the applicant organization contributes its own resources—cash, in-kind, or third-party contributions—to supplement the federal or funder award.
Question 2: Which budget line item category typically covers salaries, wages, and fringe benefits for project staff?
- Indirect costs
- Personnel costs (Correct answer)
- Contractual costs
- Other direct costs
Correct answer: Personnel costs
Personnel costs encompass all compensation paid to employees working on the project, including salaries, wages, and associated fringe benefits like health insurance and retirement.
Question 3: A grant budget narrative serves what primary purpose?
- It replaces the need for a separate project description
- It justifies and explains each budget line item to the reviewer (Correct answer)
- It lists only the indirect cost calculations
- It certifies that the organization has nonprofit status
Correct answer: It justifies and explains each budget line item to the reviewer
A budget narrative (or budget justification) explains how each cost was calculated and why it is necessary and reasonable for the proposed project.
Question 4: When a funder specifies a 'hard cap' on indirect costs at 10%, what should an applicant do if their negotiated rate is 25%?
- Ignore the cap and use the full 25% rate
- Limit indirect costs to 10% of the applicable direct cost base (Correct answer)
- Apply the 25% rate only to personnel costs
- Request a waiver automatically before submitting
Correct answer: Limit indirect costs to 10% of the applicable direct cost base
Applicants must comply with the funder's stated cap and may only claim indirect costs up to the specified limit, even if their negotiated rate is higher.
Question 5: Which of the following is an example of an in-kind contribution that can count toward a match requirement?
- A cash payment deposited into the grant account
- Volunteer hours valued at the applicable wage rate (Correct answer)
- Funds from another federal grant
- Revenue generated by the project after completion
Correct answer: Volunteer hours valued at the applicable wage rate
Volunteer time valued at the appropriate wage rate is a common form of in-kind (non-cash) match that satisfies many funders' matching requirements.
Question 6: A grantee wants to purchase equipment costing $6,000 with grant funds. Many federal agencies define equipment as items costing at least:
- $500 per unit
- $1,000 per unit
- $5,000 per unit (Correct answer)
- $10,000 per unit
Correct answer: $5,000 per unit
Under the Uniform Guidance (2 CFR 200), equipment is defined as tangible personal property with a useful life of more than one year and an acquisition cost of $5,000 or more per unit.
Question 7: What is the purpose of a 'period of performance' in a grant agreement?
- It defines the maximum indirect cost rate allowed
- It specifies the time frame during which grant funds may be expended (Correct answer)
- It lists all authorized budget categories
- It establishes the reporting frequency for financial statements
Correct answer: It specifies the time frame during which grant funds may be expended
The period of performance (or project period) sets the start and end dates during which the grantee is authorized to incur costs and obligate grant funds.
Grant Writing Budget and Financial Planning 2
What does the term 'cost sharing' mean in the context of a grant budget?