Grant Writing Grant Budget Formulation 4 — Questions and Answers
Question 1: Which term describes the grant funds actually spent or obligated during a budget period?
- Encumbrances
- Liquidated costs
- Expenditures (Correct answer)
- Accrued liabilities
Correct answer: Expenditures
Expenditures are the actual outlays or obligations of grant funds charged to the award within the approved budget period.
Question 2: A subrecipient is best described as:
- A vendor hired to provide goods at a fixed price
- An entity that receives a portion of the grant award to carry out part of the project's scope of work (Correct answer)
- The prime applicant organization
- An auditor reviewing grant expenses
Correct answer: An entity that receives a portion of the grant award to carry out part of the project's scope of work
A subrecipient receives a subaward and is responsible for programmatic decision-making; this differs from a contractor/vendor who provides goods or services for a set price.
Question 3: Why is it important to use actual, documented fringe benefit rates rather than estimated percentages in a grant budget?
- Funders prohibit estimates entirely
- Accurate rates prevent over- or under-budgeting and reduce audit risk (Correct answer)
- Estimated rates are unallowable under all circumstances
- Fringe benefits are never included in federal grants
Correct answer: Accurate rates prevent over- or under-budgeting and reduce audit risk
Using negotiated or actual institutional fringe rates ensures the budget accurately reflects true labor costs and withstands funder and auditor scrutiny.
Question 4: Which of the following is an example of an in-kind match contribution?
- A cash transfer from the grantee's operating account
- A federal pass-through award used as match
- Donated volunteer hours valued at the volunteer's professional rate (Correct answer)
- An unrestricted foundation grant
Correct answer: Donated volunteer hours valued at the volunteer's professional rate
In-kind contributions include non-cash inputs like volunteer time, donated space, or equipment; they must be valued fairly and documented.
Question 5: What is a 'no-cost extension' (NCE) in grant management?
- Additional funding added to the award with no strings attached
- An approved extension of the project period without additional federal funds (Correct answer)
- A waiver of indirect cost charges
- A reduction in reporting requirements
Correct answer: An approved extension of the project period without additional federal funds
A no-cost extension allows the grantee more time to complete project activities using remaining funds without receiving new money from the funder.
Question 6: When calculating travel costs for a federal grant budget, the most appropriate basis is:
- The highest available airfare to demonstrate commitment
- Actual costs or federal per diem rates, whichever is lower (Correct answer)
- A flat annual travel estimate with no itemization
- First-class airfare for principal investigators
Correct answer: Actual costs or federal per diem rates, whichever is lower
Federal guidelines require travel costs to be reasonable and consistent with organizational policy, generally at coach/economy rates and within GSA per diem limits.
Question 7: Which document sets the federally negotiated indirect cost rate for a university or nonprofit?
- The grant proposal itself
- The Negotiated Indirect Cost Rate Agreement (NICRA) (Correct answer)
- The IRS Form 990
- The OMB Passthrough Notice
Correct answer: The Negotiated Indirect Cost Rate Agreement (NICRA)
A NICRA is a formal agreement between the organization and its cognizant federal agency establishing the approved indirect cost rate and base.
Grant Writing Grant Budget Formulation 4
Which term describes the grant funds actually spent or obligated during a budget period?