Quiz — Chapter 11: The Budget
Question 1. Why is the budget "strategy, not arithmetic"?
Answer
Because every budget choice (effort levels, what to include, indirect treatment) shapes how the reviewer perceives the project and affects the odds. The budget makes claims reviewers read critically — is it realistic, complete, consistent, reasonable? The math is simple; the strategy behind the numbers separates a fundable budget from a flawed one.Question 2. State the threshold concept. What happens when budget and narrative disagree?
Answer
The budget is the narrative expressed in dollars, and they must match exactly — every activity has a number, every number an activity, every total agreeing. When they disagree, the reviewer can't tell which to believe, distrusts both, and a project they can't pin down isn't funded.Question 3. Give the formula for one person's personnel cost and compute it for \$50,000 salary, 50% effort, 30% fringe.
Answer
(Salary × effort) + (salary × effort × fringe rate). = (\$50,000 × 0.50) + (\$25,000 × 0.30) = \$25,000 + \$7,500 = **\$32,500**.Question 4. What are indirect (F&A) costs, and how are total costs computed from them?
Answer
Real but diffuse costs of running the organization (building, utilities, accounting, IT) that the project uses but can't be itemized per project. Recovered as a rate × a base (the modified total direct costs, with some categories like equipment and participant support excluded). Total = direct costs + (indirect rate × indirect base).Question 5. Why do funders resist indirect costs, and what should you never do about them?
Answer
Because overhead is invisible and feels like money not going to the cause (a perception problem), and as a guard against padding. Never pretend indirect costs don't exist — then your organization absorbs them unsustainably. Know your rate, apply it correctly, respect the funder's cap, and be prepared to justify it (Ch 12).Question 6. Distinguish cash from in-kind cost-sharing, and when is voluntary cost-sharing unwise?
Answer
Cash = other funds you commit; in-kind = the documented value of donated goods, services, space, or volunteer time. Voluntary cost-sharing (when not required) is often unwise: it sets a precedent, strains finances, and some funders explicitly won't consider it (or it suggests you don't need full support). When not required or valued, budget the full honest cost.Question 7. Why is a multi-year budget not just year one repeated?
Answer
Costs escalate (salaries get raises, prices inflate — typically 2–4%/year applied to salary/fringe and inflating categories), one-time costs (equipment) appear in only one year, and each year is its own direct + indirect calculation. The budget's year-by-year shape should also match the narrative's timeline.Question 8. What does it mean that the budget's "proportions tell a story"?
Answer
The shares reveal priorities and understanding: a program with 70% overhead and 10% direct service, or a project with generous equipment but no time to use it, or a token \$500 evaluation, signals a misunderstanding of the work. Reviewers read proportions and judge whether you understand your own project; the money should flow primarily to the activities that produce your outcomes.Question 9. Distinguish a consultant, a subaward, and personnel.
Answer
A consultant provides a defined service for a fee and isn't your employee; a subaward sends part of the scope of work to another organization that runs it with its own budget (including its own indirect); personnel are your own employees (salary × effort + fringe). The distinction matters for budgeting and compliance.Question 10. What is the danger of both under- and over-budgeting, and the resolution?
Answer
Under-budgeting looks naive and sets you up to fail; over-budgeting looks wasteful and invites cuts. The resolution is *accurate and justified* — budget what the work genuinely costs, build each number from a real basis, and justify it (Ch 12). Reviewers know real costs and trust a budget that matches them, neither shaved nor padded.Question 11. What does "modular budget" mean, and what doesn't it mean?
Answer
For smaller NIH grants, you present the request in round \$25,000 modules rather than itemizing every line. It does NOT mean you skip building a real, detailed budget — you must know your actual costs and justify them; modular simplifies *presentation*, not *planning*.Question 12. Why is reading the funder's budget instructions as important as the rest of the announcement?