Policies and procedures for budgeting are necessary to ensure New York University (NYU) is consistent in the way it charges costs and in order to safeguard compliance with sponsor requirements. Proposed budgets must comply with the following criteria:

  • Allowable: The proposed costs are allowed under sponsor regulations or the specific terms of the agreement.
  • Allocable: The goods or services proposed are directly attributable to the award.
  • Reasonable: The proposed costs are appropriate under the circumstances and not excessive.
  • Consistently Treated: The proposed costs must be treated consistently based on the circumstances, i.e., the costs are direct costs or indirect costs.

NYU Approach

NYU's policy has been established to ensure proper budgeting, compliance with sponsor requirements, and responsible stewardship of sponsored programs funding.


Federal sponsors and some private sponsors prohibit the charging of specific costs (such as alcohol). Proposal budgets should include only allowable costs (see Accounting for Unallowable Costs). Moreover, expenses which are normally considered indirect costs (e.g., office supplies and clerical salaries) should not be included as direct costs unless there is an exception as outlined in the Costing Policy.

Cost Sharing

The total amount of the proposed budget should include both the amount requested from the sponsor and the portion that NYU will contribute. See the Cost Sharing Policy.

Commitment of Effort

The sponsor requires a commitment of effort by the Principal Investigator (PI) during the award. This effort may be expended during the academic year and/or summer.  See Effort Reporting.


When estimating costs, there must be consistency with how expenses will be tracked and reported; moreover, proposed budget must be based upon a good faith estimate, which must have a reasonable basis.

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Frequently Asked Questions