Resource 3. Hard-to-Find Grant Resources
THERE'S AN ABUNDANCE OF USEFUL INFORMATION ON THE INTERNET FOR GRANT AND CONTRACT SEEKERS AND PROPOSAL WRITERS. WHILE SURFING, I TAKE SPECIAL NOTICE OF RESOURCES THAT HAVEN'T RECEIVED A LOT OF ATTENTION, AND TOPICS THAT DESERVE A CLEAR, CONCISE EXPLANATION. MY THOUGHTS ABOUT THESE SUBJECTS ARE SHARED ON THIS PAGE.
Table of Contents
1. Can a Proposal Consultant help me to write a Business Plan?
2. What exactly are indirect costs and what are the rules that govern them?
3. Can indirect costs be used to pay for proposal writing services?
4. I have heard about research funding for small businesses. What are SBIRs and STTRs?
5. How can I find grant and contract opportunities at the state government level?
6. What is GSA?
7. Is my organization up to speed on research ethics and capable of executing a research grant responsibly?
8. How can I use the American Association for the Advancement of Science to help find funding?
1. Can a Proposal Consultant help me to write a Business Plan?
Maybe. But a business plan is a very different type of document than a proposal for a specific contract or grant funding opportunity.
Most of the time, a business plan is needed to launch an organization. Often, a concurrent goal is to raise initial capital. Therefore, a business plan must be comprehensive in its description of the value proposition, technology (if any), business model, market research, financial and marketing plans, personnel, and resources. Proposals for targeted grants or contracts may be useful later when the organization is in a position to conduct research and development or take on an actual contract to provide products or services.
The best business plans I have seen have been written by knowledgeable founders/principals of an organization. These individuals have the vision, passion, and experience to narrow down the possibilities, choose the optimal pathway, and communicate the start-up strategy with a sense of excitement and confidence.
If this is not a viable option, consultants can be found who specialize in business plan preparation and can generate the entire document for you (usually, for a steep price). Or, if you are able to build some of the key pieces on your own, a proposal consultant with a strong business background may be able to work with you to create a strong business plan. In either of these cases, I strongly encourage the entrepreneur to be fully engaged in the process. Crucial details and decisions at every turn, even when seemingly small, may play an important role downstream, and so it is essential that the founders have a firm hand in the crafting of the original business plan.
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2. What exactly are indirect costs and what are the rules that govern them?
Here are the basics in a nutshell. The generic term “overhead” and indirect costs tend to be used synonymously. In 1996, OMB preferred that universities adopt the term “facilities and administration” or F&A costs as a more apt description of their indirect costs.
Federal sponsorship of university-based research was born out of necessity during World War II. Shortly thereafter, the Office of Naval Research acknowledged that academic research encumbers significant “indirect” costs that fundamentally differ from the direct costs of undertaking special projects. OMB’s circular A-21 was created in 1958 to provide guidelines as to how indirect costs should be determined.
A rule of thumb that’s useful in figuring out what is and isn’t an indirect cost is to ask, “Is this a cost incurred for a common objective that cannot easily be linked to a specific project?” Asked in this way, such things as building depreciation, interest, maintenance, insurance, and the on-site library are readily seen as legitimate indirect costs (of the “faciltities” variety). Similarly, utilities, local telephone service, HR, payroll, grants and contracts administration, departmental copiers, and some upper management expenses are justifiable indirect costs (of the “administration” variety). Dr. Johnson’s salary, experimental equipment, and travel budget cannot be considered as indirect costs – they are direct costs chargeable to his specific project.There are “forbidden” uses of indirect monies that recipients should be well aware of – for example, it may be tempting to allocate some indirect costs for fund-raising, lobbying, marketing, or entertainment, but the consequences for such action can be deadly serious.
Together, F&A costs typically amount to 40-60% of the allowable direct costs of a university proposal. When a few direct costs are exempted from the calculation (for example, for a big piece of equipment or student stipends), the basis is referred to as "Modified Total Direct Costs" (MTDC). Alternatively, indirect costs can sometimes be based on the proposed salary+fringe budget alone. Non-profit F&A rates can vary considerably, depending on the size and complexity of the organization’s infrastructure. Corporate indirect costs can be difficult to break out for reimbursement purposes as this often requires a separation of commercial business and government project-specific missions.
There is often a perpetual tension at R&D organizations between management and project practitioners. The practitioners, who generally write the grant and contract proposals, often resent what they perceive as steep and unjustified overhead costs. Meanwhile, management typically struggles to maintain myriad expensive facilities and administrative services that are generally taken for granted by the practitioners. Generally speaking, universities and non-profits fail to collect their full allowable indirect costs for a variety of reasons, among them: (1) some sponsors refuse to pay full or sometimes even reduced indirect costs; (2) some sponsors demand “cost sharing” wherein the organization must show good faith by pledging to invest significant resources into a proposed project.The extent to which universities fall short makes for interesting reading (see 2000 RAND report).
This is the pocket notes version of indirect costs. For a fuller treatment, no one understands the subject or explains it better or more succinctly than Professor Alvin Kwiram. Click on F&A primer for the authoritative guide from the standpoint of a university. The rules are not so different for non-profits (governing OMB circular for universities is A-21, that for non-profits is A-122, that for state, local, and Indian Tribal governments is A-87 (all last issued April 2004)). From the government contracting standpoint, consult the Federal Acquisition Regulation (FAR) (last issued March 2005) or alternatively, the Indirect Cost Management Guide last published in October 2001 by the Defense Systems Management College Press.
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3. Can indirect costs be used to pay for proposal writing services?
This question might arise in your consideration of whether to use a proposal writer or consultant to help on an upcoming proposal submittal. Like indirect costs themselves, the issue can be complicated, and there is probably no blanket rule that can be applied to every organization and consulting scenario. The most useful discussion we have seen can be found on the U.S. Department of Education’s website, FAQ #18, reproduced below (see http://www.ed.gov/about/offices/list/ocfo/fipao/faq.html).
Question: Can indirect funds from Federal grants be used by the host institution to pay for grant writing services? (Can the institution use their indirect cost monies to pay someone who has written the grant for them?)
Answer: There are two ways to answer the question. One is if the cost (grant writing services) is being considered as an expense or charge to the indirect cost account that is used to calculate the organization's indirect cost rate. In other words, can the cost be "accounted" for and allocated as an indirect cost expense?
The other view is, if after applying the indirect cost rate and receiving reimbursement, can the host institution use that money to pay for the services of a grant writer? One interpretation of your question is that it concerns the indirect cost rate determination process, the other interpretation is that it involves the subsequent expenditure of the indirect cost reimbursement after the rate is applied to direct cost claims under Federal awards.
In the first scenario, it would not be appropriate to account for the cost of a grant writer as an indirect cost for indirect cost rate determination purposes. Indirect costs should support, or benefit proportionally, all revenues and activities both of a Federal and non-Federal nature. As I interpret your question, the services of a grant writer appear to benefit one or specific Federal grants, and are not allocable to all revenue sources or activities that comprise the denominator (or base) on which the indirect cost rate is calculated.
Conversely, the services of the grant writer could be charged directly to the benefiting grant (since it can be identified with that cost objective) if the cost meets the "reasonableness" criteria described in the appropriate OMB Circular cost principles.
In the second scenario, we take the view that indirect cost reimbursement loses its identity after it is received and deposited in the "General Fund." This means the host institution can use that money to pay the services of a grant writer or for any other costs as long as the activities and reimbursement are consistent with the organization's own policy. However, by doing so, the organization essentially is "eating" the indirect costs this reimbursement was meant to replace. These costs cannot be shifted to other Federal sources.
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4. I have heard about research funding for small businesses. What are SBIRs and STTRs?
Information about the Small Business Innovation Research (SBIR) and Small Business Technology Transfer Research (STTR) grant programs is not difficult to find online, but the information tends to be fragmented and rules vary greatly between agency participants. Here, Proposal Exponent presents an overview for those wondering whether their organization is properly positioned to compete for these awards.
The SBIR Program was born in 1982 as part of the Small Business Innovation Development Act. The goal is to make a portion of the nation’s R&D budget available to innovative small businesses that might otherwise struggle to find the resources needed to conduct serious research and development. The STTR program component encourages small businesses to partner with nonprofit research organizations. This combination marries entrepreneurial drive with fundamental research prowess in the hopes that more high tech products will reach the marketplace and stimulate the US economy.
Who provides the funding and sets the research agenda? The largest federal agency sponsors of R&D are required to set aside a small percentage of their annual budgets and to solicit proposals in specific thematic areas for SBIR and STTR grants. The SBA plays mainly a coordination role. The federal participants are listed in the table below. Within each of these large agencies, there may be many branches and directorates responsible for defining specific funding opportunities and establishing their own proposal guidelines.
Meaning of "small business" and eligibility of nonprofit institutions
The basics are summarized below. So, for example, a university or nonprofit cancer research institute cannot qualify for a SBIR award, but if the university or nonprofit institute teams with a small for-profit biotech business seeking to produce a therapeutic product to battle cancer, they might work together to compete for a STTR grant. As another example, if the small business is not more than 51% owned and controlled by one or more individuals who are citizens or permanent residents of the US, it is ineligible for SBIR or STTR participation.
Basic rules governing the SBIR and STTR programs
First, it is important to understand the phased approach to SBIR and STTR grants. Phase I is typically a 6-12 month startup period meant to establish feasibility of a particular concept or technology. Phase II awards are contingent on successful execution of Phase I and typically fund up to two years of research and development. A Phase II award requires that the recipients have a commercialization plan. Phase III represents the period in which the technology is actually moved to the marketplace. Neither SBIR nor STTR funds are allocated to Phase III. However, some federal agencies may have such a vested interest in seeing a technology succeed that they will allocate non-SBIR/STTR funds to help small businesses clear this last hurdle. Or, they may creatively augment their Phase II options (e.g. IIB or II-plus). Usually, infusions of private sector cash are needed to fuel Phase III. There is no tried-and-true recipe for success. Some Phase I projects never advance to Phase II. Other companies win multiple Phase I and II awards to power their R&D. Yet others bypass the SBIR/STTR pathway entirely and move faster and fare better with venture funding.
Here are a few of the more important Phase I and II guidelines for the SBIR and STTR programs in the tables below.
*may vary with governement sponsor
*may vary with governement sponsor
I reiterate that the “rules” differ widely between sponsor agencies and they change over time. Sometimes these differences make sense - other times they seem arbitrary. For example, NIH awards tend to be larger than EPA or USDA awards, which seems logical as the costs of performing biomedical research are very high. On the other hand, it is unclear why some agency have matching requirements or options when others do not. Similarly, a few agencies allow a Fast-Track (combined Phase I+II) submittal but most do not. Prospective applicants should consult the specific requirements spelled out in each SBIR/STTR solicitation and accompanying application guide.
Two final tips: (1) Don’t overlook the possibility that your research/business concept might fit a sponsor agency you never even considered (Zyn Systems has a very useful website for exploring SBIR/STTR opportunities); and (2) remember that agencies accustomed to awarding grants behave very differently from agencies that do business using contracts (this can affect everything from how you should interact with the program manager to how your proposal will be reviewed to how you will receive your money if successful).
This summary is not meant to be exhaustive. The reader is encouraged to consult the websites of the SBA and federal agencies that sponsor SBIR and STTR awards for more details.
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5. How can I find grant and contract opportunities at the state government level?
If your geographic area of interest is large, it may pay to subscribe to a nation-wide search service, several of which have sprouted online and include offerings at the county and municipal level. If your targets are narrower, however, it may be simpler to directly check the relevant websites of interest. Below, we summarize the purchasing, procurement, and business partnership websites for all 50 states.
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6. What is GSA?
The General Services Administration (www.GSA.gov) was formed in 1949 to expedite the work of all federal agencies by making it quick and transparent to purchase goods and services on behalf of the US government. The bottom line for suppliers of these goods and services is that the GSA provides an entry point to government contracts that bypasses the conventional competitive bidding process. Today, GSA oversees about $70B in procurement of some 11 million goods and services listed in 53 “schedules”.
Some examples of product categories include “building and industrial”, “laboratory, scientific, and medical”, and “law enforcement, fire, and security” (see https://www.gsaadvantage.gov). Examples of service categories include “financial service”, “professional services”, and “transportation services”. Example service categories you will NOT find include research and development, architecture, and construction. The IT Division of GSA is the largest with about $20B of total sales in recent years and a so-called IT-70 schedule is also approved for use by state and local agencies.
Business is generally done in the form of Multiple Award Schedule (MAS) contracts, of which there are nearly 19,000 in place at any given time. A schedule award is a 5-year contact with three 5-year renewal options. All contractors must meet a minimum $25,000 threshold in annual sales or run the risk of losing the contract. To operate the program, GSA assesses an “Industrial Funding Fee” of 0.75% on each dollar transacted under a vendor’s schedule contract.
Though the GSA operating principle sounds straightforward, there are many details a company must learn to determine its suitability to participate. Some of the questions you should ask yourselves are:
- Which schedules best fit my company’s repertoire?
- What volume of business can we realistically achieve via this path?
- How much work will we have to invest to successfully market ourselves? (getting a schedule contract award does not guarantee you will see any customers!)
- How do prices and terms advertised by competitors on www.GSAAdvantage.gov compare to what we normally charge and promise?
- Is there any merit in teaming as a subcontractor with prime contractor
- How will our past pricing and discounting practices help or hurt our price negotiations with GSA?
- Are the overall costs for getting into the system, marketing, etc. worth the potential payout?
- Does this business mode and the concept of selling from a pre-approved price list fit with the mission and style of my company?
The process for becoming a GSA contractor is arduous, but so is a typical 100+ page proposal response to any federal agency contract solicitation. Perhaps the most crucial aspect is pricing, since the GSA will push hard to obtain the most favorable terms on behalf of its constituents. There are many consultants that specialize in assisting businesses evaluate and apply for GSA schedule contracts.
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7. Is my organization up to speed on research ethics and capable of executing a research grant responsibly?
This is a good question to ask in light of recent examples of scientific misconduct and increasing scrutiny from grant sponsors, oversight bodies, and journals. Research ethics embrace a broad range of considerations including data stewardship, authorship, allocation of credit, conflict of interest, intellectual property, grants management, and for those in the health sciences, abundant issues relating to animal and human subjects.
Click on
Responsible Conduct of Research for access to an effective short course I helped develop for an NSF Science and Technology Center several years ago. You may preview the three-module tutorial and if desired, sign up your organization or a subset of individuals to freely access this resource. The system is designed to allow individuals to complete the modules, replete with case studies, quizzes, and cartoons, at their leisure. The Group Leader can determine at any time, how many staff/students have registered and completed the course. So far, over 200 groups around the U.S. have registered for the short course, and their feedback has been strongly positive. There are many additional resource links provided in each module.
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8. How can I use the American Association for the Advancement of Science to help find funding?
AAAS has two useful services accessible to all website visitors.(1) GrantsNet is a comprehensive, searchable database of new science opportunities from private and public-sector organizations.Now you can view solicitations from your favorite federal and philanthropic foundations at the same time.The database also includes a comprehensive International Funding Index. AAAS does a great job of looking out for students and postdocs insofar as education and training grants.If you are a AAAS member, you can sign up for GrantsNet Express, a new weekly listing of science funding opportunities from private foundations and organizations, as well as new U.S. government science grant announcements. (2) GrantDoctor is a series of interesting, biweekly, online columns stretching back to 1999.Themes include finding various kinds of grants, fellowships and career development, interacting with program managers, help for foreign nationals, agency troubles, etc. You can even e-mail questions for the GrantDoctor at grantdoctor@aaas.org.
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