The magic number for NIH seems to be “25%”. Whether we’re talking about carry forward balances or effort devoted to a project, you have to be under the quarter mark or else have special permission. Here’s how to determine whether you will need to communicate with your program officer (through your GCO, of course!): CARRY-FORWARD If you find yourself with unspent funds at the end of a project, you can’t carry those funds forward to the next project period without permission, unless the leftover/unobligated funds equal less than 25% current year’s total approved budget (including prior-year carryover). If, for instance, your total approved budget for Year Two is $150,000 and you have monies left over going into Year Three, you must request permission from NIH to keep those funds to spend in addition to your Year Three budget IF you have more than $37,500 left over. The formula to find your threshold is [Period Total Approved Budget] x [0.25]. If you find yourself with $23,000 at the end of Year Two, you’ll likely not need permission to carry it forward and spend it on top of your approved budget for Year Three.** Keep in mind, however, that if you should find yourself with a balance at the end of Year Three, you must include the Year Two carry-forward in calculating your threshold. If your approved budget for Year Three is also $150,000, your threshold is calculated as follows:
- [Period Total Approved Budget + Prior Period Carry-Forward] x [25%]
- = [$150,000 + $23,000] x [0.25]
- = [$173,000] x [0.25]
- = $43,250
If you are carrying funds from Year Three to Year Four in this scenario, and you find yourself with a balance of $43,251, you will need to request permission from NIH to do so, or expect to have your award for Year Four reduced/offset by the unobligated amount. Note: this means that you will still have the authority to spend at the originally-approved amount in Year Four, but the source of that funding becomes dual: part of your funds for Year Four will come from the left-over funds that remain in your account from Year Three, and NIH will send the remainder in the new period award. In this example, if the Year Four approved budget was also $150,000, NIH would provide Year Four funds in the amount of [Year Four Approved Budget – Year Three Unobligated Balance], or [$150,000 – $43,251] = $106,749. This does NOT reduce the Year Four budget to $106,749; rather, NIH expects you to spend at the approved $150,000 level using the unobligated funds from the year before and the new funds to make up the difference. Had a carry-forward been both requested and approved, NIH would have sent a check for $150,000 and allowed the expenditure of the $43,251 on top of the originally-approved budget.
Bear in mind that “25%” is also the threshold for NIH permission for project effort level reductions. This reduction threshold is seen as cumulative, i.e., the 25% threshold may be reached by the reduction of two or more efforts per individual in successive project periods that total 25% or more. Let’s say that Dr. Alpha devotes 25% effort to a project, or 3.0 months. His threshold for effort reduction is 25% of 3.0 months, or 0.75 months. If Dr. Alpha reduces his effort in Year 2 by 20% (0.6 months) to 2.4 months, he does not need to request NIH permission. If he reduces his effort again in Year 3 by 10% (0.24 months), he DOES need special permission at that point, because his effort has been reduced from the last approved level by 28%.
Note: once NIH has approved a reduction, all subsequent reductions are measured at 25% of the last approval (as opposed to consistent measurement against the originally-approved effort levels). For further details on the 25% thresholds, be sure to read the Section 8 of the NIH Grants Policy Statement. If you need some guidance on calculating your own thresholds, give us a shout!
** Remember, certain programs are routinely excluded from the ability to automatically carry forward, no matter the balance. These include centers (P50, P60, P30, and others); cooperative agreements (U); Kirschstein-NRSA institutional research training grants (T); non-Fast Track Phase 1 SBIR and STTR awards (R43 and R41); clinical trials (regardless of activity code); and awards to individuals.