The Budget Narrative Guidance document provides essential instructions for preparing budget estimates and narratives required in federal grant applications and RFPs. It emphasizes compliance with cost principles outlined in 2 CFR Part 200, ensuring that all budgeted costs are allowable, allocable, and reasonable. The guidance breaks down budget categories into personnel, fringe benefits, travel, equipment, supplies, contractual, construction, and other direct costs, each elaborating on specific requirements and examples for clarity. Moreover, it details the necessity of a thorough budget narrative, which should articulate the purpose and funding details for various budget items, including cost-sharing provisions and in-kind contributions. The narrative should include precise descriptions of project tasks and personnel involved, alongside their compensation structures. Indirect costs are also addressed, providing options for applicants without a negotiated rate. Overall, the guidance serves to streamline financial transparency and accountability in the allocation of federal funds, ensuring projects align with established regulatory standards while supporting effective project implementation. This document is vital for applicants seeking to secure funding through federal or state programs, highlighting the importance of accurate and descriptive budgeting in submission packages.