You won’t be in research administration long before you’ll start hearing about effort, people will talk about it in the context of Progress Reports, Other Support, Labor Cost transfers, and freak out about certification benchmarks. And you may find yourself wondering – what is the story with effort? What is it, why does it matter, and what do I need to know about it so that I can do my job?  The purpose of this video and it’s corresponding blog post is to give a high-level overview about effort, and know enough to know what questions you need to ask to move forward with your next steps. It’s enough to get you going, but I cannot stress enough that each organization is different, and you’ll want to use this video as a springboard to learn about how your organization does things related to effort, not as the be all end all for effort wherein the research ends. This is just the tip of the iceberg. So lets start chipping away, shall we?

What is effort reporting:

Effort reporting is a federally-mandated process by which the salary charged to a sponsored project is certified as being reasonable in relation to the effort expended on that project. If you think about it, an investigator does a lot of things, administrative, clinical, research, teaching, and leadership. This makes up all of their “effort.” The feds define effort as basically everything you spend your time doing in your role within the organization. If you do a lot of things, then you may have buckets of effort in many places. If you have an investigator who is all research, then almost all of their effort will be allocated to research projects. It can look different for each investigator, but ultimately the overarching idea is the same – what does a researcher spend their time doing at work?

• Time & Effort reporting is “looking back” process, for the most part,
• reported hours need to cover 100% of the employee’s time (more on that later), and the time is a percentage of said time regardless of full-time vs. part-time work status This is not 40 hours a week. It’s however many hours you work in a week. In a year, people work about 2080 hours – 40 hours a week  x 52 weeks, but if you worked 5000 hours for your organization then that becomes the denominator of your effort. Its about the percentage of time, not the exact hours.
• The effort must be reported whether or not they are PAID from that source.

What about if they aren’t paid from the source?

Someone may get a grant, spend a lot of it, and then not have funding for their salary, they still have to do that work and someone still needs to pay for the time spent. So what you will report in those cases would be that someone spent EFFORT on the project related to how awesome puppies are, but the SALARY for that particular effort was covered by a discretionary account, sometimes operating accounts will cover those expenses. That is called a cost share. Cost sharing CANNOT be done TO a sponsored project, it has to come from a non-sponsored account. No sponsor is going to be ok with paying for effort that someone is expending on another project except in very specific cases.  Always look at the agreement. Its unlikely, but you never know what you’ll run into. That is called cost sharing, and can be voluntary or mandatory.

Mandatory Cost Sharing

There are cases where an investigator If employees are performing activities as part of a cost-share agreement (e.g., a university’s contribution to a project), this must also be accurately reflected in time and effort reports. In some cases you’ll have a submission that requires that an organization pay a portion of the salaries for effort being expended towards research. If this was committed to, it needs to be tracked, along with the cost sharing effort. Depending on the agreement, there may be reporting requirements at the end of the award cycle to demonstrate compliance with the committed cost sharing.

How do you Calculate Effort?

Let’s do a deeper dive in now. When you are talking about calculating effort it essentially Involves estimating a percentage of time spent on each project or activity. The total percentage of time worked cannot be more than 100% and the time spent on a project needs to be compared to a report of the actual pay distribution in the accounting system. That must happen within the context of someone’s entire effort bucket. So if they have 20% Admin effort, and 5% Director Effort, then the amount left over for grants is 75%, and you can’t exceed that. If someone is entirely research, then you calculate based on 100% effort on research. Once you’ve calculated the effort, there is a “close” for the month and periodically the investigator needs to certify that this is accurate and true, and that becomes the certified effort on record.

But you may ask, what about the time someone spends writing grants – what does that fall under? What if someone is 100% on research projects, sponsored research for Neurosurgery. And then they are writing grants, isn’t then the grant paying for the PI to write and submit a grant to another sponsor? The answer is – yes. That’s why a lot of organizations will have a buffer of space 2-5% that is compensated for by non-sponsored funds, which is meant to cover those non research activities.

• University of Wisconsin-Madison: Faculty are expected to engage in various activities, including non-sponsored research, instruction, administration, service, or clinical duties, which prevent them from dedicating 100% effort to sponsored projects. Proposal preparation for new and competing renewals is also considered a non-sponsored activity. Salary support for these activities must come from non-sponsored funds.  Research and Sponsored Programs
• Washington University in St. Louis: The institution’s Effort Reporting Policies and Procedures emphasize that effort is defined as the proportion of time spent on any activity expressed as a percentage of total institutional activities for which an individual is compensated. This includes a range of activities beyond sponsored research, ensuring that not all effort is allocated to sponsored projects. “or University’s faculty, total institutional effort/activity (100%) is not defined as a single, standard number of hours or days per week, since it will likely be different for each individual during the year. The number of hours in an individual faculty member’s “100%” must be reasonable and supportable to department, school, university and external reviewers, if requested.” Financial Services
• University of Oklahoma Health Sciences Center: Their Time and Effort Reporting Guidelines state that principal investigators cannot commit 100% effort to sponsored programs, acknowledging that faculty have other university duties, such as proposal preparation, requiring a portion of their effort. These non-sponsored activities must be funded by non-sponsored sources.  OUHSC Financial Services
• Harvard University: Harvard’s Effort Reporting Policy specifies that effort associated with non-sponsored university activities, including grant writing and administrative duties, will be aggregated for certification purposes, while committed sponsored effort will be certified separately. This ensures that non-research activities are appropriately accounted for and funded by non-sponsored sources. Harvard Finance
• Duke University: Duke’s Effort Reporting policy outlines that activities such as writing grant proposals, department meetings, and supervising students in non-grant-related activities are not allowable to be charged to sponsored funds and should be charged to institutional funds. This delineation ensures compliance with federal regulations and proper allocation of effort. Duke Finance

If your organization does not have that buffer requirement, then you may want to ask your manager about how that challenge is being addressed at your organization.

What about Person Months

Now we know how we’re allocating effort based on a percentage of someone’s time spent on professional activities, and it’s fairly straightforward when we talk about percentages of time. It gets a little more complicated when you bring in Person months, Calendar Months/Academic Months/Summer months into play, which is another metric of measuring effort, but its generally based off the percentage.

A “person month” is the metric for expressing the effort (amount of time) principal investigators (PIs), faculty and other senior personnel devote to a specific project. The effort is based on the type of appointment of the individual with the organization; e.g., calendar year (CY), academic year (AY), and/or summer term (SM); and the organization’s definition of such. For instance, some institutions define the academic year as a 9-month appointment while others define it as a 10-month appointment. Once you know the BASE of the months you’re working on then the converstion of percentage of effort to person months is straightforward. To calculate person months, multiply the percentage of your effort associated with the project times the number of months of your appointment. For example:

• 25% of a 9 month academic year appointment equals 2.25 (AY) person months (9 x 0.25= 2.25)  
• 10% of a 12 month calendar appointment equals 1.2 (CY) person months (12 x 0.10 = 1.2)  
• 35% of a 3 month summer term appointment equals 1.05 (SM) person months (3 x 0.35= 1.05) 
• 10% of a 0.5 FTE 12 month appointment equals 0.6 (CY) person months (12 x .5 X .1 = 0.6)

Yale has an incredible chart that basically tells you the percentage effort to person months, academic months, summer months, etc. That’s a great tool, I recommend bookmarking it. The link is in the show notes on YouTube at Minessa.tv or you can find it on my blog at Minessa.com

How do You Decide what effort goes where?

Now you know what it is, and you know the units of measurement that we employ to calculate effort, the next question becomes how do you decide what effort goes on what project? What are you tracking it AGAINST? Typically this begins at the proposal stage – it’s the amount of effort you propose in a grant proposal budget or other project application budget, regardless if salary support is requested. That is the committed effort. Always start with the application, because that’s where the sponsor starts. Typically, there will be rules from your sponsoring agency around how they treat effort, always read the guidelines, the NOA, and of course, the application as your starting point.

Once the grant has been awarded, then the proposed effort becomes the accepted effort. This is the amount of effort proposed that the sponsor accepts & awards, regardless of salary support that they provide. (The proposal or commitments listing may be included in the notice of grant award, but not always. It varies by agency. If it’s not there – you’ll have to refer to the proposal as your commitment guide).If there was cost sharing committed to, then that now becomes binding and will need to be tracked.

Effort is not always set in stone and there may be allowability in terms of wiggle room and flexibility. So for example, the NIH will allow you to adjust effort within 25% of the originally committed effort without obtaining prior approval (I typically cap the change at 24.99%), other sponsors will not. So when the grant is awarded, you’ll work with your investigator, within the framework of their effort as a whole, the new project, the allowable flexibility for this project and others and come up with the whole picture of someone’s effort that will be devoted to the project, charged to the project, and ultimately tracked and certified.

How do you Track Effort

Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. I know, I keep saying that, but it’s literally the basis for the entire concept of effort, so it bears repeating. According to 2 CFR 200.430(i)(1), the records that we keep need to follow a certain set of guidelines:

Be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;

• Be incorporated into official records;
• Reasonably reflect total activity for which employee is compensated; not to exceed 100%
• Encompass all activities (federal and non-federal);
• Comply with established accounting polices and practices; and
• Support distribution among specific activities or cost objectives.

Depending on the size and complexity of your organization, you may have differing levels of tracking. For a small biopharma company, you may have a spreadsheet and some forms that get certified regularly. For a larger organization with multiple departments there may be an electronic certification system. Many organizations have systems that integrate payroll and effort reporting so that the RA is involved only minimally once the effort is set up. Others have a lot of manual steps that need to be taken to ensure compliance. How you see this practice play out will differ wildly from place to place, but you can be sure that they will cover those requirements in some form. I have had some clients who were new to research and were just starting out, so they did not have any of these systems in place, so if that’s something that you discover your organization doesn’t have you may want to get that in place and put a mitigation plan in place. That can be one of the more costly projects that I engage in, cleaning up past effort and ensuring that the financial records match the certified effort, and then creating effort policies to support those activities, but it does happen, and is still cheaper than having an audit finding. More on consequences later.

Who has to track their effort?

All employees (Not Contractors) who are paid in full or in part with federal funds must have their effort tracked. This includes an employee whose salary is paid with state or local funds but is used to meet a required “match” in a federal program. Not everyone needs to certify their own effort, but someone with knowledge of the project needs to review and confirm that it is accurate. Typically this will be the PI So you may have a fellow who doesn’t really track their own effort at the grant level, they just focus on the research. The PI is the one who directs their work, and makes sure it’s allocated appropriately during your monthly reconciliation meetings. And then officially it is reported annually at the progress report stage. If you want to learn more about progress reports you can check out the video I did on YouTube or on Minessa.com. 

How do You Certify Effort?

Someone must review the effort each month preferably pro-actively and retrospectively to confirm that the effort on a project is accurate. Typically this will be the PI who reviews the salaries are allocated as they have directed their work. Meetign with your PI regularly gives them the opportunity to tell you who is working on what project so salaries can be pro-actively allocated. For anyone who is key, they are required to actually review and officially certify their own effort and confirm that the effort was devoted to the projects in this distribution. This includes verification through (electronic) signatures and documentation from individuals with first-hand knowledge incorporated into official records;

What happens if you aren’t Compliant?

Section § 200.301 Performance measurement of the document 2 CFR 200 specifies that “The Federal awarding agency must measure the recipient’s performance to show achievement of program goals and objectives, share lessons learned, improve program outcomes, and foster adoption of promising practices.”

Because of that, tracking performance on a sponsored project may be necessary as proof of time and effort during audits. Being audited is not a huge deal, depending on the size of your organization, it could be a routine event. But if you haven’t typically done them well, lets start with this. Regardless of the size of your organization, don’t be non-compliant. Just – don’t. It’s not worth the time, the effort, or the hassle, not to mention, it’s not good business practice, and it costs a lot of money to retrospectively go back and clean up than it does to maintain accurate proactive and retrospective records. Our job is one where you have to have good judgement, there are areas you can be gray on and then there are areas you cant. This is one where you can’t mess around. You’ll end up saving yourself more time taking your time to maintain compliance than you will fixing the problems that arise later as a consequence of not. But let’s say that you do for some reason have a compliance issue – perhaps effort was reported falsely or a federal grant was charged for something that should have been discretionary or industry sponsored. First off, it does happen, and there are steps in between to resolve the issues, which is outside of this video, so you can check that out on Minessa.com or Minessa.tv

• What are the possible penalties? What can you expect?
• You can have a disallowance of all charges relevant, which is the bare minimum
• Loss of federal and non-federal sponsor funding for the institution
• Monetary fines to the institution.
• For investigators, monetary fines, debarment from receiving federal funding and
• Legal charges.

That’s a general overview, but if you really want to hear the horror stories, then here’s the tea on some organizations that have been non-compliant over the years.

• University of Minnesota (1998) – $32 million settlement Some salaries charged to grant in excess of employee effort spent on the grant; effort reports completed by employee(s) who did not have reasonable means of verifications of the effort expended
• Northwestern University (2003) – $5.5 million settlement Researchers overstated effort commitment for federal medical research projects
• Johns Hopkins University (2004) – $2.6 million settlement Researchers overstated effort commitment for federal clinical research projects
• Florida International University (2005) – $11.5 million settlement Improperly maintained or incomplete records related to time and effort
• Cleveland Clinic Foundation (CCF): In May 2024, CCF agreed to pay $7.6 million to resolve allegations of submitting false claims to NIH. The institution failed to disclose that a key employee involved in administering grants had pending and/or active financial research support from other sources, violating NIH’s transparency requirements.
• The Scripps Research Institute (TSRI): In September 2020, TSRI paid $10 million to settle claims that it improperly charged NIH-funded research grants for time spent by researchers on non-grant-related activities, such as developing new grant applications, teaching, and administrative tasks.

Those are just the ones that have been publicly reported, In the last decade or so as a consultant with a network of consultants who works with small businesses, one of the biggest challenges that smaller and growing organizations run into is that they don’t have a way that they are tracking this information, so they need to come up with ways to retrospectively track it, records it, create the records etc, typically working with someone to bring them into compliance, which is costly. You’ll spend a fortune cleaning up a mess that would have cost a nominal amount to pre-prepare for.

What Should I do?

If you’re brand new for effort or an organization and not sure how to get going then I would recommend looking up the following information to get started.

1. What is your area of responsibility related to time/salary/effort
2. Depending on that you’ll want to do and or all of the following
3. Figure out who is being paid from the grants under your investigators and what are their roles
4. Check with your investigator to make sure that everyone who is being paid off the grant should be
5. Do a retrospective analysis of the last year of salary and effort on each of your projects to make sure that there’s nothing out of whack, you’ll need to consult with your PI to be sure.
6. If not, make whatever corrections need to be made
7. Who are your key personnel, you’ll likely have a portfolio of the same PIs over and over again, who re they? Who are their staff.

Regardless of where you have fallen into this, going through effort for each individual is a process, you may have some Pis that are super easy and everything has been posting correctly, and then a couple that are your personal nightmares that are going to take weeks and months of collaborative effort to unravel – don’t ever hedge away from doing the investigation because you’re afraid of what you’ll find. You finding the problems is the best case scenario because now it can be fixed. And once you do have everything in order, you’ll find that your day to day management of the portfolio is easier and more enjoyable because you’re not worried that you’ve done something wrong, or there’s a compliance guillotine waiting to come down. Lastly, this will give you a framework of GOOD questions to ask your manager, it will fill both of you with incredible confidence.

Resources

Effort Reporting Resources

1. Yale University: Effort Percent Calendar Month Conversion Tables
2. University of Arizona: Overview of Effort Certification
3. Buffalo State: What Every PI Should Know About Effort
4. Idaho State Department of Education: Time and Effort for Federal Grants
5. NIH Nexus: What is a Person Month & How to Calculate It
6. 2 CFR 200.430: Compensation for Personal Services
7. Federal Labor Standards Act (FLSA)

Additional Useful Links

• University of Wisconsin-Madison: Research and Sponsored Programs
• Washington University in St. Louis: Effort Reporting Policies and Procedures
• University of Oklahoma Health Sciences Center: Time and Effort Reporting Guidelines
• Harvard University: Effort Reporting Policy
• Duke University: Effort Reporting Policy (Maximum Effort)

Notes:
This is a labor of love and I put each page together based on my experience. I love to have additional voices, so if there’s something you would change or add, please grab a time with me and lets talk about writing for this blog.

Do you have a resource you want added to this list? Email it to me at me@minessa.com