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Allowable Costs for Federal Grants

To be permitted as a federal grant expense, a cost must meet these minimum standards:

• Be reasonable in its nature and amount.  For a list of factors to consider, see CFR 200.403.
• Be allocable to the award.   For example, if a workshop benefits 100 students and 40 of them are participants in a federally funded traineeship, then at most 40% of the direct costs for the workshop may be charged to the grant. The allocability requirement complicates matters when Principal Investigator (PI) attends a conference. If attending the conference furthers other projects or professional goals, the PI must provide a reasonable means of determining what fraction of the benefits/costs can be allocated to the grant. The sponsor’s approval of a conference cost does not obviate this requirement.
• Meet any limitations specified in the specific award terms or included by reference.
  • Administrative and clerical salaries are allowable as direct costs if the three conditions are met: 1) the services are integral to the project, 2) the individual’s specific role can be clearly identified with the project, and  3) the sponsor has provided prior written approval for the cost.
  • Expressly disallowed costs include proposal preparation costs, alcoholic beverages, alumni activities, entertainment costs, lobbying costs, attorney fees to defend against federal government claims, bad debts, and parking permits for travelling to and from work.
  • Food costs are disallowed unless explicitly approved by the sponsor. Contact the Grants Manager  before charging any food costs to federal grants, even training awards.
• Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities.
• Be determined in accordance with generally accepted accounting principles.  This requirement can pose a challenge for quantifying in-kind costs.
• Be adequately documented.   Federal grant records must be maintained at least three (3) years after the grant is completely closed out. To confirm the requirement for a specific award, contact the Grants Manager.
• Be treated consistently.   E.g., no double dipping. If a cost is normally included as overhead or part of a cost share for this or another federally funded program, it cannot be charged directly to a grant.

The Cost Principals for the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (“Uniform Guidance”) can be found here.