Procedures for Determining Costs Allowability on Sponsored Agreements and Identifying Direct and Indirect Costs on Federal Awards

Note: For all sponsored projects, always refer to the award's specific terms and conditions, which may include additional restrictions on cost allowability, or contact your SPA Representative

 
Advertising
Allowable when necessary to meet the specific requirements of the sponsored agreement
Same as Federal sponsors
Same as Federal sponsors
 
 
Alcoholic beverages
Unallowable
Unallowable
Unallowable
 
 
Books and journals
Allowable when necessary to meet the specific requirements of the sponsored agreement; otherwise provided as part of the University's library services
Same as Federal sponsors
Same as Federal sponsors
 
 
Consulting services
Costs of consultant services rendered by persons who possess a special skill and who are not officers or employees of the University are allowable
Same as Federal sponsors
Same as Federal sponsors
 
 
Donations and contributions
Unallowable
Unallowable
Unallowable
 
 
Donations and contributions
Unallowable
Unallowable
Unallowable
 
 
Entertainment
Unallowable
Unallowable
Unallowable
 
 
Equipment - special purpose (e.g., scientific equipment)
Allowable provided that items with a unit cost of $5000 or more have the prior approval of the sponsor
Allowable with prior approval
Same as State sponsors
 
 
Equipment - general purpose (e.g., office, computer equipment)
Unallowable, except where approved in advance by the sponsor
Same as Federal sponsors
Same as Federal sponsors
 
 
Goods and services for personal use
Unallowable
Unallowable
Unallowable
 
 
Insurance
Costs of insurance required or approved pursuant to the sponsored agreement are allowable; otherwise treated as an F&A cost
Same as Federal sponsors
Same as Federal sponsors
 
 
Materials and supplies
Allowable when necessary to meet the specific requirements of the sponsored agreement
Same as Federal sponsors
Same as Federal sponsors
 
 
Office supplies
Unallowable as a direct cost, except where extensive use of office supplies is necessary to meet the requirements of the sponsored agreement
Allowable, provided the supplies are reasonable and directly related to the work of the sponsored agreement
Same as State sponsors
 
 
Meetings and conferences
Allowable provided the primary purpose of the meeting or conference is the dissemination of sponsored agreement-related information
Same as Federal sponsors
Same as Federal sponsors
 
 
Memberships, subscriptions, and professional activity costs
Generally unallowable as a direct cost except when necessary to meet the technical requirements of the award. The cost of membership in any civic or community organization is unallowable.
Same as Federal sponsors
Same as Federal sponsors
 
 
Postage
Unallowable as a direct cost, except when extensively used (FedEx, UPS, etc….) or necessary to meet the technical requirements of the award
Allowable provided the postage is reasonable and directly related to the work of the sponsored agreement
Same as State sponsors
 
 
Proposal development costs
Unallowable as a direct cost
Same as Federal sponsors
Same as Federal sponsors
 
 
Prizes & Awards
Unallowable
Unallowable
 
 
Professional journal publications
Allowable where the article reports sponsor-supported work and the costs are levied impartially on all papers published by the journal
Same as Federal sponsors
Same as Federal sponsors
 
 
Scholarships - Merit
Allowable only when the purpose of the sponsored agreement is to provide training to selected participants and the charge is approved by the sponsor. See OMB Circular A-21, Section J.45
Same as Federal sponsors
Allowable when approved in advance by the sponsor
 
 
Taxes
Unallowable when exemptions are available to the University (e.g., sales tax) or are available to the University based on exemptions afforded the Federal government
Same as Federal sponsors
Same as Federal sponsors
 
 
Telephone - local
Unallowable as a direct cost
Same as Federal sponsors
Same as Federal sponsors
 
 
Travel - domestic
Allowable provided the travel is reasonable and directly related to the work of the sponsored agreement
Same as Federal sponsors. However, domestic travel is generally restricted to New York State.
Same as Federal sponsors
 
 
Travel - international
Allowable provided the travel is reasonable, directly related to the work of the sponsored agreement, and compliant with the requirements of the Fly America Act
Generally unallowable unless specifically approved in advance
Allowable when approved in advance by the sponsor
 
 
Tuition Remission
Allowable for graduate students and Ph.D. candidates at 50% of the University's published tuition rates. The charge must be approved in advance by the sponsor
Same as Federal sponsors
Same as Federal sponsors
 
 
 

Salary, Wages, and Stipends

Faculty and professional staff
Allowable provided the salary is reasonable, directly related to the work of the sponsored agreement, and documented in accordance with OMB Circular A-21, Section J.10
Allowable provided the salary is reasonable, directly related to the work of the sponsored agreement, and documented in accordance with University procedures
Same as State sponsors
 
 
Summer salary
Allowable at a rate (26.3%) not in excess of the base salary divided by the period to which the base salary relates. The base salary period used is the number of months covered by the faculty member's official academic year appointment (OMB Circular A-21, Section J.10.d.2.(a))
Same as Federal sponsors
Same as Federal sponsors
 
 
Post doctoral associate
Allowable provided the salary is reasonable, directly related to the work of the sponsored agreement, and documented in accordance with OMB Circular A-21, Section J.45
Allowable provided the salary is reasonable, directly related to the work of the sponsored agreement, and documented in accordance with University procedures
Same as State sponsors
 
 
Administrative and clerical staff
Unallowable as a direct cost except where a "major project" explicitly budgets for administrative services and the staff involved can be specifically identified with the award. See OMB Circular A-21, Section F.6.b
Allowable provided the wages are reasonable, directly related to the work of the sponsored agreement, and documented in accordance with University procedures
Same as State sponsors
 
 
Graduate Assistant wages
Allowable provided the wages are reasonable, directly related to the work of the sponsored agreement, and documented in accordance with OMB Circular A-21, Section J.10
Allowable provided the wages are reasonable, directly related to the work of the sponsored agreement, and documented in accordance with University procedures
Same as State sponsors
 
 
Graduate Teaching Assistants salary
Allowable only when the purpose of the sponsored agreement is instruction or training and the charge is approved in advance by the sponsor
Same as Federal sponsors
Same as Federal sponsors
 
 
Graduate Research Assistant stipend
Allowable when a degree seeking graduate student performs original, professional research related to his or her academic program. The student must be fully matriculated in a graduate or Ph.D. degree program and be under the supervision of an appropriate faculty member
Same as Federal sponsors
Same as Federal sponsors
 
 
Other Stipends
Allowable only when the purpose of the sponsored agreement is to provide training to selected participants and the charge is approved by the sponsor
Same as Federal sponsors
Same as Federal sponsors
 
 
Student Wages - Academic Year
Allowable provided the wages are reasonable, directly related to the work of the sponsored agreement, and documented in accordance with OMB Circular A-21, Section J.45.a.(3)
Allowable provided the wages are reasonable, directly related to the work of the sponsored agreement, and documented in accordance with University procedures
Same as State sponsors
 
 
Other Student Wages - Summer
Allowable provided the wages are reasonable, directly related to the work of the sponsored agreement, and documented in accordance with OMB Circular A-21, Section J.45
Allowable provided the wages are reasonable, directly related to the work of the sponsored agreement, and documented in accordance with University procedures
Same as State sponsors
 
 
 

Definitions

Allowable Costs

OMB Circular A-21 Cost Principles for Educational Institutions identifies direct and indirect costs that may be charged to federal grants and contracts, otherwise known as sponsored agreements. A-21 also identifies those charges that cannot be charged to sponsored agreements and are considered unallowable expenses. Circular A-21 offers four tests to determine the allowability of costs applied to federally sponsored agreements.

Allowable costs must be:

  1. Reasonable - For a cost to be considered reasonable, it must be necessary for fulfillment of the agreement, acquired by means consistent with federal and state laws and regulations, and consistent with University policies and practices.
  2. Allocable - A cost is allocable to a sponsored agreement if the goods/services involved are charged in accordance with the relative benefits received by that agreement. To be considered allocable, a cost must be incurred solely to advance the work under the sponsored agreement or benefit both the sponsored agreement and other work of the institution in proportions that can be approximated through use of reasonable cost allocation methods.

    Note: Any cost that is allocable to a particular sponsored agreement may not be moved (e.g., cost transfer) to another sponsored agreement in order to meet deficiencies caused by overruns or other funding considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.
  3. Treated consistently throughout the University - similar costs normally cannot be treated as both direct and indirect costs.
  4. Conform to any limitations or exclusions in the sponsored agreement.

 

Direct Costs

According to A-21, direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Identification with the sponsored work rather than the nature of the goods and services involved is a determining factor in distinguishing direct from indirect (F&A) costs of sponsored agreements. Examples of costs charged directly to a sponsored are:

  • compensation of employees for performance of services under the sponsored agreement including related benefit costs;
  • costs of materials consumed or expended in the performance of the work;
  • travel, including expenses for transportation, lodging, subsistence, and related items incurred by employees who are traveling on official business directly related to the sponsored project

 

Indirect/F&A Costs

Costs incurred for common or joint objectives which cannot be identified specifically with a particular sponsored project are treated as indirect costs. Examples include:

  • utilities, maintenance and operation
  • building and equipment use expenses
  • administrative costs (see details below)
  • library costs
  • student service costs

Most sponsored agreements include a percentage of the direct cost to cover these charges known as the Facilities and Administrative Cost Rate (F&A). Refer to the Controller's Office web page for more information about RIT's F&A Rates:
http://www.rit.edu/controller/sponsored/rates.html

 

Administrative Costs

Federal regulations limit instances where administrative costs can be charged to grants and contracts. The following is a list of the types of expenses that are generally not allowable as a direct cost per the Federal government. An exception may be made if there is EXTENSIVE use of such expenses, the expenses have been properly justified/documented in the grant/contract proposal, and they have been approved as a direct cost by the appropriate federal agency.

The most common administrative costs are:

  • Administrative and clerical salaries and wages
  • Printing and copying costs
  • Office supplies
  • Postage and mail
  • Telephone and internet expense