Approved by: The President
History: Issued              -- March 14, 2002
Revised            -- July 30, 2015
Last Reviewed -- August 1, 2019
Related Policies: Compensation from Sponsored Awards and Effort Certification Policy; Cost Sharing Policy; Cost Transfer Policy; Post-Award Principal Investigator Handbook; Reporting Financial Irregularities Policy; Service Center Policy; Subrecipient Monitoring Policy
Additional References:
Responsible Official: Director of Sponsored Accounting tel. (202) 319-6402

I. Policy Statement


All costs charged to Sponsored Awards (defined below) must meet specific award terms and must comply with federal Office of Management and Budget (OMB) requirements¹ as set forth in this policy. The Principal Investigator (PI) for each Sponsored Award has primary responsibility for properly charging costs to Sponsored Awards. This policy applies to all Sponsored Awards regardless of funding source (i.e. federal versus non-federal) and regardless of type. Questions regarding proper costing should be directed to the Sponsored Accounting Office.

II. Definitions


A. Administrative Costs mean expenses such as clerical salaries, subscriptions, memberships, phone charges, copying costs, postage and general office supplies.

B. Allocable - A cost is allocable to a grant or contract if the cost directly benefits the work done on that project as specified in the award proposal.

C. Allowable - For a cost to be allowably charged to a grant or contract, it must meet the following requirements:

  • It must be allocable to that project;
  • It must be reasonable;
  • It must be consistently treated like other similar costs; and
  • It must be allowable under the terms of general federal cost principles set forth in the applicable OMB requirements¹, the guidelines of the funding agency and the specific grant or contract.

D. Principal Investigator (PI) means the person responsible for performance of the activities specified in the grant or contract. Usually this person is named in the grant or contract agreement.

E. Reasonable means that a prudent person would have purchased the same item at the same price.

F. Sponsored Award means a grant, contract or other method of funding provided to the University by an external entity (such as the federal government or a private foundation or company) and for which there are actual or implied conditions or expectations that the University must meet. Such conditions and expectations often include, but are not limited to:

  • Sponsor control of the scope of the project;
  • Technical, financial, or progress reporting; 
  • A cost sharing component;
  • Recoveries for facilities and administrative (i.e. indirect) costs; and/or
  • Re-granting or subcontracting of some of the funds to other entities.

Sponsored Awards often involve activities such as research, teaching/training, or the provision of services by University personnel to other entities.

III. Financial Responsibility


The PI for each Sponsored Award has primary responsibility for monitoring of financial activity to ensure that expenses are within the project budget line-item limits, are recorded accurately and timely, and comply with the requirements set forth in this policy. All expense submissions must be approved by the PI or his or her designee. (A proper designee should be in a position to be aware of and supervise all award activity in the absence of the PI, such as a department chair or Dean.) A department chair or Dean must approve any expense reimbursements made directly to a PI or charges made by a PI using a University procurement card.

IV. Award Costing Requirements

A. Pre-Award Costs


Any costs incurred to propose or solicit an award, including time spent, cannot be charged to that award. No costs should be incurred for an award before funding is approved. If costs are incurred before the official start of an award project, they should be charged to a non-sponsored departmental organization code and will not be charged retroactively to the award.

B. Reasonableness, Allowability and Allocability


Fundamental to all awards is the requirement that a particular grant or contract may only be charged for costs related to that project. The PI best understands the scope of the project, the effort committed to it by faculty and staff, and the relationship of the project to other projects with which resources may be shared. The PI is responsible for approving all expenses for his/her grant, and for ensuring that all costs charged to a grant or contract are reasonable and necessary, allowable under the terms and conditions of the award, properly allocated to and among multiple awards and funding sources, and limited to funds awarded for the project. Pursuant to the False Claims Act and subsequent related regulations, individuals, as well as the University, can be subject to significant fines and penalties for submitting false or fraudulent claims for payment to the federal government.

C. Unallowable Expenses


Certain expenses are unallowable for reimbursement by the federal government or under the terms of a specific award or sponsor. These expenses may be permitted under University policy and may be entirely valid and appropriate for the project, but they cannot be claimed as direct or indirect costs on sponsored projects. It is very important that all costs that are unallowable be classified as such, as failure to do so can have severe negative consequences for the University.

The Sponsored Accounting Office has full authority to request more information or reject the reimbursement of a cost from an award if there is inadequate evidence to support that the cost is allowable. Unallowable costs must be covered by a non-sponsored departmental organization code. Applicable OMB regulations¹ define what is allowable and unallowable in the federal context. Several examples are set forth below. Two general conditions define unallowable costs: 1) costs for an unallowable activity; or 2) costs for an unallowable object. Note, however, that there are some exceptions under non-federal awards.

Specifically Unallowable Activities under OMB: 

  1. Organized fund raising
  2. Lobbying
  3. Commencement and Convocation
  4. General public relations and alumni activities
  5. Student intramural activities and clubs
  6. Defense or prosecution of criminal, civil, and administrative proceedings, including claims against the federal government
  7. Other items specified in federal or sponsor regulations All expenses in support of these activities are unallowable and are generally recorded in separate accounts to ensure that the transactions are identified for reporting.

Specifically Unallowable Costs under OMB:

  1. Most advertising and recruitment costs
  2. Alcoholic beverages
  3. Entertainment
  4. Losses on another grant or contract
  5. Fines and penalties
  6. Promotional materials (employee morale items are allowable)
  7. Moving costs if employee resigns within 12 months
  8. Certain types of travel costs (e.g., first class travel)
  9. Cash donations to other parties
  10. Memberships in civic, community or social organizations
  11. Goods and services for personal use of employees (e.g., automobiles)
  12. Investment management costs
  13. Lobbying costs (not allowable using any type of University funds)
  14. Housing and personal expenses of University officers

Other items listed in the unallowable cost section relevant OMB requirements¹

All questions about the proper recording and charging of expenses should be directed to the Sponsored Accounting Office.

D. Direct Charging of Administrative Costs


Administrative Costs may be charged to an award only if they are specifically allowable under the terms and conditions of that award, and are reasonable and necessary and properly allocated to that award in accordance with OMB requirements¹.


¹ For awards effective December 26, 2014, following OMB Uniform Guidance (2 CFR §200). For awards effective before December 26, 2014, follow OMB Circular A-21, Cost Principles for Educational Institutions (2 CFR §220) and/or OMB Circular A-110 (2 CFR § 215).