Allowable Direct Costs on Sponsored Projects

Page Updated: February 28th, 2017

NOTE: For awards made on or after 12/26/2014 which are subject to the Uniform Guidance.

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All sponsored projects at UW-Madison are also subject first and foremost to purchasing regulations set forth by the University of Wisconsin-System, implemented through Purchasing Services.

Direct Costs - Costs that are charged directly to sponsored projects and are clearly identified within that project's activity and objectives.

Indirect Costs or F&A - Costs that are not directly related to a specific sponsored project and are incurred for common or join objectives, sometimes referred to as overhead. For purposes of processing these costs in the UW financial system, they should be charged to non-federally funded sources, such as 101 (GPR), 233 (gifts), endowments, etc.

For further information, see federal cost principles in 2 CFR 200, Subpart E.

If you have additional questions, check with your Dean’s or Director’s office for details.

Costs Generally Considered Allowable as Direct Costs

  • Animals, purchase and care
  • Alterations and Renovations when approved as part of the proposal
  • Bonding
  • Computing devices that are essential and allocable in the performance of a Federal award
  • Construction when approved as part of the proposal
  • Consultant Services
  • Customs and Import Duties
  • Drugs when part of the scope of the project
  • Equipment, depending on intended use
  • Fringe Benefits, including leave and pension plan costs
  • Publication Expenses
  • Registration Fees (for Symposiums and Seminars)
  • Rental or Lease of Facilities and Equipment
  • Salaries and Wages (see exceptions)
  • Service Charges
  • Subject/Patient Costs, including recruitment, compensation and meals when appropriate
  • Materials and Supplies
  • Taxes
  • Telecommunications - Itemized long distance calls
  • Transportation of Property
  • Travel

Costs Normally Treated as Indirect Costs (F&A)

  • Administrative and Clerical Salaries
  • Audit Costs
  • Bid and proposal costs
  • Computers and electronic devices for general use
  • Depreciation or Use Allowances
  • Dues and Memberships (Exceptions need to be confirmed in advance by Dean's Office.)
  • General Purpose Equipment: Non-research equipment, which may be used for general office purposes such as computers, printers, fax machines, copy machines, and office furniture.
  • General computer services, networking costs, or other DoIT services
  • Hazardous Waste Disposal
  • Insurance
  • Interest
  • Legal Services
  • Office Supplies
  • Postage Including U.S. Postal Service, Federal Express, UPS
  • Staff Recruitment and Relocation
  • Subscriptions, Books, Journals and Periodicals
  • Telecommunications - Local Telephone Service, including phone equipment such as telephones, cell phones, pagers, fax machines, and line charges

Costs Generally Classified as Unallowable

  • Alcoholic Beverages
  • Bad Debts
  • Termination or Suspension Costs
  • Contingency Funds
  • Entertainment Costs
  • Fines and Penalties
  • Fundraising Costs
  • Honoraria
  • Independent Research and Development Costs, including their proportionate share of F&A costs
  • Lobbying
  • Salaries and Wages - Time spent on proposal development
  • Termination or Suspension Costs

Additional Summary Information on Specific Costs

NOTE: This information is only a general guide to the listed items. Please check the award-specific terms and conditions or with the RSP accountant for your award if you have questions.

Advertising

See §200.421 Advertising and public relations

Typically Allowable as a Direct Cost: No

Comment: Allowable only for recruitment of staff or trainees, procurement of goods and services, recruitment of research subjects, disposal of scrap or surplus materials, and other specific purposes necessary to meet the requirements of the grant-supported project or activity. For conditions other than those listed, prior approval is required.

Alcoholic Beverages

See §200.423

Typically Allowable as a Direct Cost: No

Comment: Unallowable as an entertainment expense, but allowable if within the scope of an approved research project.

Alteration and Renovation

See §200.462 Rearrangement and reconversion costs

Typically Allowable as a Direct Cost: No

Comment: Allowable only with prior sponsor approval.

Animals and Animal Care

See §200.468 Specialized Service Facilities

Typically Allowable as a Direct Cost: Yes

Comment: Allowable for the acquisition, care, and use of experimental animals.

Audit Costs

See §200.425 Audit Services

Typically Allowable as a Direct Cost: No

Comment: Charges for audits should generally be treated as F&A costs.

Bad Debts

See §200.426

Typically Allowable as a Direct Cost: No

Bid and Proposal Costs

See §200.460 Proposal Costs

Typically Allowable as a Direct Cost: No

Comment: Allowable as an F&A cost.

Bonding

See §200.427

Typically Allowable as a Direct Cost: Yes

Comment: Allowable when required by the terms and conditions of the Federal award.

Books and Journals

Typically Allowable as a Direct Cost: No

Comment: Books and journals should generally be provided as part of normal library services and treated as F&A costs rather than being directly charged.

Childcare Costs

Typically Allowable as a Direct Cost: No

Comment: UW System and UW-Madison policy, as well as the Uniform Guidance, do not permit the reimbursement of childcare expenses. The one exception is that childcare is allowable if incurred to assist an individual to participate as a subject in a research project. Also see Temporary Dependent Care Costs.

Communications

Typically Allowable as a Direct Cost: No

Comment: Such costs include local and un-itemized long-distance telephone calls, telephone surveys, and postage, and are usually treated as F&A costs. Telecommunications Costs: Long distance phone calls, if itemized, are normally treated as direct costs. Local phone service and phone equipment are normally treated as F&A costs by UW-Madison.

Computing Devices

See §200.453 Materials and Supplies Costs, including costs of computing devices

Typically Allowable as a Direct Cost: Yes

Comment: Allowable if essential and allocable for the performance of the sponsored project. See additional guidance here. Because of State and University regulations, smart phones and cell phones generally are unallowable as direct costs. Contact RSP with questions.

Computing Services

Typically Allowable as a Direct Cost: No

Comment: General computer services, networking costs, or other DoIT services should normally be treated as F&A costs.

Conferences

See §200.432

Typically Allowable as a Direct Cost: Yes

Comment: May be allowable if the primary purpose of the event is the dissemination of technical information beyond UW-Madison and is necessary and reasonable for successful performance under the award. See guidance.

Consortium Agreements/Contracts under Grants

Typically Allowable as a Direct Cost: Yes

Comment: Allowable to carry out a portion of the programmatic effort or for the acquisition of routine goods or services under the grant.

Construction

Typically Allowable as a Direct Cost: No

Comment: Allowable only when program legislation specifically authorizes new construction, modernization.

Consultant

See §200.459

Typically Allowable as a Direct Cost: Yes

Contingency Funds

See §200.433 Contingency provisions

Typically Allowable as a Direct Cost: No

Comment: Generally unallowable. May be allowable under specific circumstances if included in the budget and accepted by the Federal awarding agency.

Depreciation

See §200.436

Typically Allowable as a Direct Cost: No

Comment: Such costs are usually treated as F&A costs.

Drugs

Typically Allowable as a Direct Cost: Yes

Comment: Allowable if within the scope of an approved research project.

Dues or Membership Fees

Typically Allowable as a Direct Cost: No

Comment: Allowable as an F&A cost for organizational membership in business, professional, or technical organizations or societies. It may be appropriate to charge such costs to a Federal award under the following circumstances:

  • An investigator will attend a specific meeting or conference to present findings of their research under a specific award. The registration costs to attend include membership fees. A non-member option of attendance is more costly than the registration including membership. CONFIRM WITH THE DEAN’S OFFICE OR RSP ACCOUNTANT IN ADVANCE.
  • The RFP under which application was made requires investigator attendance at a specific meeting. Meeting attendance requires the individual to hold a current membership. CONFIRM WITH THE DEAN’S OFFICE OR RSP ACCOUNTANT IN ADVANCE.

Entertainment Costs

See §200.438

Typically Allowable as a Direct Cost: No

Comment: Unallowable. This includes the cost of amusements, social activities, and related incidental costs.

Equipment

See §200.439 Equipment and other capital expenditures

Typically Allowable as a Direct Cost: Yes

Comment: Allowable for purchase of new, used, or replacement equipment as a direct cost or as part of F&A costs, depending on the intended use of the equipment.

Exchange Rates

See §200.440

Typically Allowable as a Direct Cost: Yes

Comment: Cost increases for fluctuations in exchange rates are allowable costs subject to the availability of funding. Prior approval of exchange rate fluctuations is required only when the change results in the need for additional Federal funding, or the increased costs result in the need to significantly reduce the scope of the project.

Fines and Penalties

See §200.441 Fines, penalties, damages and other settlements

Typically Allowable as a Direct Cost: No

Comment: Unallowable.

Fringe Benefits

See §200.431 Compensation - fringe benefits

Typically Allowable as a Direct Cost: Yes

Comment: Allowable as part of overall compensation to employees in proportion to the amount of time or effort employees devote to the grant-supported project.

Fundraising Costs

See §200.442 Fund raising and investment management costs

Typically Allowable as a Direct Cost: No

Comment: Unallowable.

General Purpose Equipment

See §200.439 Equipment and other capital expenditures

Typically Allowable as a Direct Cost: No

Comment: General purpose equipment such as desktop computers, laptop computers, printers, office furniture and vehicles are normally treated as F&A costs.

Hazardous Waste Disposal

Typically Allowable as a Direct Cost: No

Comment: Usually treated as an F&A cost.

Honoraria

Typically Allowable as a Direct Cost: No

Comment: Unallowable when the primary intent is to confer distinction on, or to symbolize respect, esteem, or admiration for, the recipient of the honorarium. However, a payment for services rendered, such as a speaker's fee under a conference grant, is allowable. See §200.432 Conferences.

Human Subjects Costs

Typically Allowable as a Direct Cost: Yes

Comment: Allowable for payment to volunteers or research subjects who contribute blood, urine samples, and other body fluids or tissues that are specifically project-related, or who participate in health, educational, social, or behavioral sciences research. Also see Advertising or Recruitment Costs. Also see guidance on Payments to Research Participants.

Independent Research and Development Costs

Typically Allowable as a Direct Cost: No

Comment: Unallowable, including their proportionate share of F&A costs.

Insurance

See §200.447 Insurance and indemnification

Typically Allowable as a Direct Cost: No

Comment: Insurance is usually treated as an F&A cost.

Interest

See §200.449

Typically Allowable as a Direct Cost: No

Comment: Allowable as an F&A cost for certain assets as specified in the applicable cost principles.

Leave

See §200.431 Compensation - fringe benefits

Typically Allowable as a Direct Cost: Yes

Comment: Allowable for employees as an employee fringe benefit.

Legal Services

Typically Allowable as a Direct Cost: No

Comment: Generally treated as an F&A cost.

Library Services

Typically Allowable as a Direct Cost: No

Comment: General library support is not allowable as a direct cost, but may be included in the grantee's F&A pool.

Lobbying

See §200.450

Typically Allowable as a Direct Cost: No

Comment: Generally unallowable.

Meals

Typically Allowable as a Direct Cost: No

Comment: Allowable for research subjects and patients under study only. May be allowable in other limited circumstances, which may require prior sponsor approval.

Participant Support Costs

See §200.456 Participant support costs

Typically Allowable as a Direct Cost: Yes

Comment: Allowable with prior sponsor approval. Note that, similar to equipment, participant support costs are excluded from Modified Total Direct Costs. Participant Support Costs Guidance is available here.

Pension Plan Costs

See §200.431 Compensation - fringe benefits

Typically Allowable as a Direct Cost: Yes

Comment: Allowable for employees as an employee fringe benefit.

Postage

Typically Allowable as a Direct Cost: No

Comment: Postage costs which include U.S. Postal Service, Federal Express, and UPS should normally be treated as F&A. Cost of sending the proposal, revisions, periodic or annual reports, or related correspondence to the funding agency should not be charged as direct costs to a sponsored project.

Pre-Award Costs

See §200.458

Typically Allowable as a Direct Cost: Yes

Comment: Allowable. A grantee may, at its own risk and without Federal agency prior approval, incur obligations and expenditures to cover costs up to 90 days prior to the effective date of a new or competing continuation award.

Public Relations

See §200.421 Advertising and public relations

Typically Allowable as a Direct Cost: No

Comment: Allowable only for costs specifically required by the award, or for costs of communicating with the public and the press about specific activities or accomplishments under the grant-supported project or other appropriate matters of public concern.

Publication and Printing Costs

See §200.461 Publication and printing costs

Typically Allowable as a Direct Cost: Yes

Comment: Allowable. Page charges for publication in professional journals may be paid from project funds if the published paper reports work supported by the grant and the charges are levied impartially on all papers published by the journal. The costs of reprints and publishing in other media such as books, monographs, and pamphlets are also allowable. Also see Business Services’ guidance on Printing.

Recruitment Costs

See §200.463 Recruiting costs

Typically Allowable as a Direct Cost: Yes

Comment: Allowable subject to the conditions and restrictions contained in the applicable cost principles. See Advertising or Relocation Costs.

Registration Fees (for Symposia and Seminars)

Typically Allowable as a Direct Cost: Yes

Comment: Allowable if necessary to accomplish project objectives. See Dues or Membership Fees.

Relocation Costs

See §200.464 Relocation costs of employees

Typically Allowable as a Direct Cost: Yes

Comment: Allowable under specific circumstances, which may include:

  • Permanent change of duty assignment for an indefinite period or a stated period of not less than 12 months;
  • The move is for the benefit of UW-Madison and the sponsored project to which the cost is being charged;
  • The reimbursement is in accordance with UW-Madison policy (Policy/Procedure: 201.N Relocation).

Rental or Lease of Facilities or Equipment

See §200.465 Rental costs of real property and equipment

Typically Allowable as a Direct Cost: Yes

Comment: Allowable subject to the limitations. In general, the rental costs for facilities and equipment applicable to each budget period should be charged to that period.

Sabbatical Leave Costs

See §200.430 Compensation - personal services

Typically Allowable as a Direct Cost: Yes

Salaries and Wages

See §200.430 Compensation - personal services

Typically Allowable as a Direct Cost: Yes

Comment: Allowable. Compensation for personal services covers all amounts, including fringe benefits, paid currently or accrued.

  • Charges for work performed by faculty members on awards during the summer months or other periods not included in the base salary period will be determined for each faculty member at a rate not exceeding the base salary divided by the period to which the base salary relates.
  • Compensation of Students: Tuition remission and other forms of compensation paid as, or in lieu of, wages to students (including fellows and trainees).
  • Time spent in the development of new or revised proposals is unallowable.

Service Charges

Typically Allowable as a Direct Cost: Yes

Comment: Allowable.

Severance Pay

Typically Allowable as a Direct Cost: No

Comment: Allowable only to the extent that such payments are required by law, employer-employee agreement, etc.

Staff Recruitment and Relocation

Typically Allowable as a Direct Cost: No

Comment: Staff Recruitment and Relocation costs should normally be treated as F&A costs, but may be allowable as direct charges under specific circumstances. See Advertising, Recruitment Costs, or Relocation Costs.

Stipends

Typically Allowable as a Direct Cost: Yes

Comment: Allowable as cost-of-living allowances for trainees and fellows under NIH training grants and fellowships or other similar awards, per terms and conditions.

Subscriptions, Books, and Periodicals

Typically Allowable as a Direct Cost: No

Comment: Subscription, book, and periodical costs should normally be treated as F&A.

Supplies

See §200.453 Materials and supplies costs, including costs of computing devices

Typically Allowable as a Direct Cost: Yes

Comment: Allowable.

Taxes

See §200.470 Taxes (including Value Added Tax)

Typically Allowable as a Direct Cost: Yes

Comment: Allowable. Such costs include taxes that an organization is required to pay as they relate to employment, services, travel, rental, or purchasing for a project.

Temporary Dependent Care Costs

See §200.474 Travel costs

Typically Allowable as a Direct Cost: No

Comment: 2 CFR 200 allows temporary dependent care costs (care above and beyond regular dependent care) to be direct charged if certain conditions are met. Costs must be a direct result of the individual’s travel for the Federal award. Another condition is that the costs must be consistent with institutional policy. UW System and UW-Madison policy do not allow temporary dependent care costs to be reimbursed using University funds; therefore, they cannot be reimbursed on a sponsored project. Also see Childcare Costs.

Termination or Suspension Costs

Typically Allowable as a Direct Cost: No

Comment: Unallowable with exceptions.

Trainee Costs

Typically Allowable as a Direct Cost: Yes

Comment: Allowable only under predoctoral and postdoctoral training grants.

Transportation of Property

Typically Allowable as a Direct Cost: Yes

Comment: Allowable for freight, express, cartage, postage, and other transportation services relating to goods either purchased, in process, or delivered, including instances when equipment or other property is moved from one grantee to another.

Travel

See §200.474 Travel costs

Typically Allowable as a Direct Cost: Yes

Comment: Allowable as a direct cost where such travel will provide direct benefit to the project. Must be consistent with UW-Madison’s established travel policy. Per UW policy, Alaska, Hawaii and all US territories and possessions are considered foreign locations and are covered under the international per diem rates. Grantees must comply with the requirement that U.S.-flag air carriers be used by domestic grantees to the maximum extent possible when commercial air transportation is the means of travel between the U.S. and a foreign country or between foreign countries. This requirement shall not be influenced by factors of cost, convenience, or personal travel preference.

Costs must be permissible under the law, University purchasing regulations AND costs must be permissible under terms/conditions of the award.