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What Are Typical Allowable and Unallowable Expenses on Sponsored Project Awards?

Allowable and Unallowable costs on federally funded sponsored project awards are defined in the Uniform Guidance. According to the Uniform Guidance, the cost of a sponsored agreement is comprised of the allowable direct costs incident to its performance, plus the allocable portion of the allowable facility and administrative costs of the institution, less applicable credits. The tests of allowability of costs under these principles are:

  1. They must be reasonable.
  2. They must be allocable to sponsored agreements under the principles and methods provided herein.
  3. They must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances.
  4. They must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items.

To view Uniform Guidance definitions of Allowable Costs, Reasonable Costs and Allocable Costs, please go to the following link:

Allowable Costs, Reasonable Costs and Allocable Costs

The following items of cost are Unallowable in accordance with the Uniform Guidance:

  • Advertising, Public Relations
  • Alcoholic Beverages
  • Alumni Activities
  • Bad Debts
  • Certain Legal Costs
  • Charitable Contributions
  • Contingencies
  • Entertainment
  • Fines and Penalties
  • First Class Air Travel
  • Fund Raising, Investment Management
  • Goods and Services for Personal Use
  • Housing of Officers
  • Interest Expense for Operating Purposes
  • Lobbying Costs
  • Losses on Sponsored Research Agreements
  • Memberships in Civil, Community and Social Organizations
  • Selling and Marketing Costs
  • Telephone Line Costs

Below is a list of expenditure types that departments need to use when assigning appropriate expenditure codes on sponsored project awards:

Expenditure Types

Other items of cost may be Unallowable depending on the circumstances; in these instances, the Department Grant Manager should discuss with their Sponsored Research Manager.

If an Unallowable cost is charged to a sponsored project award, the Department Grant Manager for that award needs to fill out a Cost Transfer Form (if moving non-payroll charges) or a Wage Transfer Form (if moving payroll charges) to move that charge off the sponsored project award. After the appropriate form has been completed, the form needs to be reviewed and approved by the Principal Investigator or Designee and OSP before processing.

Please note that it is important that all expenses, regardless of funding source, must be coded as allowable or unallowable so that they can be appropriately included or excluded from facilities and administration cost calculations.