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Paying Stipends on Sponsored Project Awards

Background:
To provide greater clarity, Dartmouth has developed the following guidance related to the charging of stipends to sponsored project awards. Please note that the guidance is based upon IRS and federal awarding agency requirements and it is extremely important that students be classified correctly when being paid.  Incorrect classifications can have unintended consequences for the student.  Classifications should be reviewed based upon the source of funds and the nature of the student's role.

Definitions:

Stipends: are payments made to individuals for subsistence support or to defray expenses during a period of academic appointment. Stipends are typically paid on training grants and fellowship awards.  If an individual is providing benefit to a project under the direction of a principal investigator, that individual should be paid wages as an employee.  See attached references for sponsor requirements.

Fellowship: A fellowship is an opportunity to pursue study or research typically outside of the enrollment in an academic program. Funds received to support participation in fellowships are typically paid with a stipend. In some cases, academic credit is awarded for successful completion of the fellowship, for example, the Senior Fellows.

Scholarship: A scholarship is an amount of money given to defray costs typically associated with enrollment in an academic program. This may be awarded to either an undergraduate or a graduate student.

Wages: Compensation for services performed. With exception of training grants and fellowships, students are paid wages on most research awards.

Institutional Guidance:

Stipend expenses (7005A) are allowable on a sponsored project award when:

  • The intention to support training or research training is clearly in the agency program announcement.
  • The scope of work state explicitly that training or research training of individuals is a purpose of the award.

Examples of sponsored project awards that allow stipend expenses are:

  • NIH Training Grants (T32)
  • NIH Fellowship Grants (F32)
  • NSF Research Experiences for Undergraduates (REU) awards

All other students working on sponsored research projects (i.e. compensation for services rendered) should be paid wages (6261A/6262A).

Please see the Controller's Office website for detailed guidance on payment of students. 

http://www.dartmouth.edu/~control/docs/controllers/how-to-process-payments-to-students-071114.pdf.

For easy reference, you may also use the matrix below:

Stipend Matrix

Questions: Please contact your Sponsored Research Manager on questions regarding allowability of stipends on a sponsored project award. Please contact your finance center on questions regarding payroll processing and initiating changes in pay.

References:

Payroll Questions:  http://www.dartmouth.edu/~control/payroll/

Guidelines on how to process Payments to students at Dartmouth College 

http://www.dartmouth.edu/~control/docs/controllers/how-to-process-payments-to-students-071114.pdf

OMB Uniform Guidance, Cost Principles (Subpart E)
No explicit guidance exists in the Uniform Guidance for the allowability of stipends, but the Cost Principles section does address student support. The only allowance for payments to individuals that do not represent compensation for services rendered appears in §200.466 (Scholarships and student aid costs), which says such payments are allowable "...only when the purpose of the Federal award is to provide training to selected participants and the charge is approved by the Federal awarding agency."

Two sections of the Uniform Guidance Cost Principles (Subpart E), suggest that stipends should not be charged to sponsored project awards. First, §200.430 (Compensation - personal services) requires that amounts paid to individuals for their services on federal programs be documented, implying that payments to individuals which are not for services rendered should not be funded by sponsored project awards. Dartmouth's annual labor verification reports do not include stipends, since these amounts do not represent compensation for work effort. Additionally, the Uniform Guidance Cost Principles for direct and indirect costs requires that the University include all modified total direct costs allocable to benefiting activities across its major functions in determining indirect costs. If funds used to support effort directly benefiting organized research are classified as stipends, these costs are excluded from the research base in violation of the federal cost principles.

National Institutes of Health
The National Institutes of Health Grants Policy Statement (Revised November 2016) states explicitly that stipends are not allowable on research grants. This definitive statement appears in 7.9.1 Selected Items of Cost under the entry for Stipends, in which it states: "Stipends are not allowable under research grants even when they appear to benefit the research project."

National Science Foundation
The National Science Foundation Grant Proposal Guide (Revised January 30 2017) allows for stipends only in support of participant costs at conferences, symposia, workshops, or other specific training activities. In these cases, the scope of work should include a description of the training activity and NSF would have acknowledged that participant costs would be funded by stipends. NSF guidelines do not provide an allowance for payments to non-employees or non-consultants for activities that benefit a sponsored project award.

Given this clear guidance from NIH and NSF, Dartmouth's two biggest federal sponsors, we have developed this guidance for all federal sponsored project awards, regardless of agency.