Allowable Costs
on Federal Grants
Grants provide resources to make great ideas happen.
What can you spend your money on?
Everything included in your approved budget.
If it has been budgeted, justified, and approved by the sponsor, by all means- spend it!
Sponsors can have varying rules, but typically grant awards break down into two
categories:
Direct Costs
Pays for activities or services
that benefit specific projects:
• Project staff
• Travel
• Materials directly
related to the project
(equipment, publications)
Indirect Costs*
Pays for activities or services
that benefit more than one
project:
• Utilities
• Rent
• Administrative staff
• General office supplies
May be considered Direct or Indirect:
• Telephone charges
• Computers
• Project clerical personnel
• Postage and printing
• Miscellaneous office supplies
*Also known as Facilities and Administrative (F &A) costs. Not all sponsors allow for indirect costs.
Sometimes, they will approve of the negotiated Wake Tech Indirect Cost Rate and provide a percent
of the overall budget for operational expenses. Other times, they will not allow any indirect costs.
Things not included in your budget that your sponsor approves
as allowable expenditures. The Office of Sponsored Research and Federal
Relations must get permission from your sponsor in writing for any reallocation of
funds at any point during the project period.
The following list provides general guidance pertaining to costs in which federal funds
awarded through grants are allowable. Every sponsor is a bit different so each grant
announcement requires careful review for specific guidance. Check with the Office of
Sponsored Research and Federal Relations before applying any of these expenses to a
federal award. When in doubt, let us look into it.
Allowable Costs
 Advertising costs for recruiting personal required for the project; procurement of goods
and services for the project; disposal of scrap or surplus materials acquired during the
project (unless otherwise reimbursed); other specific purposes necessary to meet the requirements of the
sponsored agreement
 Public relations costs specifically required by the sponsored agreement; costs of communicating with the
public and press pertaining to specific activities or accomplishments; costs of conducting general liaison with
news media and government public relations officers on matters related to keeping the public informed
about matters of public concern (grant awards/contracts, etc.)
 Advisory Council costs
 Audits when required by and performed in accordance with the Single Audit Act; if included in proposal
 Bonding costs (pursuant to the terms of the award)
 Communication costs (long-distance telephone calls, postage, messenger, electronic transmittal services)
 Compensation for personal services (salaries, wages, fringe benefits, pension plans) that conform to the
established policies of the institution, are consistently applied, and are charged for work performed directly
related to the sponsored agreements. Salary rates must match the employee’s regular compensation rate and
work on the sponsored agreement cannot exceed the base rate. Intra-university consulting is considered an
in-kind service unless specified in the sponsor agreement.
 Salaries of Deans of faculty and graduate schools and their staff
 Depreciation and use of buildings (with conditions; pg. 51897)
 Employee morale, health, and welfare costs (publications, health or first-aid clinics or infirmaries,
recreational activities, counseling services)
 Special purpose equipment (nonexpendable, tangible property having a useful life of more than one year)
used only for research, medical, scientific, or other technical activities provided items costing more than
$5,000 have prior approval from awarding agency
 Gains and losses on depreciable assets (in the year of which they occur)
 Insurance and indemnification (except cost of insuring any contributions to any reserve covering the risk of
loss of or damage to federally-owned property; loss of lives of officers or trustees; insurance against defects)
 Labor relations costs for maintaining satisfactory relations between Wake Tech and its employees, related
committees, publications, and other related activities
 Maintenance and repair costs (necessary maintenance, repair and upkeep of buildings and equipment which
neither add to the permanent value nor appreciably prolong its intended life, but keep it in an efficient
operating condition
 Materials and supplies used for the performance for a sponsored agreement
 Meetings and conferences when primary purpose is dissemination of technical information. Includes cost of
meals, transportation, rental of facilities, speakers’ fees, and other items incidental to the meeting
 Memberships, subscriptions, and professional activity costs
 Patent costs if required by the award
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Allowable Costs
 Plant and homeland security costs, including expenses incurred for protecting facilities, personnel, and work
products (wages and uniforms of personnel; equipment; barriers; contractual security services)
 Professional services and consultants who possess a special skill and when the work could not be performed
more economically by a current employee (with conditions, pg. 51901)
 Facility rearrangement and alteration costs for the project
 Reconversion costs to restore or rehabilitate the institution’s facilities after a sponsored agreement
 Recruitment costs for positions related to the grant including advertising, HR operating costs, travel costs of
applicants, and employment agencies to the extent that such costs are incurred pursuant to a well-managed
recruitment program (but not spent on color or excessively sized print advertising). If the newly hired
employee resigns for reasons within his control within 12 months after hire, the institution will be required to
refund or credit such relocation costs to the Federal Government.
 Rental costs of buildings and equipment determined and periodically monitored to be reasonable in
comparison to equivalent facility rental rates. (additional considerations apply)
 Royalties and other costs for use of valid patents (unless the US Government already has a license to the
patent; the patent or copyright is invalid, unenforceable, or expired; additional conditions pg. 51902)
 Scholarships and fellowships, and student aid when the purpose of the sponsored agreement is to provide
student training and is approved by the sponsor. Tuition remission and other forms of compensation are
allowable provided student is conducting necessary work related to the sponsored agreement; remittance is
provided in accordance with established Wake Tech policies for both sponsored and unsponsored aid; the
student is enrolled in coursework at the time of the work; compensation is reasonable for the work
performed
 Costs of specialized service facilities (computers, wind tunnels, reactors) must be charged directly to award.
If costs are not material, may be charged as F&A.
 Taxes (unless an exemption is offered; not allowable for special assessments on land which represents capital
improvement; any refund of taxes, interest, or penalties attributed to taxes paid by the sponsored agreement
must be returned to the federal government)
 Termination costs applicable to sponsored agreements that cannot be discontinued immediately after the
effective date of the termination; loss of useful value of special tooling, machinery, and equipment (with
conditions); rental costs of unexpired leases (with conditions); settlement expenses except for when an
exemption available and except for special assessments on land which represent capital improvement
 Training costs for employee development
 Transportation incurred for freight, postage, etc. relating to goods purchased, in process, or delivered. These
can be charged as transportation costs or added to the cost of the item. Where identification cannot be
made, can be charged as an F&A cost. Outbound freight should be treated as a direct cost.
 Travel costs that follow Wake Tech policy
 Trustee travel and subsistence costs consistent with Wake Tech travel policies and rates
Source: Federal Register/Vol. 70, No. 168; Office of Management and Budget 2 CFR Parts 215 and 220 (OMB Circular A-21)
Contact the Office of Sponsored Programs and Federal Relations:
Amy MacDonald, Director of Grants Performance
(919) 335-1202 [email protected]
www.waketech.edu/about-wake-tech/administrative-offices/sponsored-programs-and-grants
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