Office of
Sponsored Programs

Postaward Guidelines

Unallowable Costs

88271993_a423e7cf4e_1_.jpgOMB Circular A-21, Cost Principles for Educational Institutions, section J, contains a list of items such as office supplies, postage, local telephone costs, memberships, and administrative and clerical salaries that are deemed unallowable as direct costs on federally sponsored projects.  Additionally, some non-federal sponsors consider these costs to be unacceptable as charges to their sponsored agreements (always consult sponsor guidelines or the Office of Sponsored Research (OSR) for specific questions).

At The Stevens Institute of Technology (SIT) the only way these costs may be charged to a federal project is if it qualifies as a Major Project or is programmatically described as allowable.  A Major Project is described in detail on the OSR Routing Form or in Exhibit C of OMB Circular A-21.

Guidelines

Although there may be a few exceptions, the followings items should also be considered as unallowable on federally sponsored projects:

  • Advertising, public relations and promotional costs – (Institutional promotion of the Stevens Institute of Technology is unallowable; however, some types of advertising, such as recruitment of study patients and recruitment of project personnel may be permitted [see qualifiers at A-21, J1c, d, and e])
  • Alcoholic beverages
  • Alumni activities
  • Bad debts
  • Charitable contributions, donations or gifts
  • Commencement and convocation expenses (see qualifier at A-21, F9[a])
  • Contingency provisions (see qualifier at A-21, J21c)
  • Entertainment
  • Fines and penalties (Costs resulting from violations of Federal, State, and local or foreign laws and regulations, see qualifier at A-21, J18)
  • Food costs – (Not allowable for routine operations or staff meals, except in the course of travel or as a part of a meeting related to the specific terms of the agreement.  May be appropriate as a direct cost for seminars and patient incentives when related to the specific needs of the agreement.  Usually authorized as part of the agreement.)
  • Fund raising and investment management costs (see qualifiers at A-21, J22a-f)
  • First class or other non-coach class trave
  • Housing and personal living expenses of University officers (“officers” includes current and past officers, A-21, J20b)
  • Legal fees – (May be allowable in certain narrow circumstances; however, it’s advisable to check with OSP)
  • Lobbying (see qualifier at A-21, J4b-g)
  • Losses / overruns on sponsored projects
  • Marketing and selling of goods
  • Malpractice insurance that does not involve human subjects
  • Membership in any civic or community organization, country club, social or dining club
  • Membership in any professional organization (part of F&A)
  • Personal use of goods or services
  • Student activity costs

Most costs that are directly associated with unallowable costs are also prohibited.  For example, the mileage or other travel expenses associated with traveling to participate in lobbying activities are directly associated with the unallowable lobbying efforts and are not permitted. OMB Circular A-21 also excludes most administrative costs from being directly charged to federally funded projects, unless they have been declared Major Projects. 

Procedures

The Principal Investigator (PI), co-investigators, project staff and departmental administrative support staff are responsible for ensuring that:

  • The appropriate category is checked on the OSR Routing Form if the PI determines this is a Major Project or is programmatically allowed
  • Unallowable items noted above are excluded from the calculation and preparation of budget data contained in proposals submitted to Federal agencies if it is not an approved Major Project
  • After the receipt of a Federal award, expenses in these costs categories are not charged to the related sponsored or cost sharing projects
  • The award notice / sponsored agreement is reviewed to determine if other cost items are restricted by the sponsor (These items may be charged to the appropriate non-federal and/or departmental projects as allowed under Institute and sponsor policies)