F&A Costs

Direct costs are those which can be identified specifically with a particular sponsored project and which can be directly assigned to such activities, relatively easily, and with a high degree of accuracy. For example, the supplies needed for a research project are easy to identify; however, costs such as heating and air conditioning the rooms and labs used by the project staff are not. The latter are Facilities & Administrative costs, also referred to sometimes as "indirect costs." These are defined as those costs that are incurred for common or joint objectives, and which cannot be allocated readily and specifically to a particular sponsored project.

Federal regulations provide principles for determining what costs are applicable to agreements (grants or contracts) with the government and identify which of those costs may be charged as direct and which must be charged as F&A costs. Furthermore, the rules state that the distinction between direct and F&A costs must be maintained consistently throughout the University regardless of the source of funding.

Allowable and Unallowable Costs

Allowable costs are perhaps most easily defined by what is unallowable. For either F&A costs or direct costs, the federal government identifies specific activities or transactions that are not allowed to be charged to sponsored research, either as a direct cost or an F&A cost. The following costs have been specifically identified by the government as unallowable on government grants and contracts.

The list below is not all-inclusive. Individual agency and program requirements may list other "unallowable" costs. When in doubt, adher to the federal government's OMB Circular A-21 "Cost Principals for Educational Institutions."

1. Advertising for general promotion of the University, including printed materials, promotional items, memorabilia, gifts, and souvenirs
2. Advertising for recruitment purposes that includes color or is excessive in size
3. Alcoholic beverages
4. Alumni or fundraising activities
5. Antiques
6. Bad debt write-offs
7. Charitable Contributions
8. Commencement expenses
9. Decorative objects for private offices
10. Entertainment
11. Fine/original art
12. Fines and penalties
13. First-class/business-class air travel differentials
14. Flowers
15. Gifts, prizes, and awards
16. Goods or services for personal use
17. Lobbying
18. Memberships in airline travel clubs
19. Memberships in civic, social, community organizations or country clubs
20. Faculty and exempt staff salary in excess of base rates paid by the institution.
21. Selling or marketing products or services of the University.
22. Social events

Modified Total Direct Costs

Modified Total Direct Costs (MTDC) are that portion of total direct costs on which we are allowed to calculate the F&A costs for a sponsored project budget. MTDC excludes the cost of equipment items costing more than $5,000, fellowships or scholarships, and rental and maintenance of off-site facilities. The MTDC also excludes subaward costs above $25,000, for each subaward on the grant for the entire project period. In the case of a competitive renewal proposal, F&A costs associated with a subaward are calculated as if the proposal were a new submission.

Cost-sharing and Matching

Cost-sharing is that portion of a project's costs, direct or F&A, not borne by the sponsor. These costs may be contributed by the University or by third parties. A sponsor's requirement to cost-share is generally necessary before the University will consider committing resources, financial or otherwise, to a project.