Direct and Indirect Costs on Federally Funded Sponsored Projects & Programs

EFFECTIVE DATE: March 2, 2010 |LAST UPDATED: February 28, 2017 | Policy Section: sponsored-research

Responsible Executives

Carolyn Ainslie, vice president for finance and treasurer

Jeffrey Friedland, director, ORPA

Responsible Offices

Sponsored Research Accounting

Office of Research & Project Administration (ORPA)


Glynis Sherard, director of sponsored research accounting, (609) 258-4996

Jeffrey Friedland, director, ORPA, (609) 258-3090

I. Policy StatementBACK TO TOP

Under federal regulations and sponsor requirements, certain departmental expenses including but not limited to administrative or clerical salaries, office supplies, postage, local telephone costs, photocopy costs, network charges, cell phones, should normally be treated as a Facilities and Administrative (F&A) cost and recovered through the F&A cost rate (also known as indirect cost rate). In exceptional circumstances where the nature of the work performed requires extensive departmental support, administrative or clerical salaries may be treated as a direct charge. However, administrative or clerical salaries and other general administrative costs must directly benefit and be easily identified with the particular sponsored project.

II. Who is Affected by this PolicyBACK TO TOP

This policy applies to all federally funded sponsored projects. It should be understood by Principal Investigators (PIs), Grant Managers, Department Managers, Department Chairs, Deans, Dean for Research, Sponsored Research Accounting (SRA) and the Office of Research and Project Administration (ORPA).

III. Definitions

Direct Costs - Those costs that 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.

Indirect Costs - Also called Facilities & Administrative costs or F&A.  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.

Computing Devices (considered Materials & Supplies) - Machines that cost less than $5,000 per unit and are used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or peripherals) for printing, transmitting and receiving, or storing electronic information.


All federal awards issued on or after December 26, 2014 must comply with OMB 2 CFR Part 200 (also known as Uniform Guidance). Awards issued prior to that date must comply with OMB Circulars A-21 and A-110, but may incorporate elements of the Uniform Guidance when appropriate. If an agency issues a new funding increment under Uniform Guidance to an existing award, then all activity incurred on or after December 26, 2014 will also be subject to Uniform Guidance. Activity incurred prior to this date will continue to be subject to OMB Circulars A-21 and A-110.

For the purposes of this policy, please note a general reference to "federal regulations" is being used, in lieu of specific references to each of the following CFRs: 2CFR Part 200 (Uniform Guidance), 2 CFR Part 215 (Circular A-21) and 2 CFR Part 220 (Circular A-110). Please read the Notice of Award and the agency's terms and conditions regarding the applicability of these federal regulations.


The direct charging of administrative or clerical salaries may be appropriate where the nature of the work performed under a particular award requires an extensive amount of administrative or clerical support which is significantly greater than the routine level of such services provided by the academic department.

The requirements for direct charging administrative or clerical salaries to federal awards will differ depending upon which federal regulation is in effect for a particular award (i.e. OMB A-21 or Uniform Guidance).  


On July 13, 1994, OMB issued an interpretation of Circular A-21, Section F.6.b that states:

“ charging of these costs may be appropriate where the nature of the work performed under a particular project requires an extensive amount of administrative or clerical support which is significantly greater than the routine level of such services provided by academic departments. The costs would need to meet the general criteria for direct charging in section D.1. -- i.e., be identified specifically with a particular sponsored project relatively easily with a high degree of accuracy, and the special circumstances requiring direct charging of the services would need to be justified to the satisfaction of the awarding agency in the grant application or contract proposal.

OMB Circular A-21 Exhibit C provides examples of circumstances where the direct charging of salaries of administrative or clerical staff may be appropriate. They are as follows:

  • Large complex programs, such as general clinical research centers, primate centers, program projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
  • Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting (such as epidemiological studies, clinical trials, and retrospective clinical records studies).
  • Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars.
  • Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).
  • Projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects, and other research field sites that are remote from campus.
  • Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communications.

These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples.

Federal regulations require that costs incurred for the same purpose in like circumstances must be treated consistently as either a direct or F&A cost. PIs and department administrators must exercise caution in applying the guidelines contained in this policy.


The Uniform Guidance eliminates the major project criteria from A-21 for the direct charging of administrative and clerical salaries, and now requires adherence to the all of the following conditions in order to direct charge these costs:

  1. Administrative or clerical services are integral to a project or activity;
  2. Individuals involved can be specifically identified with the project or activity;
  3. Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency;
  4. The costs are not also recovered as indirect costs.


The Uniform Guidance classifies computing devices under $5,000 per unit as supplies that can be treated as direct costs if essential and allocable, but not solely dedicated to the performance of a Federal award.

The following OMB guidance should be used for determining allocability when computing devices will benefit two or more chartstrings: (ex. a sponsored project and an instructional activity)

Direct cost allocation principles : If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit.   If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then… The costs may be allocated or transferred to benefited projects on any reasonable documented basis.

Proportional Benefit Allocation:

An example of a proportional benefit allocation may be a computing device that is purchased specifically for two projects. The computing device will be used 40% for Project A and 60% for Project B. Therefore, 40% of the cost is allocated and directly charged to Project A, and 60% of the cost is allocated and directly charged to Project B.

Reasonable Basis Allocation:

Examples of any reasonable basis allocation methods may include some common characteristics such as head count, square feet or other criteria that can be used as a basis for determining how to allocate the cost across the benefitted chartstrings.

Documentation that supports how costs for computing devices were allocated should be retained by the department.

V. Procedures BACK TO TOP


VII. Contact Roles and Responsibilities BACK TO TOP

PI & Department Administrator Determines appropriateness of direct charging administrative or clerical salaries, computers, and other departmental expenses in the proposal budget
PI & Dept Administrator Prepares appropriate justification for direct charging administrative or clerical salaries, computers, and other departmental expenses and the associated proposal budget
Dean / Chair / Director Approves the proposal and associated proposal budget
ORPA Verifies administrative or clerical salaries, and other departmental expenses meet federal regulations
ORPA Submits approved proposal, budget, and budget justification to sponsor
ORPA Establishes a chartstring and award budget in Coeus and PeopleSoft Financials
PI & Dept Administrator Guides expense requests through proper University channels to ensure adherence to federal regulations
PI & Dept Administrator Reviews administrative or clerical salaries, computers and other departmental expenses for allowability and maintains supporting documentation
SRA Verifies appropriateness of administrative or clerical salaries, and other departmental expenses during the award stage
SRA Prepares and submits invoices and financial reports to sponsors as required

VIII. Appendices BACK TO TOP

Appendix A - Normal Direct and Normal F&A Costs

Appendix B - Flow Chart for Evaluating Allowable Direct Costs

IX. Update Log BACK TO TOP


Updated to align with current business practices and our Prime systems implementation.


Update Policy section IV to reference OMB Uniform Guidance requirements.


Update to Appendix A on meal reimbursements per federal policies.


Modified "Direct Charging Computers" section to define incidental use; added sponsor examples and FAQs; added Appendix B flow chart


No changes. Copied to web-based policy library.


Copied to University policy template; added “Direct Charging Computers” section; modified policy title to “Direct and Indirect Costs on Federally Funded Sponsored Projects and Programs”


Original policy entitled “Charging of Administrative or Clerical Salaries and General Expenses to Federal Sponsored Projects and Programs"


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