Direct Costs

1. General: Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the University.

2. Application to sponsored agreements: Identification with the sponsored work rather than the nature of the goods and services involved is the determining factor in distinguishing direct from F&A costs of sponsored agreements. Typical costs charged directly to a sponsored agreement are the compensation of employees for performance of work under the sponsored agreement, the costs of materials consumed or expended in the performance of the work; and other items of expense incurred for the sponsored agreement. The cost of materials supplied from stock or services rendered by specialized facilities or other institutional service operations may be included as direct costs of sponsored agreements, provided such items are consistently treated, in like circumstances, by the University as direct rather than F&A costs, and are charged under a recognized method of computing actual costs, and conform to generally accepted cost accounting practices consistently followed by the University.

Indirect (F&A) Costs

F&A costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity or any other institutional activity.

Provisions for Selected Items of Cost

Below is a list of costs whose allowability or unallowability is worthy of special note. Absence from this list should not be construed to mean that the cost would be an allowable charge to an award.

Administrative and Clerical Costs

Federal regulations generally prohibit charging administrative and clerical costs to federal sponsored awards. Direct charging of these costs may however be appropriate where a major project or activity explicitly budgets for administrative or clerical salaries and individuals involved can be specifically identified with the project or activity. “Major project” is defined as a project that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by a academic departments. Examples of major projects include:

1. 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.

2. 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).

3. Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars.

4. Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).

5. Projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects, and other research fields sites that are remote from campus.

6. Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communications.

Data Networking Costs

These costs are generally unallowable. Rare exception might be a data networking cost, such as a leased line, specifically incurred for an individual sponsored award.

Office Supplies and Postage

Normally office supplies and postage are accounted for as indirect expense. However, charging of office supplies and postage expense as a direct expense may occur when those expenses are greater than the routine level of support provided by the academic department and when the expense can be specifically identified with a project. Examples of items that could be charged directly include items such as lab notebooks, diskettes, transparencies, plotter pens, printer paper for research data and reports, pens, tablets, staples, file folders, binders, and postage costs for correspondence with the sponsor and project participants and any extraordinary postage expense generated by project needs such as a mail survey.

Recruitment Costs

Recruitment costs are allowable; however, entertainment and other unallowable costs associated with a recruitment, are not. Allowable recruitment expenses should be allocated to sponsored awards and other activities in proportion to how the recruit’s salary would be allocated.


Telecommunication expenses (charges for monthly communication services, equipment rental, local calling, and voice mail) may be charged as direct costs where such expenses are completely dedicated to a sponsored project or set of interrelated sponsored projects. In addition, long distance charges may be charged as direct costs.


Foreign Flag Carriers: Foreign flag carrier charges to federal sponsored awards are restricted by the Fly American Act and Open Skies Agreements. To determine if a foreign flag carrier expense is an allowable charge, reference theWeb site that Payment and Procurement Services maintains on this subject.

Vacation, Personal Holiday and Other Compensated Absences

Vacation and other compensated absence expenses are charged to sponsored awards on a "cash basis." The accounting rules are as follows:

a. Individual takes compensated absence time: Salary is distributed as the salary expense was distributed at the time the compensated absence began.

b. Individual is terminated and is entitled to a cash payment equal to their vacation "accrual": The payment is distributed as the salary was distributed at the time the person terminated.

c. Individual transfers from one department to another department: Vacation and personal holiday accruals are transferred by charging the old department and crediting the new department. Because the entry is an accrual entry, none of the accounts involved in the   entry can be sponsored award accounts.

Sponsored award compensated absence expense may be moved to a non-sponsored award funding source, but not to a sponsored award account.