What can and can’t be charged to a sponsored project? What are the rules?

Many research administrators ask this question – how do you determine what can be charged to a sponsored project? Is there a list I can use? The answer is – not exactly!


The first step is to evaluate the standards of the funding agency you are working with. Awarding agencies have varying standards for allowable costs depending on the type of work they fund. The Federal Government has core standards which can vary by agency and then the terms and conditions of an award can limit or expand what is allowable.

The second step is to review the A21 OMB Circular for Allowable Costs in Educational Institutions.This document does a couple of things that research administrators need to learn by heart:

  • Defines Cost Accounting Standards on sponsored projects
    • Reasonable
    • Allocable
    • Allowable (follows the terms of the award and A21 guidelines)
    • Consistent
  • Lists Section J
    • Things that are never, ever, ever allowed to be charged to the government!

Exceptional Circumstances may permit you to charge an item as a direct cost where it would normally be considered an indirect cost (and therefore unallowable as a direct charge).  Sufficient documentation would be needed to justify the charge in this case. Examples would be computers and data storage for a data coordinating and monitoring site for a national clinical trial, or administrative support for a program project grant.


When budgeting for clinical trials, IRB fees are not allowable on Federal awards but are permitted as a charge to industry sponsors.

The process for determining allowable costs on clinical trials is first defined by the medical professionals that develop the study protocol. They determine the usual care the participants would normally receive under any circumstance that would be billed to insurance; and the aspects of the study that will be covered under the trial. This normally entails the costs of the study personnel time (never to the degree that they actually work) and the study intervention.

The cost principles at work here are to allocate costs otherwise covered for usual medical care to insurance, and study care costs to the trial. It is extremely important to ensure that usual medical care costs that would be billed to insurance are never charged to the study, especially Medicare costs. In addition, when some medical personnel work on the study, especially some types of residents and fellows, if they are paid to work on the study and paid to see patients in the clinic, it’s important to ensure that this time is carefully tracked by effort reporting.

When a trial is funded by the Federal government, it can take on a lot of the qualities of a grant, yet operate like a clinical trial, under both sets of rules.

Other general considerations:

  1. If a cost is not allowed on a particular federal award, you can’t charge another federal award for it.
  2. An agency can state that certain allowable costs can not be reimbursed on an award.
  3. Any incurred costs on an award that are not recovered can be considered cost sharing.

These are general guidelines – if there’s any hard and fast rule out there, it’s that there will be an award given with an exception to these rules! Read the terms and conditions and talk to the program officer if there are any questions about the award that your principal investigator has received.

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