As governed by OMB Circular A-21, the total cost of a sponsored agreement is comprised of the allowable direct costs incident to its performance, plus the allocable portion of the allowable indirect costs (Facilities and Administration costs) of the institution.

Direct Costs

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. In general, expenses are chargeable as direct costs to sponsored awards only if they are:

  • Reasonable - A prudent person would have purchased this item and paid this price. 
  • Allocable - Expenses can be allocated to the government activity based on benefit derived, cause and effect, or other equitable relationship. 
  • Consistently Treated - Like expenses must be treated the same in similar circumstances. 
  • Allowable - Allowable or not unallowable as specified by sponsor regulations (A-21, Section J)

Examples of direct costs:

  • Salaries and related benefits of faculty, research associates, graduate students and technical personnel 
  • Laboratory supplies (e.g. chemicals) 
  • Telephone toll charges 
  • Animals and animal care costs 
  • Travel required for the project

Indirect Costs

Indirect (or Facilities and Administration) costs are those that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.

"Facilities" includes depreciation and use allowances, interest on debt, equipment and capital improvements, operation and maintenance expenses, and library expenses.

"Administration" includes general administration and general expenses, departmental administration, sponsored projects administration, student administration and services, and all other types of expenditures not listed specifically under one of the subcategories of "Facilities".

Examples of indirect costs:

  • Salaries of administrative and clerical staff 
  • Office supplies
  • Postage and photocopying
  • Local telephone costs 
  • Memberships and subscriptions


Since computers and electronic devices (including but not limited to cell phones, iPads, GPS, software, and other related applications) are generally used for many different activities (such as instruction, research, administration, email, personal use), they usually are not considered direct costs to a federally funded project. Under federal regulations, they should normally be treated as Facilities and Administrative costs and should be recovered through the indirect cost rate.

To be considered as direct costs, these items must be:

  • Necessary to fulfill the project's scope of work
  • Fully described and justified in the proposed narrative and budget 
  • Specifically identified with and used exclusively on the project
  • Approved by the sponsor 
  • For example, computers that are attached to equipment necessary to analyze data pursuant to a project's scope of work or laptops that are used to conduct tests/interviews with subjects in remote locations can be justified as direct charges on federal awards.

Documentation supporting computer and electronic device purchases must:

  • Describe how the computer or electronic device directly benefits the project
  • Describe how it is unlike a general‐purpose item
  • Be retained for audit purposes

To maintain its allowability, a computer or electronic device must be used primarily (at least 95%) on the award. Incidental use should never cause the computer or electronic device to be removed from the project location. Software, upgrades, computer supplies, etc. purchased on federal awards must be likewise necessary for the conduct of the research and conform to these requirements.

As supplementary guidance, below are policy statements about general purpose equipment excerpted from the National Science Foundation (NSF) and the National Institute of Health (NIH).

NSF Proposal and Award Policies and Procedures Guide

GENERAL PURPOSE EQUIPMENT: Expenditures for general purpose equipment are unallowable unless the equipment is primarily or exclusively used in the actual conduct of the research (AAG, IV, E, 2).

NIH Grants Policy Statement

EQUIPMENT: Office equipment (copiers, laptops, desktop computers, personal handheld computers, fax machines, scanners, etc.) that is used for general office purposes (rather than justified as a specific research purpose) are not allowable as direct costs; they are allowable as an F&A cost (Part II, A, 7.5).

Administration of Policy

The Director of Sponsored Programs shall oversee this policy and review it at least once every two years. Changes to this policy shall be made in accordance with the college's Policy on Policies.

Adopted: 05/03/11