Allowable Costs for Sponsored Research and Programs Policy

This Allowable Costs for Sponsored Research and Programs Policy (“Policy”) pertains to all Principal Investigators/Project Directors, faculty, administrative and support staff at the University who are involved in the administration and conduct of Sponsored Awards. All capitalized terms contained in the Policy are defined in Section IV below.  

This Policy is intended to ensure responsible stewardship of sponsored funding at Arcadia University. The Federal government’s Office of Management and Budget’s (OMB) Guidance for Grants and Agreements at Title 2 of the Code of Federal Regulations, Part 200, Subpart E, entitled “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Cost Principals”),” sets forth principles to be followed by federal funding agencies for the uniform administration of grants, cooperative agreements, and other funding instruments. The University, as a recipient of Federal grants and funds, agrees to efficiently and effectively administer awards through sound management practices that are consistent with the provisions of the Sponsored Award and its terms and conditions. To ensure continued Federal funding for Sponsored Projects and activities, the University must adhere to the requirements set forth in the Cost Principles and all other requirements set forth in Title 2.  The Cost Principles establish the allowability of certain costs for reimbursement from the Federal government related to certain Federal programs and Sponsored Projects at the University and prohibit reimbursement for certain unallowable costs from Federally funded sources.

Failure to comply with this Policy and adhere to the Cost Principles could result in harm to the University’s reputation, disallowance of otherwise Allowable Costs on Sponsored Projects, or jeopardize current and future funding. 

Costs incurred for a Sponsored Project will ordinarily be considered Allowable for reimbursement from the Sponsored Award if they meet the general criteria presented in the definition of Allowable Costs as set forth in Section IV.  In brief, Allowable Costs on Sponsored Awards are necessary for the efficient conduct of the award, reasonable in cost, Allocable to the award in proportion to the benefit received, and consistently treated regardless of the source of support. These attributes, and others as may be required for the specific cost item, should be documented in the Sponsored Award’s financial records to provide evidence of this responsible stewardship. From time to time, ordinarily Allowable Costs may be disallowed (unallowable) on a Sponsored Award if (i) otherwise prohibited by statute, (ii) prohibited by the award’s terms and conditions, or (iii) Sponsor-required prior-approval was not obtained before incurring the cost.

Arcadia may identify a cost as a Disallowed Cost for reimbursement on a Sponsored Award if upon review its acquisition would be inconsistent with University policies or practices or based on consideration of the facts and circumstances and the Sponsored Award.

These definitions are taken from the Code of Federal Regulations; the University will also use these definitions in reference to funding from non-Federal Sponsors. 

Allowable costs means those that:

Allocable: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: 

Application/Proposal: A request for financial support of a project or activity authorized by the University and submitted to a Sponsor in accordance with the Sponsor’s instructions. The project or activity is typically well-aligned with both the University’s mission and the Sponsor’s interests and priority areas and upon completion is expected to result in outcomes or findings of broad benefit to society. If selected for funding, an Application/Proposal ordinarily results in a grant, Subaward, or other similar legal instrument to the University.

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, notwithstanding the prohibition below, the costs may be allocated or transferred to benefited projects on any reasonable documented basis. Where the purchase of equipment or other capital asset is specifically authorized under a Federal award, the costs are assignable to the Federal award regardless of the use that may be made of the equipment or other capital asset involved when no longer needed for the purpose for which it was originally required. 2 C.F.R. § 200.310-316; 2 C.F.R. § 200.439.

Caveats to direct cost allocation principles: Any cost Allocable to a particular Federal award under the Cost Principles may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons. However, this prohibition would not preclude the non-federal entity from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards.

If the contract is subject to the Cost Accounting Standards (CAS), costs must be allocated to the contract pursuant to the CAS. To the extent that CAS is applicable, the allocation of costs in accordance with CAS takes precedence over the allocation provisions in this part.

Disallowed Costs means those charges to a Federal award that the Federal awarding agency or Pass-Through Entity determines to be unallowable, in accordance with the applicable Federal statutes, regulations, or the terms and conditions of the Federal award.

Federal award has the meaning, depending on the context, in either paragraph (1) or (2) of this definition:

(1)(i) The Federal financial assistance that a recipient receives directly from a Federal awarding agency or indirectly from a pass-through entity, as described in § 200.101; or

(ii) The cost-reimbursement contract under the Federal Acquisition Regulations that a non-Federal entity receives directly from a Federal awarding agency or indirectly from a pass-through entity, as described in § 200.101.

(2) The instrument setting forth the terms and conditions. The instrument is the grant agreement, cooperative agreement, other agreement for assistance covered in paragraph (2) of the definition of Federal financial assistance in this section, or the cost-reimbursement contract awarded under the Federal Acquisition Regulations.

Pass-through entity (PTE): a non-Federal entity that provides a Subaward to a Subrecipient to carry out part of a Federal program. 2 C.F.R. § 200.101.

Reasonable. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. In determining reasonableness of a given cost, consideration must be given to: 

Sponsor: the organization or funding agency that funds a Sponsored Project. The Sponsor may be a Federal, state, or local agency; a non-profit organization; a charitable or non-charitable foundation; a professional society; or a for-profit entity such as a corporation or a small business.

Sponsored Award: a formal, written legal agreement executed by the University and the Sponsor for specific work outlined in the Application/Proposal with the reciprocal transfer of something of value. The term includes but is not limited to grants; cooperative agreements; traineeships, scholarships, and fellowships; sponsored service, testing, and training agreements; sub-awards; and contracts, including fixed-price contracts. 

Sponsored Project: the specific activity (e.g., research, instruction, training), deliverable (e.g., service), and associated requirements (e.g., technical and financial progress reports) to be provided or completed as a condition of and supported by the Sponsor’s funding. The Sponsored Project and proposed personnel to be involved are ordinarily described in a University-authorized Application/Proposal submitted to the Sponsor for their consideration of funding. Sponsored Projects ordinarily do not include major construction or renovation activities.

Subaward: an award provided by a PTE to a Subrecipient to carry out part of a Sponsored Award received by the PTE. It does not include payments to a Contractor or payments to an individual that is a beneficiary of a Federal program. A Subaward may be provided through any form of legal agreement, including an agreement that the PTE considers a contract. 2 C.F.R. § 200.101.

Subrecipient: an entity, usually but not limited to non-Federal entities, that receives a Subaward from a PTE to carry out part of a Sponsored Award, but does not include an individual that is a beneficiary of such award. A Subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency.  2 C.F.R. § 200.1.

Characteristics which support the classification of a non-Federal entity as a Subrecipient include when the non-Federal entity:

2 C.F.R. § 200.331. 

This policy is effective on the date that it is signed by the President.

 Signed:  /s/ Ajay Nair, President 

Date:  February 22, 2023