Costs are either allowable or unallowable. Find out more about each type below.

Allowable costs: Generally, the same rules that pertain to the allowability of costs charged to a sponsored project apply to those costs that are used to meet the cost-sharing commitment. The principal investigator (PI) must determine costs used for sharing.

Costs to meet the cost-sharing commitment can take the form of an expense, which may include:

• An individual's salaries and benefits commitment above five percent.
• Lab supplies and other allowable expenses.
• Facilities and Administrative (F&A) costs associated with the cost shared direct costs.

The department chair or director providing the resource must approve use of the expenditure transactions posted to the operating ledger. Costs can only be used once.

Note: If charging costs directly to the project would have generated F&A, the total cost-sharing commitment should include the associated F&A costs, calculated at the applicable negotiated F&A rate.

Costs can also be the commitment of other assets or resources for which cost may or may not be reflected on the University's current financial ledger as an expense, such as equipment depreciation costs.

Some non-expenditure and externally donated resources may possibly be used for cost sharing under very limited circumstances. Use requires the approval of the vice chancellor, Resource Management and Planning.

For more information, see the UCOP Contract and Grant Manual.

Sources of allowable costs: Costs allowable as a University contribution to direct costs may come from the following non-federal sources:

• Departmental research funds
• Gift or endowment funds
• University-paid sabbatical leave salaries
• Salaries and benefits of faculty and other University-paid staff members directly engaged in the project
• Applicable F&A costs

Unallowable costs: Costs considered unallowable, under applicable cost principles or sponsor guidelines, should not be used to meet your cost-sharing commitment without agency approval. Examples of such costs include:

• Maintenance and operation of physical plant
• General purpose equipment, buildings, land, and their improvements, unless approved by the agency
• General administration
• Libraries
• Departmental and research administration
• Student services

Departments should consider the risks of audit disallowance in their decision. Ask yourself, "Could I pay for this expenditure with the federal project funding?" If the answer is no, you probably cannot use the cost as cost sharing without agency approval.

Other costs that are not allowable include:

• Expenditures previously cost shared
• Salary in excess of a salary cap. If a sponsor imposes a cap on the level of salary eligible for reimbursement as a direct project cost, the amount of salary in excess of the cap is not allowable for cost sharing.
• Income earned under the award. Such income may not count as cost sharing unless expressly authorized by the sponsoring agency.

If you have questions, e-mail the OPAFS award analyst.