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Sponsored Project Non-Salary Direct and Indirect (F & A) Costs

Find out how to determine if a cost is direct or indirect.

After you determine that a particular non-salary cost is allowable, you must then decide if that cost can be paid directly from sponsored project funds (a direct cost) or from other sources (an indirect cost). See Fiscal Compliance: Step Through the Direct and Indirect Cost Decision. The rules that help determine the proper treatment of a cost pertain to both actual costs and estimates of costs used when preparing a proposal.

OMB Circular A-21

Anyone authorizing the expenditure of federal funds needs to have a working understanding of the underlying cost principles set forth in OMB Circular A-21 (A-21). These principles govern costs that can be charged to the government by educational institutions either directly or indirectly. UCSD generally applies these same cost principles to non-federal funding as well.

A direct cost

  • Meets all the tests for an allowable cost (see Sponsored Project Allowable and Unallowable Costs)
  • Is allocable to the project. The cost can be identified specifically or logically with a particular sponsored project or program or can be directly assigned to such activity relatively easily with a high degree of accuracy; or the cost is incurred solely to advance the work under the sponsored project.
  • Provides a clear and supportable benefit to the project

Examples of direct costs

  • Salaries of scientific and technical staff
  • Laboratory supplies
  • Special purpose equipment
  • Communication costs (project specific)
  • Next Generation Network (NGN) charges
  • Animals, animal care costs
  • Computer costs
  • Travel costs
  • Specialized shop costs, materials, fabricated parts

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 institution.

An indirect ("facilities and administrative," or F&A) cost

  • Is an allowable cost that doesn't provide a direct and identifiable benefit to a particular sponsored project or program
  • Is incurred for common or joint cost objectives
  • Includes costs that would normally be considered direct, but the cost of accounting for the direct charge would exceed the cost itself.

Awarding agencies

Each awarding agency has the right to establish its own terms and conditions for its awards. Specific award terms and conditions may take precedence over the provisions of A-21. However, exceptions to basic costing principles and the usual accounting treatment as defined by UCSD should be brought to the attention of the CAS compliance officer for review and approval.

UCSD policy

It is UCSD policy to charge costs directly to the sponsored projects that benefit from those costs whenever possible. Departments and organizational units often incur certain types of costs for both direct and indirect purposes. Deciding whether a cost is direct or indirect depends on criteria stated on this page and on the purposes and circumstances for which the costs are incurred.

Identification with a particular activity, rather than the nature of the cost, is the determining factor.

For example, even though paper and copying costs are typically administrative in nature and are therefore typically an indirect cost, a project that requires extensive paper and copying costs may be able to direct charge some or all of these extraordinary costs.

When expensed for usual purposes and under normal circumstances, costs listed below are charged as indirect costs (the services and support involved are a part of the normal level of support funded by UCSD and provided to all UCSD supported activities). Such costs indirectly benefit sponsored research.

  • Building and grounds repair, maintenance and management, design and construction, trash removal, general purpose equipment repair, security, air conditioning, utilities, janitorial services
  • Depreciation and use allowances on buildings, capital improvements, and equipment
  • Interest expense on buildings, capital improvements, and equipment
  • Plant facilities operations and maintenance
  • Library costs
  • Sponsored project administration
  • Student administration and services
  • General office furnishings: Copiers, faxes, desks, chairs, shelving, cabinets
  • Dues and memberships: Business, professional, and technical organizations
  • Books and subscriptions: Business, professional and technical periodicals, general interest books
  • Advertising: General help wanted, recruitment
  • Basic communication costs (non-project specific): Toll calls, telegrams, faxes, postage, messenger services, electronic/ computer transmittal services, campus mail services, line charges, equipment, installation, cell phones
  • General and departmental administrative office supplies: Paper, pencils, paper clips, post notes, desk supplies, calculators, file folders
  • General purpose publication/ document reproduction (low volume and non-project specific): Printing, promotion materials, page charges, routine departmental copying (ledgers, invoices, proposals, reports, correspondence)
  • Computer support: General purpose equipment and related services, supplies (cables, cords, disks, toner)

Normal level of support

A normal level of support usually indicates an indirect cost. For instance, normally scheduled trash pickup is an indirect cost, whereas specially required waste removal services is a direct cost. Amounts in excess of the normal level of support may be a direct cost if identified as a cost that meets the criteria under a different purpose or circumstance. See Sponsored Project Costs: Different Purposes and Circumstances.

Charging administrative and clerical salary costs as a direct expense

In major projects, administrative or clerical staff salaries may sometimes be considered direct costs instead of indirect costs. See Charging Administrative and Clerical Costs as Direct for more information and guidance on this issue.