Sponsored Project Costs: Different Purposes and Circumstances

Find out when a typically indirect cost for a sponsored project can be treated as a direct cost.

Costs that are normally considered indirect may be treated as direct costs if the purposes and circumstances for which these costs are incurred are different, and they meet all of the following conditions:

• The cost is extraordinary and required to be incurred by the project scope
• The cost can be specifically identified to the project
• The cost is explicitly budgeted in the award

When an agency permits rebudgeting for these items and the cost meets the first two criteria, the third criterion is not required.

Note: Inadequate general funding to pay for administrative support is not considered to be a different purpose and circumstance.

Typical example

A Typical example of a different purpose and circumstance is when a particular project requires specific and identifiable support that is over and above the level of support provided and charged indirectly to all activities. These incremental costs are considered direct because they are not incurred for the same purpose as the common costs.

Situations demonstrating different circumstances and purposes

These situations result in direct charging of costs that might otherwise be considered indirect. In many cases, the focus or intent of these projects budgets for and/or specifies the need for these types of costs:

• Administrative services for geographically inaccessible departments. Examples: Business support, telephone equipment, installation costs, and other service costs
• Computer access or specific upgrades beyond those normally provided to campus units
• Projects that involve extraordinary special requirements for security, facilities, materials, and supplies and other direct costs that are specifically identified with the project. Examples: Hazardous material removal, secured facilities, control of sensitive research data, telecommunication equipment charges, and equipment maintenance agreements for special purpose equipment.
• Research units with federally negotiated unique indirect cost rates and direct costing alternatives such as the Nimitz Marine Facility, Marine Physical Laboratory, and the General Clinical Research Center.
• Supplies and expense for activities that support an integral function of the project, which are inventoried and controlled for audit purposes
• Supplies for clinical activities and patient care, where the focus of the project is on such activity
• Paper, folders, and page charges for producing manuals, conference materials, human subject files, manuscripts, survey instruments, scientific data when such activity is a primary objective of the project
• Supplies for participants in an externally funded conference or seminar hosted by the campus. Example: Conference grants
• Materials for recording extensive patient (human subjects) data
• Materials in support of extensive outreach and educational activities, such as those needed by the CREATE project
• Postage, messenger, mail stop charges required for mass mailing or survey collection, patient follow-up letters, or mailing scientific materials
• Cellular phones for projects requiring round-the-clock activity monitoring
• Costs related to sponsoring agency requirements that vary from normal UCSD costing practices

Supplies and other non-salary costs

Supplies and other non-salary costs related to major projects as described in Fiscal Compliance: Examples of Major Projects may qualify as a direct expense, if these expenditures meet the requirements noted above.