Grants Accounting

Types of grant costs

Grant budgets are built on two types of costs:
Direct and indirect.

Direct costs are those expenses that can be specifically identified
to the grant. If not for the existence of the grant, these expenses
would not be incurred. In addition, direct costs must be allowable,
as described by federal cost principles, and reasonable, or consistent
with the amount a prudent person would spend. Some examples of
direct costs are:
  • Project Salaries
  • Student Stipends
  • Materials and Supplies
  • Travel
  • Printing & Publications
  • Equipment 
Indirect Costs are expenses that cannot be specifically attributed
to a grant. Instead these costs benefit multiple programming
objectives. In order to capture the amount of indirect costs that
should be allocated to a grant, the university has calculated an
indirect cost rate, approved by the federal government, which
currently is 40.5% of salaries and fringes.

The indirect costs included in this rate are made up of two
broad categories: Facilities and Administration. Facilities costs
  • Custodial and Maintenance
  • Utilities
  • Grounds Services
  • Parking Operations, less parking fines & fees
  • Property and Liability Insurance
  • Facility Planning and Management
  • Engineering and Energy Management
  • Depreciation 
Administration costs include all the expenses incurred in
providing the following university services:
  • Central Administration
  • Business & Finance, including financial audit
  • Human Resources
  • Legal Services
  • Affirmative Action
  • Library Operations
  • Administrative Computer Operations
  • Grants and Research Administration
  • Department Administration, as defined by the federal
    government to be 20% of Dean and Dean’s assistant
  • Mail Services
  • Public Safety
  • University Communications
The federal government requires that direct and indirect costs
be treated consistently across the organization. Otherwise, the
possibility exists for the grantor to be overcharged if costs
included in the indirect rate are also charged directly to the grant.

Therefore, when preparing a grant budget, only those costs that
can be specifically identifiable to the grant should be included as
direct costs. Since expenses incurred for facility and
administration services are built-into the grant budget with
the application of the indirect cost rate, none of these types
of expenses can be included as a direct cost
Any questions regarding classifications of costs should be directed
to the Grants Accounting Office.

Page last modified March 31, 2010