A significant majority of UNHs sponsored funding comes from the federal government. As steward of the taxpayer’s money, the government, through the Office of Management and Budget (OMB), has issued principles for determining costs allocable to research and administrative regulations to augment these principles.
The University uses the following federal requirements in establishing its procedures for administering all awards for research and other sponsored agreements:
- OMB Uniform Guidance, Subpart E (Cost Principles)**
- Office of Management & Budget (OMB) A-21: Cost Principles for Educational Institutions
- OMB Circular A-110: Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations
- OMB Circular A-133: Audits of States, Local Governments, and Non-Profit Organizations
- Federal Acquisition Regulations (FAR): Contracting requirements
The provisions of the OMB Circulars and the FAR are applicable to all agencies that award federal funds. UNH has translated these principles into its policies.
UNH and its principal investigators are jointly responsible for providing appropriate and compliant stewardship of sponsored funds and must comply with federal cost principles.
UNH follows four cost principles. The cost must be (1) allowable, (2) allocable, (3) reasonable, and (4) consistent. Though these principles may change depending on the project, they must be used to determine whether the costs are appropriate for a sponsored project.
1. A cost is allowable when:
- When it serves a business purpose, including instruction, research, and public service.
- It is permissible according to UNH policy and federal regulations, regardless of whether it is a sponsored project.
- It is permissible for a sponsored project according to the terms and conditions of the sponsored agreement.
2. A cost is allocable:
- When the cost provides “benefit” to the project
3. A cost is reasonable when:
- A prudent person would purchase the item at that price.
- The cost is necessary for the performance of the activity
- Incurrence of the cost is consistent with established University policies and practices
4. A cost is consistent when:
- Like expenses are treated in the same manner under like circumstances.
- Consistency means that sponsors pay for costs either as a direct charge or as a Facilities and Administrative (F&A) cost, not both directly and indirectly. The University establishes policies that, if followed, ensure consistency.
OMB Uniform Guidance:
In addition to the Cost principals listed above a cost is allowable when:
- The cost cannot be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period.
- The cost is adequately documented.
Both activities and transactions could be considered unallowable due to regulations put in place by the federal government or other sponsor. Unallowable costs may also be identified in the specific terms and conditions of a sponsored project. These can be more specific than those outlined in OMB Uniform Guidance.
For example, if a sponsor specifies that international travel costs cannot be charged to a particular project, then those costs may not be charged to that project, even though general UNH and federal regulations may allow them.
Unallowable activities include:
- Alumni activities
- Organized fundraising
- Commencement and Convocation
- General public relations activities
- Student activities such as intramural activities and student clubs
- Managing investments solely to enhance income
- Prosecuting claims against the federal government
- Defending or prosecuting certain criminal, civil, or administrative proceedings
- Housing and personal living expenses of University officers
Unallowable transactions include:
- Advertising (only certain types are allowable)
- Alcoholic beverages
- Fundraising or lobbying costs
- Fines and penalties
- Memorabilia or promotional materials
- Relocation costs if employee resigns within 12 months
- Certain recruitment costs, such as color advertising
- Certain travel costs, such as first-class travel
- Cash donations to other parties, such as donations to other universities
- Interest payments
- Membership in civic, community, and social organizations or in dining and country clubs
- Goods or services for the personal use of employees, including automobiles
- Insurance against defects in UNH’s materials or workmanship
**Please note that Federal Awards (including flow-down awards) issued on or after 12/26/2014 are subject to 2 CFR 200 - Uniform Guidance
PI Essentials: Guidance Document #1
©2012 UNH Sponsored Programs Administration, adapted with permission from Massachusetts Institute of Technology Office of Sponsored Programs