§ 200.413 - Direct costs.

§ 200.413 Direct costs.

(a) General. Direct costs are those costs that can be identified specifically with a particular final cost objective, such as a Federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs. See also § 200.405.

(b) Application to Federal awards. Identification with the Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards. Typical costs The association of costs with a Federal award determines whether costs are direct or indirect. Costs charged directly to a Federal award are the compensation of employees who work on that award, their related fringe benefit costs, the costs of materials and other items of expense incurred for the Federal award. If directly related to a specific award, certain costs typically incurred specifically for that Federal award (including, for example, supplies needed to achieve the award's objectives and the proportion of employee compensation and fringe benefits expended in relation to that specific award). Costs that otherwise would be treated as indirect costs may also be considered direct costs . Examples include if they are directly related to a specific award (including, for example, extraordinary utility consumption, the cost of materials supplied from stock or services rendered by specialized facilities, cybersecurity, integrated data systems, asset management systems, performance management costs, program evaluation costs, or other institutional service operations).

(c) The salaries of administrative Administrative and clerical staff salaries. Administrative and clerical staff salaries should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if they meet all of the following conditions are met:

(1) Administrative The administrative or clerical services are integral to a project or activityFederal award;

(2) Individuals involved can be specifically identified with the project or activity;

(3) Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency

a Federal award; and

(

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3) The costs are not also recovered as indirect costs.

(d) Minor items. Any A direct cost of a minor amount may be treated as an indirect (F&A) cost, for reasons of practicality where such accounting treatment for that item of cost is consistently applied to , provided that it is treated consistently for all Federal and non-Federal cost objectivespurposes.

(e) Treatment of unallowable costs in determining indirect cost rates. The costs of certain activities are not allowable as charges to Federal awards. However, even Even though these costs are unallowable for purposes of computing charges to Federal awards, they nonetheless must be treated as direct costs for purposes of determining indirect (F&A) cost rates and be allocated their equitable share of the non-Federal entityrecipient's or subrecipient's indirect costs if they represent activities which:

(1) Include the salaries of personnel,;

(2) Occupy space, ; and

(3) Benefit from the non-Federal entityrecipient's indirect (F&A) or subrecipient's indirect costs.

(f) Treatment of certain costs for nonprofit organizations. For nonprofit organizations, the costs of activities performed by the non-Federal entity nonprofit organization primarily as a service to members, clients, or the general public when significant and necessary to the non-Federal entityorganization's mission must be treated as direct costs whether or not allowable, and be allocated an equitable share of indirect (F&A) costs. Some examples of these types of activities include:

(1) Maintenance of membership rolls, subscriptions, publications, and related functions. See also § 200.454.

(2) Providing services and information to members, legislative or administrative bodiesthe government, or the public. See also §§ 200.454 and 200.450.

(3) Promotion, lobbying, and other forms of public relations. See also §§ 200.421 and 200.450.

(4) Conferences (except those held to conduct the general administration of the non-Federal entityrecipient or subrecipient). See also § 200.432.

(5) Maintenance, protection, and investment of special funds not used in operation of the non-Federal entitythe recipient's or subrecipient's operation. See also § 200.442.

(6) Administration of group benefits on behalf of members or clients, including life and hospital insurance, annuity or retirement plans, and financial aid. See also § 200.431.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13, 2020]