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Appendix: Nonpayroll Expenses

What to Know
Allowable Nonpayroll Expenses

Important information about non-payroll expenses. "Benefiting activities" include Instruction, Research, and Departmental Administration.

  • Advertising, Allowable (Account Codes - 001220, 001223, 001230, and U0123_)
    • This cost is charged directly to a benefiting activity if the purpose of the cost is one of the folllowing:
      • Recruitment of personnel
      • Procurement of goods and services
      • Disposal of scrap or surplus materials
      • Other specific purposes necessary to meet the requirements of a sponsored award agreement.
  • Equipment, Inventorial
    • Equipment may be purchased with federal funds only if it is necessary for the completion of the project.
    • Other alternatives, such as leasing, should be evaluated before making a purchase.
  • Lab Supplies
    • Lab supplies are charged to the benefiting activity.
  • Leases & Rentals
    • Lease costs are charged to either a sponsored award if the terms explicitly allow it, or to another benefiting activity.
  • Memberships/Subscriptions-Allowable (Account Codes - 001200 and U0120_)
    • A membership in a technical or professional organization is treated as an indirect cost.
    • A subscription to a professional or technical periodical is charged to the benefiting activity.
    • A subscription to a periodical may be charged to federally sponsored award if it is not reasonably available to the faculty member and it benefits the specific project.
  • Meetings & Conferences, Allowable (Account Codes - 001270)
    • These costs are charged directly to a sponsored award if the primary purpose of the meeting is to disseminate technical or project-related information.
    • Costs not directly charged to a sponsored award are charged to the benefiting activity.
    • Light refreshments are allowable costs if they are permitted by the funding source and the meeting or conference is business-related.
    • Specific restrictions apply to certain meeting-related costs, such as airplane travel and the purchase of alcoholic beverages.
  • Office Supplies
    • Office supplies are usually treated as a facilities and administrative (indirect) cost. However, an extensive amount of office supplies significantly greater than the routine level are charged to the benefiting activity.
  • Photocopying and Reproduction
    • Routine copying and reproduction costs are treated as indirect costs.
    • The cost of an extraordinary volume of copying are directly charged to a sponsored award or to another benefiting activity.
      • Example: reproduction of a publication or other project exclusive material
  • Postage and Mail
    • Ordinary and routine mail delivery and postage costs are treated as indirect costs.
    • The cost of an extraordinary amount of postage, such as for a mass mailing, may be directly charged to the fund source supporting the specific project
      • The sponsored award's organization code is charged for mailings associated with a contract/grant.
      • The departmental organization code is charged for departmental mailings.
    • Overnight delivery costs are directly charged to a sponsored project or other benefiting activity
  • Repairs & Maintenance
    • The following repair and maintenance costs are treated as an indirect cost.
      • Core service repair and maintenance costs for state-supported, non-leased UCSC building space.
      • Services provided to leased space maintained by Physical Plant using state funding.
      • Services provided to equipment installed as part of a State-funded capital project or which form an integral part of a central building system.
    • The following repair and maintenance costs are charged to the benefiting activity:
      • Specialized services that are provided by Physical Plant maintenance services.
      • Services provided to leased space that is not state-supported.
      • Services to all other equipment, whether fixed or moveable.
  • Scholarships and Fellowships
    • These costs are charged directly to a sponsored award under the following conditions:
      • The purpose is to provide training.
      • It is explicitly allowed by the sponsoring agency.
  • Telephones
    • Basic telephone equipment and line charges, and local telephone services are usually treated as an indirect cost.
    • Long distance and fax charges are charged to a sponsored award or other benefiting activity.
  • Travel, Allowable - In-State and Out-of State
    • Travel costs for recruiting, disseminating information at a conference, or other allowable activities are charged to the benefiting activity.
    • Travel costs associated with recruitment or other instructional activities are directly charged to an Instruction FOAPAL
    • Travel costs are directly charged to the sponsored award if allowed under the awarding agency's policies.
  • Utilities
    • Utility costs are normally treated as an indirect cost.
    • Utility costs associated with a lease agreement are charged to the benefiting activity.
Unallowable Nonpayroll Expenses

The following types of expenses usually cannot be charged directly to a federally-sponsored award, except as noted:

  • Advertising (Account Codes - 001220, 001223, 001230, and U0123 _)
    • Exception: This cost may be charged directly to a benefiting activity if it is incurred for one of the folllowing purposes:
      • Recruitment of personnel
      • Procurement of goods and services
      • Disposal of scrap or surplus materials
      • Required to comply with sponsored award agreement terms.
  • Fines and penalties (Account Code - 009430)
    • Costs resulting from violations of, or failure to comply with, federal, state, and local laws and regulations, including University regulations, are unallowable.
    • Exception: Incurred as a result of complying with specific terms of the sponsored award agreement.
  • Donations and contributions (Account Code - 001280 and U0128_)
    • Donations or contributions made to any organization or activity are unallowable.
  • Unallowable memberships (Account Code - 001210 and U0121_)
    • Membership costs for any civic or community organization or club (country, social, or dining) are unallowable.
  • Unallowable advertising (Account Code - 001240)
    • Costs associated with events related to instruction or other institutional activities including displays, demonstrations and exhibits are unallowable.
    • These costs must be direct charged to an Instructional fund/organization code.
  • Social activities and entertainment (Account Code - 001250 and U0125_)
    • Costs incurred for alcoholic beverages, amusement, social activities, entertainment (e.g., tickets to shows or sporting events), and any related items, such as meals, lodging, rentals, transportation, and gratuities are unallowable.
    • Entertainment costs associated with such items as flowers, party balloons, or other sensitive items should be charged to an entertainment account code specifically set up to account for such expenses.
  • Legal proceedings (Account Code - 001340)
    • Costs incurred in connection with any criminal, civil or administrative proceeding are unallowable.
    • Exception: Incurred as a result of complying with specific terms of the sponsored award agreement or with the specific written direction of an authorized official of the sponsoring agency.
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