Unallowable Costs

Click here to access the Unallowable Costs section of the Post-Award Sponsored Projects Guide.

Unallowable Costs

An unallowable cost is one that is not permitted under the terms and conditions of the sponsored agreement or under the rules and regulations of the state or the University. The following costs have been specifically identified as Unallowable on Federal sponsored awards. The list below is not all inclusive. Individual agency and program requirements may list other “unallowable” costs.

  1. Advertising for general promotion of the University, including printed materials, promotional items, memorabilia, gifts and souvenirs
  2. Alcoholic beverages
  3. Alumni activities
  4. Bad debt write-offs
  5. Commencement and convocation costs
  6. Charitable contributions and donations
  7. Cost Overruns – Any costs allocable to a particular sponsored agreement may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience
  8. Costs on Industry, Foreign Government or Other Non-Government Grants/Contracts; Any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to Federally-sponsored agreements
  9. Entertainment
  10. Fines and penalties
  11. Faculty and exempt staff salary in excess of base rates paid by the institution – see full text of 2 CFR 200 §200.430 Compensation – personal services.


However, individual agencies and programs have authority to approve certain costs. For example, it may be appropriate to budget “alcoholic beverages” as a direct cost of a sponsored project to study effects of alcohol on reflex movement. To budget or charge such a cost, one must fully disclose such items in the budget narrative or have written approval by the sponsoring agency grant/contract management officer (if approval was not obtained in the original proposal and award document).

Unallowable costs may not be charged to a sponsored award as either a direct charge or through F&A. Separate account codes have been created in PeopleSoft to track unallowable items. A complete list of these account codes can be found in the CC_Account tree.