Office of Sponsored Projects:
Post Award – Award Management 

Cost Allocations

Principal investigators (PIs) often have multiple concurrent funded projects. Costs must be charged to one or more projects in reasonable proportion to the benefit provided to each project. Allocation is the process of assigning a cost, or a group of costs, to one or more projects, and for a federal proposal allocation best practices are governed by the principles contained in the 2 CFR Part 200 (Uniform Guidance).

If an expense solely benefits one project, it should be charged entirely to that project. However, if a cost benefits two or more projects or activities, a split allocation is appropriate and allowable. Be sure to document the basis for the split allocation method that you choose at the time of the cost being incurred. Such a split must also be approved in advance by the Principal Investigator (PI) of the awards to which the costs are allocated. When it is not possible to allocate costs to the benefiting sponsored awards at the time when the goods or services are purchased, costs must be recorded in a non-sponsored account, instead of being charged to a specific grant.

When costs are initially recorded in a non-sponsored account, the eventual distribution of these costs to a sponsored award is a cost transfer that must comply with the University’s cost transfer procedure.

Proportional Benefit: If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. An example of a proportional benefit allocation may be a computing device that is purchased specifically for two projects. The computing device will be used 40% for Project A and 60% for Project B. The cost of the computing device would be charged to the projects based on the proportionate benefit to each project. Therefore, 40% of the cost is allocated and directly charged to Project A, and 60% of the cost is allocated and directly charged to Project B.

Reasonable Basis: If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved … the costs may be allocated or transferred to benefited projects on any reasonable basis.

Costs may not be allocated based on:

  1. Amount of available funds on a given award;
  2. Budgetary convenience (to accommodate an award that is either over or under budget, budget is ending soon, etc.);
  3. Avoidance of restrictions imposed by regulations or terms of a given award;
  4. Offset (costs charged to budget A one-time and budget B the next time).