Spending Grant Funds
One of the most important aspects of grant administration is the proper expenditure of funds. It is imperative to abide by sponsor and University guidelines that specify which expenses should be listed as direct costs and which should be reimbursed through indirect cost recovery, and that also specify which expenses are unallowable charges on a given grant.
While Research Portfolio Managers play a key role in day-to-day financial oversight, Principal Investigators (PIs) are ultimately responsible for both the technical and financial management of their awards. PIs and their research administrative staff should all be aware of the cost principles which determine the appropriateness of listing an expense as a direct charge on a sponsored award:
- Allowable - allowable under both the provisions of federal guidance and the terms of a specific award
- Allocable - the expense can be associated with a project with a high degree of accuracy
- Reasonable - the cost reflects what a prudent person would consider ordinary and necessary as a sound business practice at the time the cost was incurred
- Consistent - consistently charged as a direct cost versus an indirect cost
PIs should work closely with their Research Portfolio Managers to ensure all charges comply with sponsor requirements and Harvard policies.
Travel and Entertainment
Travel charged to sponsored awards must comply with the Harvard Travel Policy and any sponsor-specific rules. Federal sponsors may impose more restrictive limits on airfare class, lodging, per diem, or international travel.
Unallowable Costs
In accordance with federal costing principles and sponsor guidelines, certain costs are considered unallowable on sponsored awards. While most allowable expenses fall under direct cost categories—such as personnel, equipment, travel, supplies, publication of results, communications, consultants, and subcontracts—basic administrative and operational costs are generally unallowable as direct charges to federally sponsored awards.
Unallowable costs are expenses that must not be charged, either directly or indirectly, to a sponsored award or a related cost share account.
A cost is considered unallowable if it:
- Does not comply with allowability, allocability, or reasonableness requirements outlined in the OMB Uniform Guidance, Subpart E – Cost Principles.
- Does not comply with the terms and conditions of the sponsored award or Harvard University policy.
- Cannot be associated with a project with a high degree of accuracy.
- Is for a restricted purchase made without proper authorization from the sponsor and/or the University.
- Is not incurred during the approved award period.
- Is not treated consistently with similar expenses for the same purpose and under like circumstances (e.g., recovering indirect costs as direct costs)
Unallowable costs must be identified and excluded from all charges to sponsored projects to ensure compliance with sponsor and institutional requirements.
- Office supplies (e.g., pens, paper, folders)
- Basic software not specific to the project
- Local telephone charges, fax, and equipment line fees
- General clerical or secretarial support
- Personal laptops or desktop computers
- Postage and express mail services
- Hazardous waste disposal
- Proposal preparation activities
- Alumni events and activities
- Commencement or convocation-related expenses
- Fundraising activities or campaigns
- Lobbying (at the federal, state, or local level)
- Student events or activities
- Bad debt or uncollected receivables
- Marketing or promotional expenses
- Fines, penalties, or legal settlements
- Sales tax (when not reimbursable)
- Goods or services for personal use
- Alcoholic beverages
- Flowers or decorative items
- Catering (unless specifically allowed and documented)
- Gifts of any kind
- Meals without a documented business purpose and list of attendees