What are Allowable costs?

Allowable costs are those costs subject to reimbursement if they are (a) reasonable (a prudent business person would have purchased this item and paid this price), (b) allocable (assignable), and (c) consistently treated.  Unallowable costs are those that are not reasonably and directly related to the project and those deemed unallowable by the sponsor.  Therefore they are not eligible for reimbursement.

"Allowable" applies also to activities (something you do) as well as costs (something you buy; a line item).  See OMB A-21: C-8 & J. 

Generally it is not the type of cost that determines allowability.  It is the purpose and circumstance of the expenditure.  Many categories of costs are allowable as a direct or indirect (F&A), e.g., salaries, travel, materials, etc.

Some examples of unallowable costs are found in OMB A-21: C-8 & J.  They are alcoholic beverages, entertainment (TRIO is the exception with an agenda and substantiation of a business purpose), fines and penalties, promotional materials, certain recruitment costs, organized fund raising, lobbying, commencement and convocation, general public relations and alumni activities, student activities, managing investments solely to enhance income, and prosecuting claims against the federal government and more.  (OMB A-21: C-8a-d; & J)

| Back |