Frequently Asked Questions (FAQs)
Working with sponsored projects (i.e., external funding via grants and contracts) can be complicated. To facilitate compliance with all applicable federal, state and institutional policies and guidelines, and an awards terms and conditions this page offers information on the following frequently asked questions. Please feel free to contact the Lewis-Clark State College (LC State) Office of Grants and Contracts (OGC) with any questions you may have regarding the pre- and post-award processes associated with external funding via grants or contracts.
Any full-time LC State employee can submit a proposal request to the OGC. Each proposal, however, must be approved by the appropriate institutional authorities prior to formal submission of the proposal to a sponsoring agency.
Please note that the President and/or the Vice President for Finance & Administration are the only individuals who can sign a funding agreement or contract on behalf of the College.
Grants and contracts are typically any externally funded activity that has a defined scope of work or set of objectives which provides a basis for sponsor/donor expectations (e.g., Progress reports, budget reports, and general monitoring of the funding, etc.).
A gift is a donation from an individual, corporation, or non-profit organization without any expectation or receipt of direct economic benefit or tangible compensation (i.e. goods or services) from the recipient. Gifts are accepted and processed through College Advancement.
A grant is a transfer of anything of value, to an award recipient, to carry out a public purpose of support or stimulation, instead of acquiring (by purchase, lease, or barter) property or services for direct benefit, and substantial involvement is not expected between the awarding agency and the recipient when carrying out the activity contemplated in the grant agreement.
Contracts are agreements between local, state or federal government agencies and private businesses, non-profit organizations or other entities. Contracts require specified services and often incorporate specific performance standards that contractors must meet.
Cooperative agreements (i.e., Memorandum of Agreement [MOA] or Memorandum of Understanding [MOU]) include a greater amount of active involvement by the funding party than a grant. Essentially, a cooperative agreement is a form of assistance relationship where the awarding agency is substantially involved during the performance of the award.
The total cost of a sponsored project includes direct costs and facilities and administration (F&A) costs, or indirect costs. The direct costs are those that can be specifically and easily identified with a particular project or activity and are allowable under the sponsoring organizations guidelines. Indirect costs, are defined in CFR 2 Part §200.420 as costs that are "incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.”
Indirect costs include operating and maintenance costs (e.g., utility costs, security costs, custodial costs, etc.), and common administrative functions (e.g., student administration and services expenses, library expenses, payroll, purchasing, etc.). Most federal agencies and other sponsoring organizations pay the College for indirect costs in addition to the direct costs of a sponsored project.
Indirect costs are not profit; instead they are the real costs of using the College’s facilities and administrative support to conduct and manage externally funded projects. By collecting indirect costs from the sponsor/donor, the College is recovering those expenses. The federal government has established what costs may be charged as direct costs and what costs are considered indirect costs.
The LC State Controller's Office negotiates the Colleges indirect cost rate with the Department of Health and Human Services (DHHS) every five (5) years.
The current LC State Indirect cost rate is 36% of direct costs, excluding:
- Capital outlay/equipment (over $5K)
- Rental cost of off-site facilities
- Any amount over $25,000 on subcontracts
- Federal training grants (e.g. TRIO programs) can only recover indirect at a rate of 8%
If you have any questions about what qualifies for indirect cost please contact the OGC.
Here is how the billing process of indirect costs works: At the point of every transaction or expenditure on a grant account during the course of the year, up to 36% (or whatever rate outlined on the initiating grant contract/agreement and only on those allowable items) is added to that expenditure, billed to the grantor, and stored in a central admin account. During the fall semester of the following fiscal year, those dollars are allocated to those associated with the grant account invoiced from the prior fiscal year. The table below reflects how the model was operating historically and how it has been approved to change.
Historical Allocation Model
- Central Administration: 65%
- Principal Investigator / Program Director (PI/PD): 20%
- PI/PD's Department: 15%
New Allocation Model
- Central Administration: 25%
- PI/PD's Department: 30%
- Office of Grants & Contracts: 40%
- Grants Culture & Undergraduate Research: 5%
The implications of this allocation model are two-fold: 1) Project directors or principle investigators can expect their indirect revenues to be deposited within a department account, and no longer within an institutional account associated with them personally. 2) Five percent (5%) of the combined allocation historically distributed to the project director (referred to as PI in the table above) and their department (sum total 35%), will now be allocated to an account managed by executive leadership to support development of an LC State grants “culture” (e.g., workshops, etc.) and potentially make available application-based funds for future undergraduate research endeavors.
Cost sharing, or matching, occurs when the College, and/or an entity other than the college, contributes resources to a sponsored project beyond the amount funded by the sponsor/donor. The cost share contribution is either an in-kind contribution or a cash contribution. Cost sharing may be mandatory or voluntary. Voluntary cost sharing may be committed or uncommitted.
In-kind contributions are a computed value, where no actual cash is transacted, for a service and/or resource in support of a sponsored project being administered by the College. In-kind contributions may be in the form of equipment, supplies and other expendable property, or goods and services.
Cash contributions occur when an actual cash transaction occurs in support of a sponsored project being administered by the College. A cash contribution to a sponsored project for cost sharing purposes may include:
- Contributing the computed value of effort that personnel employed by the College are expending on the project without reimbursement from the sponsor/donor; and/or
- Contributing monies from a gift, endowment and/or other unrestricted College fund to pay for any of the direct costs associated with a sponsored project (e.g., salaries, fringe benefits, travel, equipment etc.)
Mandatory cost sharing occurs when there is a requirement for cost sharing described in the request for proposal (RFP) or application guidelines. The sponsor/donor may mandate a cost share amount as a percentage of the total award, match ratio, or actual dollars.
Voluntary cost sharing occurs when an applicant contributes a quantifiable amount of resources to a proposed project even though the sponsor/donor does not explicitly require cost sharing. Sponsor’s/donor’s view any voluntary cost sharing offered at the proposal stage as voluntary committed cost sharing. Voluntary committed cost sharing places additional administrative burden upon the researchers and College because any quantified cost sharing offered in a proposal, that is submitted to a sponsor/donor and awarded to the college by that sponsor/donor, becomes auditable and must be documented and reported to the sponsor/donor.
Voluntary uncommitted cost sharing refers to effort and/or resources contributed to a project beyond that which is committed and/or budgeted for in awarded agreement. Voluntary uncommitted cost sharing amounts and documentation do not need to be reported or submitted to the award sponsor/donor.
Waived or reduced F&A costs, or indirect costs, on the sponsored portion of a project may, with prior approval of a sponsor/donor or when explicitly noted in an RFP or awarded budget, be claimed as cost sharing. Also, reduced F&A costs can only be claimed as cost sharing if F&A costs are considered un-reimbursed rather than unallowable costs.
According to CFR 200.306, all contributions, including cash and third party in-kind, shall be accepted as part of the recipient's cost sharing or matching when such contributions meet the following criteria.
- Are verifiable from the recipient's records.
- Are not included as contributions for any other federally-assisted project or program.
- Are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
- Are allowable under the applicable cost principles.
- Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching.
- Are provided for in the approved budget when required by the Federal awarding agency.
- Conform to other provisions of CFR 200, as applicable.
A consequence of cost sharing is a reduction of Colleges federally negotiated F&A rate, which in turn reduces the amount of funds available to the institution for administrative support and unrestricted dollars for program enhancement. Principal investigators (PI’s) or Program Director’s (PD’s) are advised to follow the sponsor’s/donor’s guidelines on cost sharing and to contact the OGC with any questions they may have about cost sharing.
Determining if an expense would be allowable or unallowable is a primary function of a PI or PD when assigning a cost to an award. Federal guidance for what costs are allowable on a sponsored project can be found in Subpart E, Cost Principles of the Uniform Guidance. If an expense is not allowable for an award, do not charge the expense to the award.
Allowable costs are subject to reimbursement if they are:
- consistently treated throughout the college;
- compliant with federal, state, local laws, and any limitations or exclusions set forth in the award’s terms and conditions;
- not used as a cost-share on other projects; and
- necessary for the performance of the award.
A cost is reasonable when the nature and amount of the cost does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.
Allocable means that the cost must benefit the account to which it is charged in proportion to the benefit that it provides. A cost is allocable if:
- it is incurred solely to support work under the sponsored agreement;
- it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through the use of reasonable methods;
- it is necessary for the overall operation of the institution and is deemed assignable in part to sponsored projects. (In other words, if the cost provides a benefit to a project equal to 50 percent of the cost, then only 50 percent should be charged to that project.)
- any cost that is allocable to a federally sponsored agreement may not be shifted to another sponsored agreement to meet deficiencies caused by cost overruns or other funding considerations.
Unallowable Costs are costs that are not reasonably and directly related to the project and/or deemed unallowable by the sponsor/donor, and are not eligible for reimbursement.
Examples of unallowable activities include:
- 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;
- commencement and convocation;
- general public relations and alumni activities;
- student activities;
- managing investments solely to enhance income; and
- prosecuting claims against the Federal government
Examples of unallowable practices include:
- Purchasing items simply to exhaust funds;
- Charging an expense exclusively to a single award when the expense supported other activities;
- Assigning charges to an award before a cost is incurred without prior approval from the sponsor; and
- Transferring a cost overrun from one sponsored project to another.
The lists above is not all-inclusive. Individual agency and program requirements may list other unallowable costs. When in doubt, review and adhere to the terms and conditions of the award and review Federal guidance Subpart E, Cost Principles of the Uniform Guidance.
According to Federal guidelines, Payment in Addition (PIA) or additional compensation, for work completed on a sponsored project is normally not allowed for regular salaried faculty and non-faculty personnel. Work completed on a sponsored project should be represented as the appropriate proportion of an individual’s institutional base salary (IBS): A regular salaried employee should not earn more than 100% of their contracted IBS. The CFR 200 defines IBS as the annual compensation paid by the College for an individual’s appointment whether that individual’s time is spent on research, instruction, administration, or other activities.
Individuals with faculty appointments may not receive a temporary salary increase, or extra-compensation paid as overtime pay for work completed on a sponsored project. Individuals with non-faculty appointments may receive a temporary salary increase, or extra-compensation paid as overtime pay, for work completed on a sponsored project as-long-as the charges made to the sponsored project adhere to institutional guidelines, are expressly outside of the duties as expressed on the institutional contract and the sponsoring agency has approved extra compensation for the individual’s services.
Faculty who do not have a twelve-month (12-month) contract may be employed by the College during the summer (usually mid-May to mid-August), on a separate contract, for sponsored project activities. The faculty member’s compensation for summer employment should be based on, and consistent with, the individual’s IBS pay rate from the preceding fiscal year. This is considered a short-term, separate employment contract and not considered payment in addition.
Occasionally, a situation may arise in which additional compensation for faculty is justified. Additional compensation for faculty can be charged to a sponsored project for intra-institution consulting when;
- the faculty member serves, on a strictly limited basis, as consultant on a research or training project for which another faculty member in another college has principal responsibility;
- the work involves a separate or remote operation; and
- the work will be conducted in addition to the faculty member's regular departmental load.
In such instances the faculty member who arranges the consulting fee must obtain prior approval and adhere to institutional compensation policies for services for which the employee receives PIA. Such a request for approval should include evidence of the following:
- The services to be provided by the consultant are essential and cannot be provided by the faculty member who wants to arrange for the services of the consultant;
- The charge is appropriate considering the qualifications and normal charges of the consultant and the nature of the services to be provided; and
- The sponsoring agency has approved extra compensation for the consultant services (i.e., additional compensation payments for intra-institution consulting are not allowed to be funded from sponsored projects without documented approval from the sponsor.).
Employees who receive additional compensation from sponsored project funds are subject to all institutional compensation policies for services for which the employee receives PIA. Please note, that a faculty member with a summer appointment is, during the period of appointment, considered an employee of the College and is subject to the same laws, policies and procedures as during their regular appointment with the College. Additionally, an individual assigned full-time to a sponsored project, awarded to the College, remains a full-time employee of the College and is subject to the same laws, policies and procedures as an employee paid from institutional funds.
According to Institutional guidelines for an employee to receive Payment in Addition (PIA) for work that is outside of the employee’s contracted duties, the employee will need to complete a Memorandum of Agreement (MOA). If a permanent employee will receive PIA outside of their normal division/department, written approval from the employee’s immediate supervisor must be included with the LC State Personnel Action Form (PA). Source – LC State Professional Development Training (2/24/2021), LC State PA Instructions, LC State MOA Instructions.
To assist the PI/PD's with the PIA process the OGC has created the following PIA flow-charts:
A Program Activity Report (PAR), Time and Effort Reporting, is the process of certifying that salaries and wages charged to sponsored project accounts are reasonable in relation to the actual work performed. Time and Effort Reporting ensures that:
- the sponsor only paid for the amount of effort that directly benefited the project; and
- the employee met their effort commitment to the project.
Effort certification is required by Federal regulations for all compensation costs charged to Federal sponsored awards. All employees who render services on behalf of a federally sponsored program will have to certify the percentage of effort provided to the program by completing time and effort reports. See Federal guidance Subpart E, Compensation—personal services.
An effort reporting system must provide records on how individuals participating in federally funded sponsored awards actually spend their time. Documentation on how individuals spend time on federally sponsored awards is subject to Federal audit and can be cause for institutional or individual disallowances. Therefore, it is important that the College maintain accurate and auditable systems and records.
Institutional disallowances can result if:
- the effort report was certified by an individual other than the employee or someone who has "first-hand" knowledge of 100 percent of the employee's time;
- the effort report does not encompass all of the activities performed by the employee under the terms of their employment;
- the levels of effort reported do not appear reasonable, given the responsibilities of the individual.
Individual disallowances can result if:
- the effort report certified by the individual is found to be falsified; and/or
- the levels of effort reported do not appear reasonable.
Federal audit disallowances can result in serious financial penalties for the College. In addition, criminal charges may be brought against an individual certifying to falsified effort.
Program income is gross income earned by the College that is directly generated by a supported activity or earned as a result of a sponsored project during the projects’ period of performance, unless the awarding agency regulations or the terms and conditions of the award provide otherwise. Examples of program income include:
- income from fees for services performed;
- money generated from rental or real or personal property acquired under the award;
- the sale of commodities or items fabricated under the award;
- license fees and royalties on patents and copyrights; and
- principal and interest on loans made with award funds.
Interest earned on advances of funds is not program income. Except as otherwise provided in Federal statutes, regulations, or the terms and conditions of the award, program income does not include rebates, credits, discounts, and interest earned on any of them (2 CFR § 200.80).