According to OMB Circular A-21 (Cost Principles for Educational Institutions http://www.whitehouse.gov/omb/circulars/a021/a021.html), section F6B explains how to determine if departmental administrative costs should be charged as direct cost or indirect costs. Sponsors provide us with indirect funds to pay for certain costs that are not directly identifiable to the project. This includes infrastructure, utilities, general administrative support, etc.

Since they provide us these indirect funds, section F6B tells us under what circumstances charges that are typically appropriate for indirect funds can be directly charged to the grant. The two topics covered are administrative and clerical staff and other general use items.

1) administrative and clerical staff - These are normally be treated as indirect costs. The only time you can charge an administrative person directly to a grant is if it is considered a "major project" as defined in F6B, and their level of support is significantly greater than the routine level they normally supply in their job function.

2) other general use items - items such as general office supplies (pens, paper, toner, etc), local telephone costs, postage and memberships are normally treated as indirect costs. In major projects, you may be able to justify some of these items as direct charges. For example, if you are working on a survey that involves printing paper surveys and administering them to 1,000 people, it may be appropriate to directly charge the grant for 1,000 pens and the paper to copy the surveys. However, a toner would be very difficult to directly charge to a grant because it would be almost impossible to prove that the toner was only used for that project and not one page was printed for another purpose. Therefore, the sponsor provides us indirects to purchase these items that are not project specific.

So, when preparing your proposals, please do not include general purpose items or clerical staff unless you are certain it meets the requirements of F6B. If you think it does, please make sure to justify the reason you are charging it to the grant in the budget justification. This includes why the item is project specific and not general purpose and what it will be used for. If you have any questions about directly charging something to your grant, please give me a call.