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Charging Costs to Sponsored Projects: Understanding Cost Allocability

The Office of Sponsored Programs (OSP) would like to remind all Principal Investigators (PI) and Departmental Research Administrators about the importance of correctly allocating costs to sponsored projects. Understanding what costs may be charged to sponsored projects is crucial for compliance and financial management of all sponsored projects and requires a basic understanding of cost principles.  For more detailed guidance on cost principles, including details and examples about cost allocability, please review the Basics of Charging Costs to a Sponsored Project guidance on OSP’s website.

What is Cost Allocability?

  • Cost allocability refers to whether a cost can be directly tied to one or more sponsored projects in a reasonable proportion to the benefit provided to each project. 
  • Costs are allocable if the goods or services being charged are assigned in accordance with the relative benefits received by the project.
  • A fundamental question to ask is: Was this cost incurred specifically for this award or these awards?

Ensuring Cost Allocability:

  • It is the responsibility of the PI and the department/college support staff to document and retain records for the allocation of costs (i.e., charging costs to a particular project(s)).
  • PIs must carefully review all costs before charging them to a project(s).
  • PIs should consult with their department/college’s research administrators and OSP Post-Award staff if there is any uncertainty whether a cost is allocable to a sponsored project.

Why is Cost Allocability Important?

  • Proper cost allocation ensures compliance with sponsor regulations and university policies.
  • It protects PIs and the university from potential audit findings and financial penalties.
  • It helps maintain the integrity of your research and creative activities, as well as the reputation of Boise State University.
  • Proactive efforts to ensure costs are allocable when charged to a sponsored project help to prevent cost transfers and the need to charge unallocable costs to other accounts, including the PI’s local account.

Remember: Adhering to cost principles is essential for responsible financial management of your sponsored project. Always consult with your department’s research administrator or the Office of Sponsored Programs if you have any questions about charging costs to your project.  

Have questions about cost allocability or cost principles? Contact OSP Post-Award at postaward@boisestate.edu.