Budget and Spending Tips

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Proper allocation of research expenditures is an important part of grants management and ethical research conduct. ORSP helps by monitoring expenditures to ensure that they are reasonable, allocable, and allowable, and advising PIs and financial managers on budgeting and spending.


Proper budgeting at the proposal stage can save a lot of headaches during project management! Although it is not always possible to foresee every contingency, thinking through the different phases of the project and working with your Contract and Grant Specialist well before the proposal deadline can help. Once your project is awarded, continue to collaborate with your CGS throughout the award period, especially when considering large or unusual purchases, foreign travel, or any unbudgeted expense.

Budgeting Tip for Electronics and Computing Devices: According to OMB Uniform Guidance 200.453 (c) …In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award. ANNOUNCED 1/1/2017, UPDATED 1/1/2018

Lehigh Imaging and Disposal Fee: For budgeting purposes, in addition to the cost of purchasing your electronic and/or computing devices, Lehigh has announced it will charge an additional fee of $45 per device ordered/purchased regardless of method (One Card or Purchase Order) and funding source (Department or Research). As determined by the Purchasing Department, this includes any electronic device which is described by a vendor or manufacturer as a computer, desktop, laptop, tablet, kiosk or server.* This shall not include telephonic devices, televisions or a server* that is housed in the Data Center, and/or not recycled through the eWaste Program.

Please be aware this fee could be added to your purchase if it meets the above criteria.

*Servers have additional issues. Talk to LTS if considering the purchase of a server.


There are three guiding principles to determine whether a cost can be appropriately charged to a sponsored research agreement. All three must be met.

1) Costs must be Allowable:  Costs must meet the following general criteria in order to be considered allowable. Costs must:

  • be necessary and reasonable for the performance of the project.
  • adhere to agency-specific policies and award-specific terms and conditions.
  • adhere to University policies regarding specific items of cost.
  • be accorded consistent treatment when used in the same manner. This means that for all categories of costs, all activities within the University must account for such in the same manner when incurred in similar circumstances.
  • be adequately documented.
  • must not be included as a cost to meet cost sharing or matching requirements of any other federally financed program.

See 2 CFR 200, Part E, 200.403

2) Costs must be Reasonable:  A cost is reasonable if:

  • in its nature and amount, it does not exceed that which would be incurred by a prudent person under prevailing circumstances.
  • is recognized as necessary for the operation of the institution or performance of the research project.
  • is consistent with the requirements imposed by arms-length bargaining, federal or state laws and regulations, and ethical business practices.
  • is in line with market prices for comparable goods and services, and with the University’s established practices and policies.

See 2 CFR 200, Part E, 200.404

3) Cost must be Allocable:  A cost is allocable to a particular Federal award or project if the cost:

  • is incurred specifically for the project and/or is assignable in part to the project.
  • is not charged to the award to overcome deficits or other restrictions of another award.
  • is assignable to the benefitting activity without undue effort or cost.
  • if assigned in part to more than one project, is allocated in a reasonable and documented basis.

See 2 CFR 200, Part E, 200.405


Following are some tips for avoiding common pitfalls while spending external awards.

Business Meals/meals and refreshments (non-travel status):  OMB requirements state that costs of entertainment, including amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows, or sports events, meals, lodging rentals, transportation and gratuities) are not usually allowed on a grant. Based on this, meals outside of travel can be viewed as entertainment. Federal rules do restrict when meals and refreshments are allowable, but they do not indicate that they are always considered to be entertainment and therefore unallowable.  Each case should be considered individually, but a few examples here may be of help:

  1. One example often cited is a GAO (General Accounting Office) finding that involved a faculty member buying pizza for graduate students working late at night on a federal project. While this was a very nice gesture, the cost was deemed unallowable because the pizza was not necessary for performance of the project. In other words, serving pizza was viewed as a social event (a pizza party!), not necessary for the work being done.
  2. A hospitality suite is made available to attendees of an allowable conference. Hospitality suites by nature indicate a social event and the related costs would therefore be unallowable.
  3. Receptions, even when directly associated with a work-related event, such as a training session or conference, are considered unallowable because the primary purpose of the reception is social.
  4. Deciding to have a meal together to discuss business with no need for continuity of a meeting or conference is viewed as primarily social in nature and unallowable.
  5. Within the context of meetings or conferences, refreshments served at breaks, working dinners and working lunches ARE typically allowable. An agenda indicating such a work schedule should be available as documentation of the nature of the meals. Attaching a copy of the agenda to related payment documents is necessary.  

In other words, food must be integral to the allowable working event.  For example, food is typically not integral to a two-hour mid-morning meeting, even though the meeting is work-related, integral for the project’s completion, and included in the project budget.  Additionally, scheduling a meeting at a mealtime does not automatically make a meal integral to the event.  Federal guidance indicates that deciding to go to breakfast, lunch, or dinner together when no need exists for continuity of a meeting is considered to be entertainment and is unallowable. Typically, if all or most of the participants are internal, the meal will be considered social, and therefore unallowable. Likewise, meals for site visits by sponsoring agencies are usually unallowable. If mealtime meetings must be scheduled, be sure that there are other well-documented reasons for having the meeting at that time of day.

As always, the purchase of alcohol on a sponsored award is not allowed.

For information regarding meals while on travel status, see travel information for researchers.

Telephones, cell phones, voicemail charges and general office supplies like pens, notebooks, tape, and staplers: These items are normally considered F&A costs. Exceptions are made only when the project is a large, heavily administrative project AND the costs have been included in the proposal and therefore approved by the sponsoring agency.

Professional society memberships: Individual (ie. not institutional) professional society membership costs are allowable only when paying for memberships reduces conference registration fees. Then membership costs should be incurred at or around the same time as registration for the professional society conference.

If you are uncertain whether or not a cost is allowable or if you need prior sponsor approval, please contact your Contract and Grant Specialist.