Direct Costs

Direct costs are those costs that can be specifically and easily identified with a particular project or activity and are allowable under the sponsoring organizations guidelines. This may include project materials, program staff salaries, and other fees that pertain only to the program. Examples of common direct costs are below:

Salaries and Wages (Personnel)

This is usually the largest budget category and includes salary or wages for the faculty, technicians, and technical personnel necessary to meet the goals of the project. It is computed as either percent effort, hourly wages, or person months.

Some Federal sponsors have salary restrictions. The NIH requires a salary cap and the NSF restricts the amount of salary that can be requested, across all NSF awards (NSF Grant Policy Office).

Administrative and clerical staff salaries should normally be treated as F&A (indirect) costs. Charging these costs as direct costs is only appropriate where the costs can be specifically budgeted and justified in the proposal and the services are integral to the project. They must also be allowed by the sponsor.

Employee Related Expenses (Fringe Benefits)

Whenever grant funds are used to pay salaries and wages, associated fringe benefits must also be charged to the grant. Employee Related Expenses (ERE) is computed as a percentage of the salary, based on the employee category. Contact the OCG for the current ERE rate.

Consultants/Independent Contractors

Consultants provide expertise or a service to a particular project, consistent with their normal course of business. They are independent contractors, not employees of GCU, so care must be taken the individual meets the Internal Revenue Service criteria for such a classification. Guidance on including consultants on federal grants is available in OMB Uniform Guidance (2 CFR 200.459). Please contact the OCG for more information on including a consultant in your proposal.

Travel

Sponsors often allow travel for project personnel to attend meetings with funding agency representatives, professional conferences, and meetings to disseminate information about the project, or for other purposes specific to the project.

Equipment

Equipment is defined as tangible personal property (including information technology systems) having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. All equipment should be itemized in detail in the budget and the estimated cost based on quotes or catalog prices.

Materials and Supplies

Consumables to be used in the performance of the proposed project are included in the supplies and materials category. Examples include laboratory glassware, chemicals, reagents, clinical supplies, laboratory notebooks, and data processing supplies. Include a description of each category (e.g., reagents) and an estimated cost. The types of materials and supplies will vary widely based on the project’s nature, scope, duration, and objectives. The cost estimate for the materials and supplies should be based on catalog prices, vendor quotes, or historical costs for the item, and should include costs such as shipping, handling, and delivery charges.

Projects may include materials that will be given to participants as part of the project activities (e.g., professional development projects may provide resources for participating teachers). Individually itemize these materials and include information on unit costs and quantity to be purchased and describe how each supports the objectives or activities.

Subawards (Subrecipient)

OMB Uniform Guidance (2 CFR, 200), Section 200.93 defines a subrecipient as follows:

"Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program; but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency."

Guidance on distinguishing between a subrecipient and a contractor is provided in OMB Uniform Guidance (2 CFR 200), Section 200.330 Subrecipient and Contractor Determination.

Please contact the OCG if you will be including a subaward in your grant proposal so that the necessary documents can be obtained from the subrecipient organization.

Other Costs

There are a number of other costs that may be allowed by the sponsor. These include, but are not limited to, animal purchase and care, publication costs, marketing expenses, Honoria, and costs related to human subjects research. It is important to read the sponsor’s guideline’s carefully in order to understand what costs are allowable.

Facilities and Administrative Costs

Facilities and Administrative Costs (F&A Costs) (also called indirect costs) are costs 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 (2CFR 200.414). These are items that are associated with running the organization as a whole, such as rent, utilities, office supplies, and administrative staff salaries. 

F&A costs are computed as a percentage of direct costs. Grand Canyon University is using the 10% de minimis rate. Not all sponsors allow the charging of F&A costs; therefore it is important to read the sponsor’s guidelines carefully.

 The Budget Preparation Checklist can guide you as you prepare your budget.