Federal regulations (Uniform Guidance) and Stanford Policy state that clerical and administrative salaries should normally be treated as indirect costs unless costs meet four criteria. Non federal sponsors do not typically follow this rule.
Four Criteria for federally sponsored projects
For Federally sponsored projects, clerical and administrative salaries should normally be treated as indirect costs (F&A Facilities & Administrative). However, If the administrative cost is “integral” to the project you can direct charging administrative salary costs to federally sponsored projects is appropriate if ALL four of the following conditions are met:
- Administrative or clerical services are integral to a project or activity.
- The requirement that the cost is “integral” means the services are essential, vital, or fundamental to the project or activity
- Individuals involved can be specifically identified with the project or activity.
- Such costs are explicitly included in the budget or have the prior written approval of the federal awarding agency. A budget justification must be included in the proposal. (see RPH 14.1, Preparation, Review, and Submission of Sponsored Project Proposals).
- The costs are not also recovered as indirect costs.
Non-federally Sponsored Projects
Direct charging of administrative or clerical salaries to a non-federally sponsored project is appropriate if the services benefit the sponsored project. Some non-federal sponsors may have specific requirements for direct charging of administrative costs. Such requirements need to be addressed in proposals.
Proposing Proposing Administrative Expenses On Federally Sponsored Projects
For federal sponsors, the Proposal Development and Routing Form (PDRF) includes the following question.
Is this Integral as defined by the Uniform Guidance, allowing administrative and clerical salary expenses to be charged (Federally-Funded Projects only)?
If you answer “yes” to that question, you must justify how the salaries are “integral to the project” in the budget justification section of the proposal.
The question will not appear in the PDRF for non federal sponsors.
An adequate budget justification helps administrators, auditors, and sponsoring agencies to easily understand the nature of the costs and why they are allowable under the regulations.
The justification should include the following.
- A description of the administrator’s role tailored to sponsor specific requirements and the specific project or activity
- Why the activity qualifies as integral to the project
- How the administrator’s effort relates to and benefits the project
- The level of effort expressed as a percentage FTE or person months per sponsor instructions
- The time period(s) in which the person will be working
- Any other information that will aid the sponsor in evaluating and funding the proposed salary
- In addition, you must establish that the project being proposed meets the Stanford policy requirement for integral costs
NOTE: Although NIH modular grants or similar grant instruments do not require line-item justifications, the personnel, including administrative salaries, do need to be described in a modular budget justification.
Sample Budget Justification
The PI has included effort for administrative salary that is integral to the project, and not for general support of the academic activities of the faculty or department. Effort charged to this project can be specifically identified to the project.
Then you proceed to describe how the administrative role is integral to the project.
NIH Modular Grants
NIH modular grants or similar grant instruments do not require line-item budgets. (Note: Rebudgeting authority may be used to charge administrative expenses not included in the approved budget if specific rebudgeting authority for clerical and administrative expenses is allowed by award and sponsor rebudgeting guidelines.
All deans' office administrative activities must be consistently treated as F&A costs. Therefore, no deans' office administrative expenses shall be charged directly to sponsored awards. Deans' sponsored project activities are subject to RPH 15.4.3.
Any other administrative costs that are required to perform the technical scope of work may be directly charged as long they provide technical benefit to the sponsored project.
The Office of Sponsored Research (OSR) blocks administrative charging on federal awards unless the proposal met the criteria in Stanford Policy and the sponsor did not disallow the costs.
Alternatives to Direct Charging
If the administrative salary does not meet the criteria for “integral”, the salary shall not be proposed or charged as a direct cost to a federally funded sponsored project and shall instead be charged to a department or school PTA.
Specific Identification/Direct Assignment
A method of accounting for time, or percent of effort, is required in order to identify the benefit of the administrative and clerical personnel effort to the federal sponsored agreement. This requirement may be met by using the Labor Schedules (if the level of effort is consistent over extended periods of time), manual effort allocation, or another timekeeping process.
Charging Administrative Costs for Technical Purposes
Charging administrative costs for technical purposes has not changed and does not require the project nor the expenditure to be “integral.” The allocable, allowable and reasonable criteria are the same.