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Saint Paul Public Schools, District 625
360 Colborne Street
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Unallowable Costs

Unallowable Costs Under Federal Program Grants

The Office of Management and Budget (OMB Uniform Grant Guidance)

2 CFR Part 200 Excerpts: Unallowable Costs

On or after December 26, 2014, 2 CFR Part 200 is effective and applies to all new awards issued.

2 CFR Part 200 section Subpart E Cost Principles; Listing of Costs that are Unallowable either as a Direct or Indirect Charge to Federal Grants and Contracts. Note: These excerpts are a high-level summary. CFR Part 200 section Subpart E Cost Principles should be referred to for specific questions and language.

2 CFR Part 200

Section Reference



Advertising costs are unallowable unless they are necessary to meet the requirements of the sponsored agreement.


Public Relations Costs are unallowable except for (1) costs specifically required by sponsored agreements, (2) cost of communicating with the public and press pertaining to specific accomplishments which result from performance of sponsored agreements or (3) costs of conducting communication and liaison necessary to keep the public informed on matters of public concern such as notices of awards, financial matters, etc.


Advisory councils or committees costs are unallowable unless authorized by statute, the awarding agency or as an indirect cost where allocable to sponsored awards.


Alcoholic beverage costs are unallowable.


Alumni activity costs are unallowable.


Bad debt costs are unallowable.


Commencement and convocation costs are unallowable.


Institution furnished automobile costs for personal use are unallowable.

Severance costs incurred in excess of the institution's normal severance pay policy applicable to all persons employed at the institution upon termination of employment are unallowable.

Tuition benefits for family members other than the employee are unallowable.


Contingency provision costs are generally unallowable.


Contributions and donations made are unallowable.


Defense and prosecution of criminal and civil proceedings, claims appeals, and patent infringement are generally unallowable.


Entertainment costs including amusement, diversion, and social activities and any costs directly associated with such costs are unallowable unless they are required for programmatic purposes and either in the approved budget or with prior written approval.


Fines and penalties costs resulting from violations of, alleged violations of, or failure to comply with federal, state, local or foreign laws and regulations are unallowable unless specifically approved by a federal agency or with prior written approval.


Fundraising costs including financial campaigns, endowment drives, solicitation of gifts and similar expenses incurred to raise capital or obtain contributions are unallowable.

Costs of investment counsel and staff and similar expenses incurred to enhance income from investments are unallowable except when associated with investments covering pension, self-insurance, or other funds which include federal participation allowed by 2 CFR Part 200 subpart E.


Goods and services costs for personal use are unallowable regardless of whether the cost is reported as taxable income.


Housing costs, housing allowances and personal living expenses are only allowable as direct costs and must be approved in advance by the federal awarding agency.


Insurance costs when reasonable and necessary are generally allowable. See section 445 for specifics. Insurance to protect against defects in the institution's materials or workmanship are unallowable. Losses which could have been covered by insurance are unallowable unless expressly allowed by the sponsor.


Intellectual Property

Patent costs, copyrights and related disclosures and filings are generally unallowable unless required by the federal award.

Royalties on a patent or copyright and related costs are allowable only if necessary for the proper performance of the federal award and if the federal government does not already have a license, the patent is valid and enforceable. Also see section 448 for other details.


Interest on borrowed capital, temporary use of endowment funds, or the use of an institutions own funds are unallowable.


Lobbying costs are unallowable unless specifically authorized by statute to be undertaken with funds from sponsored agreements.


Losses on other sponsored agreements or contracts are unallowable.


Membership costs in any civic, community organization, country club or social or dining club or organization are unallowable. Cost of memberships in organizations whose primary purpose is lobbying are unallowable.


Participant support costs as defined in 200.75 are allowable with the prior approval of the federal awarding agency.


Preaward costs are allowable only when deemed necessary for the performance for the scope of the federal award and only to the extent that they would have been allowable if incurred after the date of the federal award and only with written approval of the federal awarding agency.


Recruiting costs for help wanted advertising, special emoluments, fringe benefits and salary allowances incurred to attract professional personnel from other institutions that do not conform with the established practices of the institution are unallowable.


Relocation costs related to: fees and costs with acquiring a new home; loss on sale of former home; mortgage payments on a home being sold and income taxes related to relocation costs are unallowable. Allowable costs incurred where an employee resigns within 12 months after hire must be refunded or credited to the federal award.


Rental costs under “sale and leaseback” arrangements and “less-than-arm’s length” leases are only allowable up to the amount that would be allowed had the entity continued to own the property.


Selling and marketing costs of products or services of the institution are unallowable except as a direct cost when approved by the awarding agency when necessary for the performance of the award


Student activity costs are unallowable unless specifically provided in the sponsored agreements.

Appendix III, B8(a)

Rare books (museum type books) with no value to sponsored agreements are unallowable.