Allowable and Unallowable Grant Expenses Policy

Last updated: February 5, 2024

Background

The Wisconsin Partnership Program is governed by a number of unique rules and requirements through the Insurance Commissioner’s Order, the Grant Agreement with the UW System Board of Regents, and the University of Wisconsin’s rules and policies as well as local, state and federal laws. It is within this context that the Wisconsin Partnership Program (WPP) works diligently to ensure the best stewardship of the funds.

As stated in the governing WPP cost principles, project costs must be allowable, allocable, reasonable and consistently treated. The Allowable and Unallowable Grant Expenses policy provides guidance on specific items of cost for applicants and grant recipients of Wisconsin Partnership Program grant funds. Grant recipients are expected to review this policy carefully upon receipt of the award and regularly thereafter to ensure a full understanding of the rules and requirements of the policy.

It is impossible to envision every potential unallowable cost in one policy. Therefore, based on the experience of the Wisconsin Partnership Program as a result of many years of grants management, included in the policy are a number of specific expenditures or general expense categories that require prior approval by WPP. Additionally, the program asks each grant recipient to include, as much as possible, all expenses with specificity in the project budget. Inclusion of a cost within a project budget does not make the cost allowable.

WPP reserves the right to question or deny any expense whether or not it is specifically mentioned in this policy or included within the project budget. If you are questioning whether an expense is allowable, please contact a member of the WPP Finance team.

Definitions

Allowable costs are expenses directly incurred by the grant recipient that are project specific and necessary for the performance of the WPP grant award. Please be aware that costs listed as allowable may include exceptions, and/or require prior approval by WPP.

Unallowable costs are expenses that may not be incurred using WPP funds, including indirect expenses such as expenses related to the general operating functions of the organization.

In addition, the non-supplanting stipulation requires that all reimbursable expenses be directly attributable to the grant and that WPP funds cannot replace other funding available to the grant recipient. Examples include:

Overhead
Alcoholic beverages
Entertainment
Fines
Lobbying
Pre-award costs
Proposal costs
Donations
Any expenses for goods and services for personal use of employees

Because of non-supplanting requirements, the Wisconsin Partnership Program does not allow indirect costs, such as overhead or administrative costs. WPP expects that grant recipients have existing infrastructure in place to provide indirect support for the grant agreement. Grant recipients must indicate their capacity to oversee and manage the project, programmatically and financially, before any funding decisions are made. Overhead is not an allowable expense, even if there is an existing cost allocation model. Expenses for existing clerical and administrative staff such as bookkeepers or accountants, human resources or general IT support are considered an unallowable indirect cost.

Prior approval by WPP will be in writing by the Finance Associate Director addressing the original or revised budget as a whole, or a particular expense. For some expenses, prior approval by the WPP Executive Director is required. Requests for prior approval must be made in writing to the Finance Associate Director.

Policy

Unallowable Costs

Unallowable Expense Item	Description
Alcoholic Beverages	Alcoholic beverages are not allowable.
Alumni Activities	Alumni relations and alumni service costs are not allowable.
Bad Debts	Losses from uncollectible accounts, collection costs and related legal costs are not allowable.
Commencement/ Convocation	Costs of ceremonies and receptions are not allowable.
Contingency Funds	Provisions made for events that are uncertain as to actual occurrence, timing or extent are not allowable.
Capital Expenditures	Expenditures to acquire capital assets such as general-purpose equipment, plants, buildings, building improvements, and land are not allowable. Costs to keep property and equipment in generally efficient operating condition are not allowable. Project specific equipment purchases are allowable with restrictions, please refer to the equipment section below.
Defense, Prosecution, Claims and Appeals	Defense, prosecution, claims and appeals are not allowable.
Depreciation	The cost of an asset – building or equipment – spread over the asset’s useful life is not allowable.
Donations and Contributions	Donations and contributions at a fundraising event, including gifts, memorials and the purchase of tables, are not allowable. Charitable contributions to organizations are not allowable.
Entertainment & Social Activities	Amusement, social activities, and related costs, including tickets, meals, lodging and gratuities, are not allowable.
Establishing Independent Organization	Using WPP funds to establish an independent organization, such as a 501(c)(3) or a limited liability corporation, is strictly prohibited. This includes a prohibition of WPP funds being used to support project staff effort to establish an independent organization.
Fines and Penalties	Costs resulting from violations of laws and regulations are not allowable.
Fundraising	General fundraising not related to the grant is not allowable.
Goods or Services for Personal Use by Employees	Items or services providing direct personal benefit to employees are not allowable.
Grantmaking	Recipients of WPP funds are prohibited from re-granting funds to subrecipients, unless otherwise specified in a grant agreement. (see contractor/subaward/pilot guidance)
Hospitality	Hospitality expenses, such as flowers, retirement gifts and non-program greeting cards are not allowable. See Events for exceptions related to gifts.
Institutional Review Board Fees	Costs associated with obtaining necessary approvals from research compliance bodies, such as the Institutional Review Board, are considered institutional costs and are not allowable. In fact, IRB fees are to be waived for WPP grant recipients.
Insurance	Insurance coverage for normal business purposes, whether provided by an external company or through a self-insurance program, is not allowable. For example, travel and automobile insurance are not allowed.
Interest	Interest expense is considered an institutional cost and not directly allocable to a project.
Investment Management	Costs for investment management are not allowable.
Lobbying	Attempts to influence outcomes of elections or other political actions are not allowable. See Lobbying and Advocacy Policy and Guidelines.
Losses on Project Agreements	Costs in excess of available funding are not allowable as a direct cost on subsequent project agreements.
Official Functions/Social Events	Official functions, which are events that are primarily social in nature, are not allowable on WPP grants (See UW–Madison Official Functions and Expenses Policy UW-3075). Examples: holiday parties, retirement parties, staff celebrations. For information on events, such as summits or conferences, see “Events.”
Payroll Fees	Fees for payroll processing and maintenance are considered a broader organizational expense that cannot be specifically attributed to the WPP project and are not allowable.
Pre-Award Costs	Pre-award costs – costs incurred prior to the start date of the project agreement – are not allowable.
Prepaid Expenses	All expenses must be incurred during the grant agreement. If an expense relates to a good received or service incurred outside the project date this is considered a prepaid expense and is unallowable.
Proposal Costs	Expenses related to the preparation of the proposal, prior to the grant award are considered institutional costs and are not allowable.
Salary/Fringe for Administrative Personnel	Salaries and fringe benefits of general corporate or organizational support staff – departmental administration, including professional and clerical staff, finance, human resources, general IT and central administration staff serving the entire organization – are considered an indirect cost and not allowable.
Sales Taxes	State sales taxes paid by tax-exempt organizations or tax-exempt entities are not allowable and will not be reimbursed.
Sponsorships	Sponsorships are unallowable unless they have a specific direct purpose for the project. If determined by WPP to be allowable, the expense must be included in the approved project budget.

Allowable Costs

In general, the following costs are allowable on WPP awards, however there may be exceptions.

Allowable Expense Item	Description (including exceptions and requirements for prior approval)
Advertising	Advertising is allowable if specifically related to the project, such as recruitment of dedicated personnel.
Audit	Grant funds may be used to support a program specific audit in the absence of a routine organizational audit. Exception: A review of financial controls by an external audit firm is considered a broader organizational expense that cannot be specifically attributed to the WPP project and is not allowable.
Books, Journals and Subscriptions	Books, journals and subscriptions to professional and technical publications are allowable if specifically related to the project.
Childcare	Childcare provided during meetings or events is allowable with prior approval by WPP and must be explicitly include in the approved project budget
Computers	The purchase of personal computers is allowable if specifically related to the project and included in the approved project budget. See "Equipment" for computer expenses greater than $5,000. Computer purchases within the last 90 days of an award are subject to review. As part of the review, the grant recipient must explain how the purchase benefited the award late in the project.
Consulting & Professional Services	Individuals or companies hired to perform professional, short-term services are allowable if specifically related to the project with prior approval by WPP. See “Termination Costs” for information on expenses related to terminating a contract. Exception: General costs, such as corporate legal or accounting services, are considered to be indirect costs and are not allowable.
Equipment	Equipment is defined as tangible personal property with a useful life of more than two years and a unit cost greater than or equal to $5,000. Requests to purchase equipment must be included in the original application budget and therefore vetted as part of the grant review process. Special purpose equipment – scientific equipment used only for technical activities – is allowable as a direct cost if specifically related to the project with prior approval by WPP. General purpose equipment – computers, office equipment, and furnishings, which are not limited to research or technical use – would be allowable if directly used for the grant with prior approval by WPP. Purchases of equipment, including computers, within the last 90 days of an award are subject to review. As part of the review, the grant recipient must explain how the purchase benefited the award late in the project.
Events	Events, such as summits or conferences, are allowable with restrictions. The event must align with goals of the grant. Requests to host an event must be included in the original application budget and therefore vetted as part of the grant review process. The grant recipient must submit a detailed budget of the event for prior approval by WPP. For internal (faculty) grant recipients, all events paid through WPP grant funding via UW payment mechanism (purchase order or purchasing card) must adhere to UW–Madison “hosted” event policies (See UW–Madison Division of Business Services, Planning a UW Event, which includes relevant policies). Events hosted in Madison should utilize UW–Madison facilities for cost effectiveness. Exceptions: Alcohol is unallowable Gifts to attendees are unallowable — swag, give-away items or favors are unallowable without prior approval by WPP Extravagant spending on the venue, décor, give-away items, entertainment, or other event extras is unallowable
Fringe Benefits	Costs of fringe benefits are allowable provided that the benefits are reasonable and consistent with the established policy of the grant recipient. Fringe benefits may be claimed as either direct costs for each component (employer taxes, insurance, retirement, etc.) or as a percentage of gross wages as determined by the grant recipient.
Honoraria	Honoraria, such as a speaker’s fee or other service rendered, are allowable if specifically related to the project with prior approval by WPP. Unallowable when primary intent is to confer distinction or symbolize respect for recipient.
Meals and Meeting Refreshments	Meeting refreshments, site visit meals and guest meals are allowable if specifically related to the project and included in the approved project budget. Meals associated with staff travel, conference or symposia are allowable but are subject to limitations established by UW–Madison. Although allowable, WPP discourages using grant funds for meals and meeting refreshments. Exceptions: Recreational activities, either for entertainment or team-building, are not allowable Meals that only include employees are unallowable
Memberships and Dues	Only memberships and dues specifically related to the project are allowable with prior approval by WPP. Costs must be included in the approved project budget.
Office Supplies	Office supplies – those items usually maintained in a departmental stock for general use by all staff, including pens, pencils, writing paper, file folders, departmental letterhead, envelopes, staples, staplers and rulers – are allowable if specifically related to the project.
Participant Support Costs and Payments to Trainees	Payments to individuals who participate occasionally in research, education, or community-based programs. This may include compensation to, or on behalf of, participants or trainees (but not employees) in connection with official meetings, conferences, or symposia, training or research projects. These costs are allowable with prior approval by WPP and in accordance with the WPP Guidelines on Payments to Individuals. Costs must be included in the approved project budget. Payments may be in the form of gift cards, checks or other non-cash items or incentives. Cash may not be used.
Patient Care Supports	Clinical services that involve screening and education or mobilizing resources to promote healthcare access are allowable. Exception: Providing clinical services related to treatment or follow-up for specific health conditions is not allowable, such as billable clinical services.
Postage/Messenger Service	Postage, such as routine postage costs, is allowable and shipping of materials, receiving goods for project use or other delivery of items are allowable if directly related to the project.
Public Relations and Marketing	Public relations and marketing costs are allowable if specifically related to the project.
Rent	Rental costs – costs to lease building space or equipment – are allowable if specifically related to the project and they represent a new cost solely attributable to the project. Such expenses require prior approval by WPP and must be explicitly included in the approved project budget. Exceptions: General rental costs, such as allocation of preexisting office space, are indirect costs and not allowable Residential rent expenses for individual project participants are not allowable
Salaries and Fringe Benefits: Technical and Programmatic Personnel	Salaries and wages for technical and programmatic personnel staff – personnel performing scientific or other technical work related to a project – are allowable if specifically related to the project. Bonus compensation payments are not allowable on WPP grants.
Scholarships	Scholarships are only allowable with prior approval by the WPP Executive Director and must be included as a line item in the approved project budget.
Software	The purchase of computer software is allowable if related to the project and included in the approved project budget.
Specialized Service Facilities or Service Center	Operating units that use specialized equipment or technical expertise to provide goods or services for a fee are allowable if specifically related to the project.
Student Publication and Activity Costs	Costs of student publications and activities are allowable if specifically related to the project.
Telephone, Cell Phone, Fax Lines and Pagers	Equipment and service costs for local telephone, fax service and pagers are allowable if specifically related to the project. Exception: The purchase of telephones, cell phones and pagers for personal use is not allowed.
Termination Costs	Costs incurred due to early termination of a project agreement are allowable so long as effort is made to minimize those costs by canceling contracts and reselling surplus goods.
Travel	Travel – transportation, lodging, subsistence, and related costs that are not lavish or extravagant for official business, in accordance with organizational policy – is allowable if specifically related to the project. Costs related to travel for staff, participants, speakers must be identified and included in the approved budget. Exception: Travel insurance is not allowed.
Tuition	UW graduate students under the direction of a Principal Investigator who are directly working on the project and being funded by the project may incur tuition remission charges, which are allowable. Exception: Individual employee tuition reimbursement is not allowable.