9c. Allocable Costs (2 CFR §200.405)
Costs must meet federal guidelines for allocability in order to be reimbursed through a federal grant or contract. To be allocable, a cost must meet the following requirements:
- Benefits both the Federal award and other activities and can be distributed in proportions that may be approximated using reasonable methods
- Is incurred specifically for the funded program (i.e., direct costs)
- Proves necessary to the overall operation of the organization, even though a direct relationship to any particular program activity cannot be readily shown (i.e., indirect costs)
The cost may benefit both the funded program activities and other activities, in which case it must be assigned to the respective activities in reasonable proportion to the benefits received.