This describes the campus’ guidelines regarding costs that cannot be included in the direct or indirect costs of sponsored agreements, both federal and non-federal.
Unallowable costs, for the purpose of these guidelines, are costs that cannot be included in the direct costs of sponsored agreements or in the Campus’ indirect cost rate according to OMB Uniform
Guidance (UG) 2CFR200 §200.400 - 200.475. These costs are not necessarily what the University considers unallowable. Unallowable costs, by UMass definition, are outlined in Trustee Document T92-031 and include items such as: expenses for personal gain, political contributions, personal gifts of gratitude, and personal fines.
Uniform Guidance (UG) 2CFR200 §200.400 - 200.475 defines allowability of costs as "(a) they must be reasonable; (b) they must be allocable to sponsored agreements under the principles and methods defined in UG; (c) they must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances; and (d) they must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items."


Unallowable costs and directly associated costs (costs that would not have been incurred had the unallowable cost not been incurred) should be appropriately identified on all documentation to ensure these costs are in the proper accounts and are excluded from direct and indirect costs of sponsored agreements. Correct classification of unallowable costs in the accounts is also important in the computation of indirect cost rates.
Below is a list of unallowable costs taken from UG and a description of how these expenditures are treated at the Lowell campus. This is not an all inclusive list and there may be exceptions.
Unallowable Cost CategoriesUMass Accounting Treatment
Advertising and public relations - to promote the institutionAdvertising Exhibits/displays
Alcoholic BeveragesAlcoholic Beverages
Alumni activitiesAlumni Relations accounts
Bad debt costsWrite-off Grants & Contracts
Commencement and Convocation expensesCommencement Account
Contingency provisionsContingencies
Cost overruns on Sponsored AgreementsTransferred to Unrestricted Accounts
Donations and ContributionsCharity events
Entertainment expensesEntertainment
Fines and penaltiesFees, fines, licenses
Fundraising and investment management costsDevelopment Dept. Accounts
Goods or services for personal useExpenditure not permitted by state
Housing and housing allowancesHousing allowance
Interest costsDebt payments
Legal costs relative to failure to comply with state, federal, local or foreign statutesIncurred by university
Lobbying costsUniversity Relations accounts
Membership in any civic, community, country club or social organizationMemberships, dues and fees
Personal use of institution furnished vehiclesExpenditure not permitted
Student activity costsStudent Activities account

Examples of Unallowable vs. Allowable Expenses

A common area of misunderstanding can be in the area of business function (allowable) vs. entertainment expenses (unallowable) when charging to unrestricted accounts. Below you will find examples that we hope will help clarify this matter for the University community. If there are any questions concerning the allowability of a cost please contact the Director of Financial Research Administration for assistance.

Unallowable Entertainment - Examples

1. An invited speaker is in town to present a seminar. While here, you pay for the speaker and spouse to go to dinner and to the theater. 

The cost of dinner and the tickets are considered entertainment and charged to account 743010.
2. Your department is sponsoring a research seminar. You decide you would like to have a pianist play during the dinner reception. 
The cost of the pianist is entertainment and charged to account 743010.
The above costs are for "amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities) and therefore are examples of unallowable entertainment costs.” The encumbrance documents should be coded with account 743010 to designate them as entertainment so that they will be excluded from any indirect cost calculations.

Allowable Business Function

  1. An invited speaker is on campus to present a research seminar from noon to 1 p.m. You have a luncheon, following his seminar, so that attendees can have the opportunity to meet and talk to the lecturer more closely about his research.
  2. You are recruiting a new post-doc fellow and decide to conduct the interview over lunch. You pick up the tab.
The cost of these luncheons would be allowable expenses and should be classified as a business functions. They are considered an extension of business.
The Allowable expenses in these examples would be for charges against an unrestricted account (RIF Account) and not against sponsored projects.