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3.9 Allowable Costs


Federal grant funds are governed by the cost principles of the Office of Management and Budget (OMB). Allowable costs are those costs identified in the relevant OMB circulars and in the grant program’s authorizing legislation. To be allowable under Federal awards, costs must be reasonable, allocable, and necessary to the project, and they must also comply with the funding statute requirements. In this chapter we highlight certain elements of allowable costs. For more information about specific factors that affect whether costs are allowable, refer to the appropriate cost principle-related section of the Code of Federal Regulations (CFR):