Sponsored Costs Allocation Policy

I. Policy Title: Allowability, Reasonableness and Allocation of Costs for Sponsored
Projects Policy

II. Who Does This Policy Affect

All HFC faculty, staff, students, vendors/contractors and visitors to our campus who manage, supervise, or conduct business or financial transactions or activities using sponsored funds. This policy applies to all sponsored agreements, both federal and non-federal.

III. Purpose

This policy is to set forth guidelines for the basis for the allowability, reasonableness, and allocation of costs on sponsored contracts and projects in accordance with Federal Uniform Guidance (2 CFR Part 200).

IV. Policy Statement

To maintain its status as a good steward in the acceptance of sponsored awards, the Board of Trustees encourages the proper management and allocation of funds relating to costs incurred are directly related to the project. Direct, indirect and allowable costs shall be consistently estimated, charged, accumulated, and reported in compliance with federal cost principles contained in the Uniform Guidance and Henry Ford College’s cost accounting standards.

Basis for Allocation:

When possible, costs shall be allocated based on the exact benefit of the cost to each funding source, the cost is allocated according to the proportion of benefit provided. When it is not possible or cost effective to determine the exact allocation or use for each funding source, the cost is distributed on a reasonable and rational basis
Costs may not be allocated based on the amount of available funds on an award, budgetary convenience, in avoidance of restrictions on an award, or rotating costs across multiple projects.

Best Practices:

The applicable basis of the allocation method should be determined in advance of purchasing, or at the time of ordering. The college will retain documentation on the type of costs and methodology used in the allocation of costs. The award will be reviewed regularly, and any reallocation will be completed in a timely manner.

Example of Allocations:

Example: A lab purchases 12 gallons of solution. 3 gallons of solution are used on Award A and 9 gallons on Award B. 25% (3/12) is charged to Award A and 75% (9/12) is charged to Award B.

Example: A lab purchases syringes for use in experiments on two Awards. It is impossible to tell in advance exactly how many syringes will be used for each Award, and it would not be cost effective to track the use of each syringe. Instead, the lab allocates the cost of the syringes based on the amount of effort the lab personnel who use the syringes expends on each Award. If the effort allocation is 70/30 on Awards A and B, the cost of the syringes would also be 70/30.

V. Definitions

Sponsored Award/Fund- funding from an outside entity (like a government, foundation, or company) given to Henry Ford College to perform specific, defined activities (like research or training) with a clear scope, budget, and deliverables, creating a binding agreement for a return benefit or specific outcome for the sponsor.

VI. Responsible Party for Policy Interpretation/Review

Vice President of Financial Services

VII. Related Documents

Uniform Guidance-2 CFR 200.405 https://www.ecfr.gov/current/title-2/section-200.405
Uniform Guidance-2 CFR 200.409 https://www.ecfr.gov/current/title-2/section-200.409

VIII. Policy History:
Adopted by the Board of Trustees: May 18, 2026

This policy supersedes and replaces any and all policies related to this subject