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Allowable & Unallowable Costs

Federal grants have limitations on what items and services you can purchase using grant funds.

Some items and services are allowable costs, meaning you can use grant funds to purchase them, while others are not.

Allowable and unallowable costs are based on information in 2 CFR Subpart E – Cost Principles

It is also important to note that in some cases, state law and administrative rule further limit what is allowable or unallowable. State guidelines for allowable costs are outlined in the Department of Financial Services’ Reference Guide for State Expenditures (PDF).

Advertising and Public Relations

1. What advertising and public relations expenses are allowed?


The only allowable advertising costs are those which are solely for:

  • Recruiting personnel you need to perform the services your federal grant funds.
  • Procuring goods and services you need for the grant.
  • Disposing of scrap or surplus materials acquired in the performance of a federal award unless you are already reimbursed for disposal costs.
  • Program outreach necessary to meet the requirements of the federal award.


The only allowable public relations costs are:

  • Costs specifically required by the federal award. 
  • Outreach: costs of communicating with the public and press about activities or accomplishments. 
  • Costs for notifying the public funding opportunities, etc.

Read more in the electronic code of federal regulations.

2. What advertising and public relations expenses are NOT allowed?
  • All advertising and public relations costs other than those already specified.
  • Costs for meetings, conventions, convocations, other events, or related activities, including:
    • Displays, demonstrations and exhibits. 
    • Meeting rooms, hospitality suites and other special facilities. 
    • Salaries and wages of employees engaged in setting up and displaying exhibits, making demonstrations and providing briefings. 
  • Promotional items and memorabilia, including models, gifts and souvenirs.
  • Advertising and public relations designed solely to promote your organization.


3. What about audit expenses?


If you spend more than $750,000 in federal funds, you must have a Single Audit done.

The cost of the required Single Audit is allowable.

Not allowed 

The cost of a general audit is not allowable. 

If your organization has not spent over $750,000 in federal funds, you are not required to have a Single Audit done. 

Read more in the electronic code of federal regulations

Compensation - Personal Services

4. What personal services costs are allowed?

Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the federal award, including but not limited to wages and salaries.

Compensation for personal services may also include fringe benefits.

Costs of compensation are allowable to the extent that they satisfy specific requirements and that the total compensation for individual employees:

  • Is reasonable for the services rendered and conforms to your organization's established written policy. It must be consistently applied to both federal and nonfederal activities. 
  • Follows an appointment made in accordance with your laws and/or rules or written policies and meets the requirements of federal statute.

Read more in the electronic code of federal regulations.


5. How does IMLS define a conference?

A conference is defined as a meeting, retreat, seminar, symposium, workshop or event whose primary purpose is the dissemination of technical information.

A conference should be necessary and reasonable for success of the program the federal grant funds.

6. What conference expenses are allowable?

Your organization may be a host or a sponsor of a conference. 

Allowable expenses are: 

  • Rental of facilities.
  • Speakers' fees.
  • Meals and refreshments.
  • Local transportation.
  • Other items incidental to such conferences.
  • Identifying (but not providing) local, dependent-care resources. 
  • Circulating materials that relate to or are part of an approved LSTA project topic.

Read more in the electronic code of federal regulations.

State guidelines for allowable costs are outlined in the Department of Financial Services’ Reference Guide for State Expenditures (PDF).

7. What conference expenses are not allowable?

Expenses that are restricted by the terms and conditions of the federal grant are not allowed. 

Conference hosts/sponsors must exercise discretion and judgment to ensure conference costs are appropriate, necessary and managed in a manner that minimizes costs to the federal award.

8. Are there any exceptions to nonallowable expenses?

The federal awarding agency may authorize exceptions where appropriate for programs including Indian tribes, children and the elderly. See also §§200.438 Entertainment costs, 200.456 Participant support costs, 200.474 Travel costs and 200.475 Trustees.

Contributions and Donations

9. Can I use donations or contributions to my organization to meet matching requirements?


10. Can my organization donate money, property or services to another organization?

You cannot use federal grant funds for these purposes. 

More specifically: 

  • Costs of contributions and donations, including cash, property and services, from your organization to other entities, are unallowable.
  • The value of services and property donated to your organization may not be charged to the federal award either as a direct or indirect cost.
  • The value of services donated or volunteered to your organization by professional or technical personnel, consultants and other skilled and unskilled labor may not be charged to the federal award either as a direct or indirect cost. 

Read more in the electronic code of federal regulations.

Employee Health and Welfare Costs

11. What about costs for employee health and welfare?

Costs incurred in accordance with your organization's documented policies for the improvement of working conditions, employer-employee relations, employee health and employee performance are allowable.

Such costs must be equitably apportioned to all your activities.

Entertainment Costs

12. What about entertainment costs?


You can use federal grant funds to pay for musicians for a music project, storytellers for story time, etc.

Not allowed

Costs of entertainment, including amusement, diversion and social activities and any associated costs are unallowable, except where specific costs that might otherwise be considered entertainment have a programmatic purpose and are authorized either in the approved budget for the federal award or with prior written approval of the federal awarding agency.

Read more in the electronic code of federal regulations.

Equipment and Other Capital Expenses

13. What about equipment and capital expenditures?


Capital expenditures for special purpose equipment are allowable as direct costs.

Items that cost $5,000 or more require prior written approval from the Institute of Museum and Library Services. 

The Division will request this approval from IMLS after grants are awarded.

Not allowable

Capital expenditures for general purpose equipment, buildings and land are unallowable as direct charges, except with the prior written approval. 

Read more in the electronic code of federal regulations.

Fundraising and Investment Management

14. What fundraising costs are allowable or not?


Fund raising costs for the purposes of meeting the federal program objectives are allowable with prior written approval. 

Not allowable

Costs of organized fund raising, including financial campaigns, endowment drives, solicitation of gifts and bequests and similar expenses incurred to raise capital or obtain contributions are unallowable.

Read more in the electronic code of federal regulations.

Goods or Services for Personal Use

15. What about goods and services for personal use?


Costs of housing (e.g., depreciation, maintenance, utilities, furnishings, rent), housing allowances and personal living expenses are only allowable as direct costs regardless of whether reported as taxable income to the employees.

These costs must be approved in advance.

Not allowable

Costs of goods or services for your employees' personal use are unallowable regardless of whether the cost is reported as taxable income to the employees.

Read more in the electronic code of federal regulations.


16. What about lobbying?

The cost of certain influencing activities associated with obtaining grants, contracts, cooperative agreements or loans is an unallowable cost.

Read more in the electronic code of federal regulations.

Maintenance and Repair

17. Which maintenance and repair costs are allowed, and which are not?


Costs incurred for utilities, insurance, security, necessary maintenance, janitorial services, repair or upkeep of buildings and equipment (including federal property unless otherwise provided for) which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are allowable.

Not allowable

Costs incurred for improvements which add to the permanent value of the buildings and equipment or appreciably prolong their intended life must be treated as capital expenditures. These costs are only allowable to the extent not paid through rental or other agreements.

Read more in the electronic code of federal regulations.

Materials and Supplies Including Computing Devices

18. What about materials and supplies, including computer equipment?


Costs incurred for materials, supplies and fabricated parts necessary to carry out your federal award are allowable.

Purchased materials and supplies must be charged at their actual prices, net of applicable credits. Withdrawals from general stores or stockrooms must be charged at their actual net cost under any recognized method of pricing inventory withdrawals, consistently applied.

Incoming transportation charges are a proper part of materials and supplies costs.

Materials and supplies used for the performance of your federal award may be charged as direct costs.

In the specific case of computer equipment, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a federal award.

Federally-donated or furnished materials

If your organization uses federally-donated or furnished materials to perform your federal award, you must use them without charge.

Read more in the electronic code of federal regulations.

Memberships, Subscription and Professional Activities

19. What about memberships, subscriptions and other professional activities?


Your organization's membership fees in business, technical and professional organizations are allowable.

Your organization's subscriptions to business, professional and technical periodicals are allowable.

Costs of membership in any civic or community organization are allowable with prior approval.

Not allowed

Costs of membership in any country club or social or dining club or organization are unallowable.

Costs of membership in organizations whose primary purpose is lobbying are unallowable. 

Read more in the electronic code of federal regulations.

Before the Award

20. What are pre-award costs, and are they allowable?

Pre-award costs are those incurred prior to the effective date of the federal award. 

These costs are necessary for efficient and timely performance of the scope of work.

Such costs are allowable: 

  • To the extent that they would have been allowable if incurred after the date of the federal award. 
  • With written approval.

Read more in the electronic code of federal regulations.

Professional Services

21. What factors are relevant in determining if costs of professional and consulting services are allowed?

Costs of professional and consulting services rendered by persons who are members of a particular profession or possess a special skill and who are not your officers or employees are allowed. 

These costs must be reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the federal government.

In addition, legal and related services are limited.

Relevant factors

  • Nature and scope of the service rendered in relation to the service required.
  • Nhe necessity of contracting for the service, considering your organization's capability in the particular area.
  • Past pattern of such costs, particularly in the years prior to federal awards.
  • Impact of federal awards on your business (i.e., what new problems have arisen).
  • Whether the proportion of federal work to total business influences you to incur the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under federal awards.
  • Whether the service can be performed more economically by direct employment rather than contracting.
  • Qualifications of the individual or concern rendering the service and the fees charged, especially on non-federally funded activities.
  • Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time required, rate of compensation and termination provisions).
  • Retainer fees must be supported by evidence of bona fide services available or rendered.

Read more in the electronic code of federal regulations.

Publication and Printing Costs

22. What about publication and printing?

Publication costs for electronic and print media, including distribution, promotion and general handling are allowable.

If these costs are not identifiable with a particular cost objective, they should be allocated as indirect costs.

Page charges for professional journal publications are allowable where:

  • Publications report work supported by the federal government.
  • Charges are levied impartially on all items published by the journal.
  • Your organization may charge the federal award before closeout for the costs of publication or sharing of research results if the costs are not incurred during the period of performance of the federal award.

Read more in the electronic code of federal regulations.


23. What about recruiting costs?


Provided the size of staff recruited is in keeping with workload, the following costs are allowed: 

  • Help wanted advertising. 
  • Operating an employment office necessary to secure and maintain an adequate staff. 
  • Operating an aptitude and educational testing program.
  • Travel costs of employees while engaged in recruiting personnel.
  • Travel costs of applicants for interviews for prospective employment. 
  • Relocation costs incurred recruiting new employees, are allowable to the extent that such costs are incurred pursuant to your standard recruitment program.

If you use employment agencies, costs not in excess of standard commercial rates for such services are allowable.

Not allowed 

Special emoluments, fringe benefits and salary allowances incurred to attract professional personnel that do not meet the test of reasonableness or do not conform with the established practices of your organization are unallowable.

Where relocation costs incurred incident to recruitment of a new employee have been funded in whole or in part by a federal award and the newly hired employee resigns for reasons within the employee's control within 12 months after hire, you will be required to refund or credit the federal share of such relocation costs.

Read more in the electronic code of federal regulations.

Selling and Marketing

24. What about selling and marketing costs?

Costs of selling and marketing any of your products or services, unless allowed under advertising and public relations, are unallowable, except as direct costs, with prior approval, when necessary for the performance of the federal award.

Read more in the electronic code of federal regulations.

Training and Education

25. What about training and education?

The cost of training and education provided for employee development is allowable.

Read more in the electronic code of federal regulations.


26. What are allowable travel costs and how are they charged?


Travel costs are the expenses for transportation, lodging, subsistence and related items incurred by employees who are traveling for your official business.

How to charge travel costs

Such costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip. 


Travel costs must be consistent with those normally allowed in like circumstances and in accordance with your written travel reimbursement policies.

Lodging and subsistence

Costs incurred by employees and officers for travel, including costs of lodging, other subsistence and incidental expenses, must be considered reasonable and otherwise allowable only to the extent such costs do not exceed charges you normally allow. 

In addition, if these costs are charged directly to the federal award, you must document that:

  • Participation of the individual is necessary to the federal award.
  • Costs are reasonable and consistent with your established travel policy.
27. What if I travel to branch libraries?

Travel to branch libraries as part of the LSTA project must be reimbursed in accordance with the State of Florida rate.

28. Where can I find more information and guidance on travel?

On our Travel Guidance page, we have: 

  • Lists of what you must do to be reimbursed for travel.
  • Word and PDF versions of the Travel Reimbursement Voucher. 
  • Links to the applicable Florida Statutes

Read more in the electronic code of federal regulations.

State guidelines for allowable costs are outlined in the Department of Financial Services’ Reference Guide for State Expenditures (PDF).

During FY2023-24, the percentage of total costs for the Administration of the Annual Program financed with federal money is 67%; the federal dollar amount to be spent on the program is $334,129. This program does not receive any nongovernmental funding.

imls180.for.panel.jpgMany of these resources and programs are funded under the provisions of the Library Services and Technology Act from the Institute of Museum and Library Services. Florida's LSTA program is administered by the Department of State's Division of Library and Information Services.