Allowability of Costs/Cost Considerations for Foreign Grantees
Allowability of Costs / Activities (section 7.9) from the NIH Grants Policy Statement provides a list of allowable costs for NIH grants in general (including domestic and foreign). A list of allowable costs for foreign grants (section 16.6) is provided but is not intended to be all-inclusive.
Foreign grants may not charge the following costs:
- Major Alteration and Renovation (A&R) Costs (more than $500,000): Unallowable.
- Minor A&R Costs (less than $500,000): May be allowable with justification and NIH approval, unless prohibited by the governing statute or implementing program regulations. Minor A&R costs may be included and justified in any detailed budget of a competing application. Further, rebudgeting of active grants to accommodate minor A&R is also allowable; however, this does require NIH prior approval of the GMO. Additional information may be required.
- Facility and Administrative (F&A) Costs: With the exception of the American University of Beirut and the World Health Organization, which are eligible for full F&A cost reimbursement, F&A costs under grants to foreign and international organizations will be funded at a fixed rate of 8 percent of modified total direct costs, exclusive of tuition and related fees, direct expenditures for equipment, and subawards in excess of $25,000. These funds are paid to support the costs of compliance with federal requirements. Some examples of NIH compliance requirements are the protection of human subjects (including the required education in the protection of human research participants), animal welfare, invention reporting, other post-award reporting requirements, financial conflict of interest and research misconduct. Note, these are just a few representative examples of compliance requirement; this list is not all inclusive. Awards to domestic organizations with a foreign or international consortium participant may include 8 percent of modified total direct costs, exclusive of tuition and related fees, direct expenditures for equipment, and subawards in excess of $25,000. These funds are paid to support the costs of compliance with federal requirements. NIH will not support the acquisition of or provide for depreciation on any capital expenses (facilities) or the normal general operations of foreign and international organizations. Therefore, these expenses may not be requested as a direct cost; however, equipment is an allowable direct cost. Other items normally treated as F&A costs (e.g., rent) may be requested as direct costs and will be evaluated by NIH for allowability.
Other cost considerations for foreign grants:
- U.S. Dollars: The application budget, requests for funds, and financial reports must be stated in U.S. dollars. Once an award is made, NIH generally will not compensate foreign grantees for currency exchange fluctuations through the issuance of supplemental awards. Cost increases for fluctuations in exchange rates are allowable costs subject to the availability of funding, as determined by the awarding IC.
- Customs and Import Duties: Allowable under grants to domestic organizations when performance will take place entirely within the United States, its possessions, or its territories, or when foreign involvement in the project is incidental to the overall grant-supported project. Charges may include consular fees, customs surtaxes, value-added taxes, and other related charges.
- Valued Added Tax (VAT): Foreign taxes charged for the purchase of goods or services that a non-Federal entity is legally required to pay in country is an allowable expense under Federal awards. Foreign tax refunds or applicable credits under Federal awards refer to receipts, or reduction of expenditures, which operate to offset or reduce expense items that are allocable to Federal awards as direct or indirect costs. To the extent that such credits accrued or received by the non-Federal entity relate to allowable cost, these costs must be credited to the NIH awarding IC either as costs or cash refunds. If the costs are credited back to the Federal award, the non-Federal entity may reduce the Federal share of costs by the amount of the foreign tax reimbursement, or where Federal award has not expired, use the foreign government tax refund for approved activities under the Federal award with prior approval of the NIH awarding IC. For many countries an exemption of this tax for research exists. Consequently, requesting this cost should be unallowable for research grants involving such countries as a performance site.
- Visa Costs: Generally, allowable direct cost as part of recruiting costs on an NIH grant, as long as the institution has an employee/employer relationship with the individual. Visa costs may also be allowable when identified in specific FOAs or when within the scope of an approved research project. When included as a recruiting cost it is the responsibility of the institution to monitor the status of the individual's visa and ensure they have sufficient time to fulfill the obligations of the research they are being paid for on the grant. However, if the person is already an employee and the cost in question is a visa renewal then this isn't a recruiting cost so the cost would not be an allowable charge to a grant. Expedited processing fees are generally unallowable unless and until they become part of standard processing fees. Fraud prevention and detection fees are allowable if they are required fees. Department of Homeland Security SEVIS Form I-901 is a required fee and is allowable.
- Cost Reporting: Foreign grantees must submit annual Federal Financial Reports (FFR) in U.S. dollars, whether or not they are under Streamlined Non-competing Award Process (SNAP). This is due to the fact that foreign grantees are not paid through the Payment Management System (PMS) and, therefore, do not submit the quarterly reports, which are required for domestic awards under SNAP). The currency rate in effect at the time the FFR is prepared should be used in preparing the report.
- Audit (section 16.7.4): Foreign grantees are subject to the same audit requirements as for-profit organizations (specified in 45 CFR 75.501(h) through 75.501(k) and in Grants to For-Profit Organizations (section 18.4.6) in the NIH Grants Policy Statement).
Updated November 2017