Compensation, broadly speaking, is payment for services performed on a sponsored project during the period of performance of an award, and may include salary, wages and fringe benefits as part of an individual’s total compensation. Compensation costs are generally allowable as a direct expense when the paid effort provides a direct benefit to the award. Some federal agencies limit the amount of salary that can be requested (e.g., National Institutes of Health [NIH] imposes a cap on the salary that can be expensed to an award), where salary costs above a cap are unallowable and must be borne by institutional funds. See NIH Salary Cap for more information. Note: Costs representing salaries over regulatory caps, such as the NIH Salary Cap, cannot be used to meet a cost sharing commitment.
As an example for calculating with a salary cap, if a faculty member is paid over the NIH Salary Cap and is providing 10% of his or her effort on an NIH award, 10% of the capped amount for the corresponding time period can be charged to the award.
Faculty Salary: $200,000 NIH Cap: $185,100 Effort on NIH grant: 10% Maximum salary charge to NIH grant = Effort % X NIH Cap = 10% X $185,100 = $18,510
See NIH salary cap for additional background information.
The University has processes in place to comply with Federal regulations pertaining to compensating personnel in accordance with OMB Uniform Guidance Part 200.430 (Compensation – Personal Services), and charges compensation costs consistently.
Note: The level of compensation must be: (1) reasonable, (2) in accordance with an individual’s University appointment letter, and (3) consistent with their Institutional Base Salary (IBS).