The Uniform Guidance governs almost every federal grant a nonprofit, university, tribe, or local government receives. Most of what makes a budget fail review is in a handful of its sections. This page is the working subset — with the section numbers, so you can check us against the regulation rather than take our word for it.
§200.403 lists what a cost has to be: necessary and reasonable for performance of the award, allocable to it, consistent with policies that apply uniformly to your federal and non-federal work, treated consistently as either direct or indirect, conforming to any limits in the guidance or the award, not used as cost share on another federal award, and adequately documented. A cost that fails any one of those is unallowable no matter how sensible it looks. Most budget questions are answerable by walking that list.
If you have a negotiated indirect cost rate agreement, you use it. If you do not, §200.414(f) entitles you to the de minimis rate — you do not have to justify it, and a pass-through entity may not force you below it. Budgeting zero indirect costs to look lean is the single most common self-inflicted wound in the applications we see, and it funds your own overhead out of your reserves for the life of the award.
Modified total direct costs exclude equipment, capital expenditures, participant support costs, rental costs, tuition remission, scholarships and fellowships, and the portion of each subaward above the threshold in §200.1. Applying a rate to the wrong base is an arithmetic error a reviewer will catch, and it moves real money in both directions.
Stipends, travel, registration, and subsistence paid to or on behalf of participants — not employees — are participant support costs under §200.1. They sit outside the MTDC base, and under §200.308 they generally cannot be moved to other budget categories without prior written approval. Putting them in the wrong line changes both your indirect recovery and what you are allowed to do with the money later.
The guidance repeatedly assumes documents you may not have written: procurement procedures and a conflict-of-interest policy (§200.318), a method for determining allowability (§200.302), travel policy (§200.475), and cash management procedures (§200.305). An auditor asks to see them. Their absence is a finding even when every individual cost was reasonable.
§200.331 sets out the distinction, and it turns on substance rather than what the agreement is titled. A subrecipient carries out part of the program and is measured against its objectives; a contractor provides goods or services within normal business operations to many purchasers. Get it wrong and you have either imposed monitoring obligations that do not apply or skipped ones that do — and a subaward you called a contract has been sitting in the wrong place in your MTDC base the whole time.
A funding notice can be more restrictive than the Uniform Guidance, and frequently is — caps on indirect, salary limits, unallowable categories specific to the program. Where they conflict, the notice governs for that award. The guidance is the floor, not the ceiling.
Negotiated rate, de minimis, or a program-specific cap from the notice. This determines the base, which determines what each direct line is actually worth to you, so it cannot be an afterthought.
§200.403(d) requires consistent treatment. A cost you treat as indirect in your normal operations cannot become direct on one application because there is room in the budget.
This is where the arithmetic goes wrong most often. Compute MTDC explicitly rather than applying a rate to a subtotal that happens to be nearby.
A budget narrative that explains why each cost is necessary, reasonable, and allocable is answering §200.403 directly. One that only restates the arithmetic leaves the reviewer to make the allowability argument for you, and they may not.
Several of these moved in the revision effective 1 October 2024, so figures repeated from older guidance are frequently out of date. These are transcribed, not read from the regulation — the authority is the eCFR text of 2 CFR part 200, which is continuously updated. Check it before you rely on a number.
| Threshold | Amount | Section | Notes |
|---|---|---|---|
| De minimis indirect cost rate | 15% of modified total direct costs | §200.414(f) | Raised from 10% in the 2024 revision. Available to any recipient without a negotiated rate — you do not have to justify it, and a funder may not require you to accept less. |
| Subaward amount included in the MTDC base | first $50,000 of each subaward | §200.1 (“Modified Total Direct Cost”) | Raised from $25,000 in the 2024 revision. Everything above that per subaward is excluded from the base your indirect rate is applied to. |
| Equipment capitalization threshold | $10,000 | §200.1 (“Equipment”) | Raised from $5,000 in the 2024 revision. Below it, an item is supplies. Your own capitalization policy may set a lower figure, and if it does, yours governs. |
| Single Audit requirement | $1,000,000 in federal awards expended in a fiscal year | §200.501 | Raised from $750,000 in the 2024 revision. It counts what you expended across all federal awards in the year, not the size of any one award. |
| Micro-purchase threshold | $10,000 | §200.320(a)(1), §200.1 | Below it, procurement may be made without competitive quotations if the price is reasonable. A recipient may self-certify a higher threshold under the conditions in §200.320(a)(1)(iv)–(v). |
| Simplified acquisition threshold | $250,000 | §200.1, 48 CFR part 2 subpart 2.1 | Above it, procurement moves to sealed bids or competitive proposals under §200.320(b)(2). |
It applies to federal awards to non-federal entities — states, local governments, tribes, institutions of higher education, and nonprofits — unless the award or a federal agency exception says otherwise. Agencies adopt it in their own regulations and may add requirements. Check the notice and the agency’s implementation, not just the part itself.
A pass-through entity cannot require a subrecipient to accept less than the de minimis rate under §200.414(f). A federal agency can limit indirect recovery for a program where a statute or regulation provides for it, and the notice will say so. "We do not pay indirect" without that basis is worth questioning.
Total direct costs is everything charged directly to the award. Modified total direct costs removes the categories listed in §200.1 — equipment, capital expenditures, participant support, rental costs, tuition remission, scholarships, and the portion of each subaward over the threshold. Indirect rates are normally applied to MTDC, so the difference is money.
Yes, and several moved in the revision effective 1 October 2024 — the de minimis rate, the subaward exclusion, the equipment threshold, and the Single Audit trigger all changed. Figures widely repeated online are often the older ones. The eCFR is the authority and is continuously updated.
It reads the funding notice for the cost restrictions that apply to your award and flags them in the responsiveness report, including where the notice is more restrictive than the Uniform Guidance. It is not a substitute for your finance staff, your auditor, or counsel, and it does not certify compliance.
Bring in a notice and see the cost restrictions it actually imposes, pulled out of the document with the rest of its requirements.