We’ve gone to the grant management mailbag for some common problems encountered in the “real-world” by “real-life” grant managers.
Today we’re looking at 4 common mistakes about the un-allowability of public relations costs that you may experience when managing your Federal grant.
A grant manager writes:
“Are promotional items, such as pens, water bottles, nylon bags, with an agency logo allowable?”
“We use them as part of our outreach to the eligible population that we serve through our Federal grant.
I read that these types of costs are unallowable as public relations costs, but I also read that as long as they had the federal project logo or name on it, they were allowable.
We have also supported community events where the organizers purchase signs or promotional items, and put our federal project logo on it.
What to do?
What our grant manager is referring to are examples of public relations costs. Here are the general “rules”
If the costs fall into the allowable cost categories for public relations-such as outreach effort for the award, they would be allowable.
On the other hand, if the public relations costs are to promote the organization (not the award) they would not.
What are Public Relations Costs?
Public relations are defined as community relations and activities dedicated to maintaining the image of the organization, institution or governmental unit or maintaining or promoting understanding and favorable relations with the community or public at large or any segment of the public.
Here are two examples:
An organization had souvenir rulers made to hand out to the high schools that had the name of the project as part of the project outreach to get the kids interested in the project. These costs would likely be allowable.
An institution had coffee cups with the name of the institution made up which were given to volunteer board members for their service. These costs would likely be un-allowable.
What Public Relations Costs are Allowable?
There are three types of allowable public relations according to the Federal Cost Principles regulations:
(1) Costs specifically required by the Federal award;
(2) Costs of communicating with the public and press pertaining to specific activities or accomplishments which result from performance of Federal awards (these costs are considered necessary as part of the outreach effort for the Federal award); or
(3) Costs of conducting general liaison with news media and government public relations officers, to the extent that such activities are limited to communication and liaison necessary keep the public informed on matters of public concern, such as notices of Federal contract/grant awards, financial matters, etc.
How to Recognize Allowable vs. Unallowable Public Relations
In the “real-world” it can be hard to distinguish between when you are promoting the Federal Award vs. promoting your organization, institution or governmental unit.
Sometimes the purposes seem to run together…
That’s why it’s so important to make sure you have sufficient documentation to show why the costs are allowable vs. unallowable.
- -It really comes down to make sure the purpose of the spending is part of the allowed outreach and not promoting the organization.
It’s also a good idea to put a memo with the supporting documentation about how and why the spending falls in the allowable categories.
(Sometimes just working through that “how” and “why” process makes it clearer what the intended purpose of the spending is.)
Here are 4 Types of Unallowable Public Relations to Avoid
1) It’s all about “ME”
- -Costs of advertising and public relations designed solely to promote the organization, institution or governmental unit are unallowable.
2) What Happens In Vegas, Stays In Vegas?
Costs of meetings, conventions, convocations, or other events related to other activities of the organizations, institution or governmental unit instead of the Federal Project are unallowable, including:
- -Costs of displays, demonstrations, and exhibits;
- -Costs of meeting rooms, hospitality suites, and other special facilities used in conjunction with shows and other special events; and
- -Salaries and wages of employees engaged in setting up and displaying exhibits, making demonstrations, and providing briefings;
3) No More Foam Fingers
- -Costs of promotional items and memorabilia, including models, gifts, and souvenirs are unallowable.
If you are purchasing these types of items for your Federal Award, make sure you have a rock solid documentation of how these costs are considered necessary as part of the outreach effort for the Federal award or specifically required by the Federal Award.
Where can I find out more?
For Non-profit Organizations:
The relevant sections are contained in 2 CFR Part 230 (Formerly OMB Circular A-122)
Appendix B: Selected Items of Cost for Non-Profit Organizations
For Institutions of Higher Learning:
The relevant sections are contained in 2 CFR Part 220 (formerly OMB Circular A-21)
Appendix A, Section J: Selected Items of Cost
For State, Local and Tribal Governments:
The relevant section is contained in 2 CFR Part 225 (formerly OMB Circular A-87)
Appendix B: Selected Items of Cost
Lucy Morgan CPA, MBA
CEO, Compliance Warrior
P.S. If you’d like some more help about what we talked about today, check out Grant Management Boot Camp training that helps that helps people work through these issues.
Click the link below for your type of organization to get more information about our courses and to get signed up.