Stipends are payments made to individuals for subsistence support or to defray expenses during a period of academic appointment. Stipend payments are not compensation for services rendered and, therefore, are not allowable on federal awards unless the purpose of the agreement is to provide training to selected participants and the charge is approved by the sponsoring agency (OMB Circular Uniform Guidance, Subpart E). The most common type of federal awards that include stipends are fellowships and training grants. Additional information is available in the Guidance Concerning Charging Stipends to Sponsored Awards.
Stipends are allowable on non-federal sponsored research awards, and they should be anticipated in proposal budgets and approved by the sponsor. Many non-federal sponsors are willing to fund stipends. It is important, however, to distinguish individuals who are providing services to the University from individuals who are being paid without any expectation of work effort. University human resources policies prevail over non-federal sponsor expectations. An individual who is being paid for the services provided to the University should be considered either an employee or an independent contractor.
Fellowships are grants that support the educational experience of the recipient. Fellowships may be research related or non-research activities. These funds are not considered compensation for performance. The purposes of a fellowship are to enhance the academic experience and career growth.
Some Sponsors use the term fellowship to support individuals who are actually participating in a defined research project in which deliverables are expected. The funds are considered compensation for performance and usually includes stipend payments. This type of fellowship represents an employment relationship. It is important to carefully read the sponsor’s guidelines to determine which type of fellowship the sponsor is offering and the implications for proposal processing, budgeting, deliverables, award acceptance, and award management.
Many sponsors fund fellowships; however, the most common are foundations, NSF and NIH.
Preparing a Proposal
Stipends are only allowed if there are specific training activities included in the scope of work as proposed and awarded by the federal sponsor. Outgoing federal proposals that include stipends in the budget should include a description of a training purpose in the award. Graduate student support that is not identified explicitly as “stipend” will be considered “compensation” and should carry indirect costs. OSP offices and tub-level research administrators will review proposals to prevent submission of stipends on research awards.
Sponsored funds intended to support training or research training will state that intention clearly in the agency program announcement. When submitting a proposal for an award that allows stipends, the stipend costs should be identified in the proposal budget justification and justified as to why it is necessary and allocable to the performance of the award. Inclusion in the budget justification is intended to enable the sponsor to review and concur with the need for the stipend costs. Written justification and/or approval is meant to prevent questions regarding the allowability of costs in the event of an audit.
NIH uses stipends when funding Fellowships. The stipend levels are updated on a yearly basis. The stipend is specific to the individuals career level and years of experience. The latest rates are posted by NIH.
NSF only allows stipends in support of participant support costs. The stipends cannot support Harvard employees, and do not support activities that benefit the research award.
Setting Up an Award
Not every cost can be anticipated at the time of proposal preparation. In the event that an unbudgeted stipend cost is required after an award is funded, the department should work directly with their OSP Awards Management contact to determine if sponsor approval is required. Any stipends on federal awards require sponsor approval, except those already noted. The written sponsor approval, as well as the justification explaining the purpose and need for stipend payments on the specific project, will be retained in GMAS for future reference should the expenditure be questioned at a later date.
Managing an Award
As part of ongoing account reconciliations, Department/Local Level Managing Units are responsible for reviewing stipend transactions for allowability and compliance with sponsor requirements. Stipend expenses on a federal award require verification of allowability, as such, stipends are automatically flagged as part of GMAS Transaction Monitoring. OSP Research Finance confirms the allowability of stipend charges on federal awards during periodic reviews of financial activity. Stipends are expensed to object code 6440 for Graduate Students and 6450 for Postdoc Fellows. When allowable under the terms and conditions of the fellowship, additional salary compensation can be paid using object code 6140 for Graduate Students and 6150 for Postdoc Fellows. The Department/Local Level Managing Unit must ensure stipend payments and salary compensation are budgeted and expensed correctly since there are different IRS tax rules for each.
Closing out an Award
The Department/Local Level Managing Unit provides a final account reconciliation to ensure allowable stipend expenditures post to the account. They are also responsible for removing any stipend expenditures that are unallowable. OSP Research Finance validates stipend transactions against the sponsor budget to confirm allowability and reports them as required by the sponsor.