Subpart A: Acronyms and definitions 2024 Uniform Guidance · effective Oct 1, 2024

2 CFR 200.1: Definitions

2 CFR 200.1 sets 4 requirements for organizations that receive federal grants and cooperative agreements. Applies when you build your application and budget, and to every cost you charge after award.

Shows up in your application: BudgetBudget justificationIndirect cost rateSubaward planProject narrativeCost sharing commitment

What 2 CFR 200.1 requires

1. Allowable costs

What you must do

When indirect costs are charged on a Modified Total Direct Cost (MTDC) base, the base may include only direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the subaward's period of performance); it must exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other exclusions require approval of the cognizant agency for indirect costs.

When it applies

Application budget applies an indirect cost rate (negotiated or 15% de minimis per § 200.414(f)) to an MTDC base.

BudgetBudget justificationIndirect cost rate
2. Allowable costs

What you must do

Budget items may be classified as equipment only if they are tangible personal property (including information technology systems) with a useful life of more than one year AND a per-unit acquisition cost at or above the lesser of the applicant's capitalization level or $10,000; all other tangible personal property — including computing devices under that threshold regardless of useful life — must be classified as supplies.

When it applies

Budget contains equipment or supply line items.

BudgetBudget justification
3. General

What you must do

Each third party receiving award funds must be classified per the definitions: a subaward goes to a subrecipient that carries out part of the Federal award to contribute to the project's goals and objectives (never to a beneficiary, participant, or contractor); a contractor is an entity that receives a contract for goods or services. The substance of the relationship, not the label or form of the legal agreement, controls (case-by-case determination per § 200.331).

When it applies

Application budget or narrative directs award funds to a third-party organization.

BudgetSubaward planProject narrative
4. Cost sharing

What you must do

Amounts presented as cost sharing (including required matching) must be project costs not paid by Federal funds or contributions, unless a Federal statute authorizes Federal funds to be used; amounts voluntarily pledged in the proposal budget (voluntary committed cost sharing) become binding requirements of the Federal award.

When it applies

Application pledges cost sharing or the notice of funding opportunity mandates matching.

BudgetCost sharing commitmentBudget justification
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Sections 2 CFR 200.1 refers to

Sections that refer to 2 CFR 200.1

Regulation text of 2 CFR 200.1

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§ 200.1 Definitions.

The following is a list of definitions of key terms frequently used in 2 CFR part 200. Definitions found in Federal statutes or regulations that apply to particular programs take precedence over the following definitions. However, where the following definitions implement specific statutory requirements that apply government-wide, such as the Single Audit Act, the following definitions take precedence over Federal regulations. For purposes of this part, the following definitions apply:

[...]

Contractor means an entity that receives a contract.

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Cost sharing means the portion of project costs not paid by Federal funds or contributions (unless authorized by Federal statute). This term includes matching, which refers to required levels of cost share that must be provided. See § 200.306.

[...]

Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost that equals or exceeds the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes, or $10,000. See the definitions of capital assets, computing devices, general purpose equipment, information technology systems, special purpose equipment, and supplies in this section.

[...]

Federal financial assistance means:

(1) Assistance that recipients or subrecipients receive or administer in the form of:

(i) Grants;

(ii) Cooperative agreements;

(iii) Non-cash contributions or donations of property (including donated surplus property);

(iv) Direct appropriations;

(v) Food commodities; and

(vi) Other financial assistance (except assistance listed in paragraph (2) of this definition).

(2) For § 200.203 and subpart F of this part, Federal financial assistance also includes assistance that recipients or subrecipients receive or administer in the form of:

(i) Loans;

(ii) Loan Guarantees;

(iii) Interest subsidies; and

(iv) Insurance.

(3) For § 200.216, Federal financial assistance includes assistance that recipients or subrecipients receive or administer in the form of:

(i) Grants;

(ii) Cooperative agreements;

(iii) Loans; and

(iv) Loan Guarantees.

(4) Federal financial assistance does not include amounts received as reimbursement for services rendered to individuals as described in § 200.502(h) and (i).

(5) For part 184 of this title, in addition to the forms of assistance listed in paragraph (1) of this definition, Federal financial assistance also includes assistance that recipients or subrecipients receive or administer in the form of:

(i) Loans; and

(ii) Loan Guarantees.

[...]

Financial obligations means orders placed for property and services, contracts and subawards made, and similar transactions that require payment by a recipient or subrecipient under a Federal award that will result in expenditures by a recipient or subrecipient under a Federal award.

Fixed amount award means a type of grant or cooperative agreement pursuant to which the Federal agency or pass-through entity provides a specific amount of funding without regard to actual costs incurred under the Federal award. This type of Federal award reduces some of the administrative burden and record-keeping requirements for both the recipient or subrecipient and the Federal agency or pass-through entity. Accountability is based primarily on performance and results. See §§ 200.102(c), 200.101(b), 200.201(b), and 200.333.

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Modified Total Direct Cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs.

[...]

Period of performance means the time interval between the start and end date of a Federal award, which may include one or more budget periods. Identification of the period of performance in the Federal award consistent with § 200.211(b)(5) does not commit the Federal agency to fund the award beyond the currently approved budget period.

[...]

Program income means gross income earned by the recipient or subrecipient that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance except as provided in § 200.307(c). Program income includes but is not limited to income from fees for services performed, the use or rental of real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, license fees, and royalties on patents and copyrights, and principal and interest on loans made with Federal award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in Federal statutes, regulations, or the terms and conditions of the Federal award, program income does not include rebates, credits, discounts, and interest earned on any of them. See § 200.407. See also 35 U.S.C. 200-212 “Disposition of Rights in Educational Awards,” which applies to inventions made under Federal awards.

[...]

Subaward means an award provided by a pass-through entity to a subrecipient for the subrecipient to contribute to the goals and objectives of the project by carrying out part of a Federal award received by the pass-through entity. It does not include payments to a contractor, beneficiary, or participant. A subaward may be provided through any form of legal agreement consistent with criteria in with § 200.331, including an agreement the pass-through entity considers a contract.

Subrecipient means an entity that receives a subaward from a pass-through entity to carry out part of a Federal award. The term subrecipient does not include a beneficiary or participant. A subrecipient may also be a recipient of other Federal awards directly from a Federal agency.

[...]

Supply means all tangible personal property other than those described in the equipment definition. A computing device is a supply if the acquisition cost is below the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes or $10,000, regardless of the length of its useful life. See this section's definitions of computing devices and equipment.

[...]

[89 FR 30136, Apr. 22, 2024, as amended at 89 FR 79732, Oct. 1, 2024]

Source: eCFR · checked Sep 17, 2026

Questions about 2 CFR 200.1

What does 2 CFR 200.1 require?

When indirect costs are charged on a Modified Total Direct Cost (MTDC) base, the base may include only direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the subaward's period of performance); it must exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other exclusions require approval of the cognizant agency for indirect costs. Budget items may be classified as equipment only if they are tangible personal property (including information technology systems) with a useful life of more than one year AND a per-unit acquisition cost at or above the lesser of the applicant's capitalization level or $10,000; all other tangible personal property — including computing devices under that threshold regardless of useful life — must be classified as supplies. Each third party receiving award funds must be classified per the definitions: a subaward goes to a subrecipient that carries out part of the Federal award to contribute to the project's goals and objectives (never to a beneficiary, participant, or contractor); a contractor is an entity that receives a contract for goods or services. The substance of the relationship, not the label or form of the legal agreement, controls (case-by-case determination per § 200.331). Amounts presented as cost sharing (including required matching) must be project costs not paid by Federal funds or contributions, unless a Federal statute authorizes Federal funds to be used; amounts voluntarily pledged in the proposal budget (voluntary committed cost sharing) become binding requirements of the Federal award.

When does 2 CFR 200.1 apply?

Application budget applies an indirect cost rate (negotiated or 15% de minimis per § 200.414(f)) to an MTDC base. Budget contains equipment or supply line items. Application budget or narrative directs award funds to a third-party organization. Application pledges cost sharing or the notice of funding opportunity mandates matching.

Plain-English summaries for information only, not legal advice. Always check the regulation text, your award terms and your agency’s guidance.