2 CFR 200.438 sets 2 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.
Entertainment costs — including amusement, diversion, and social activities and any associated costs (such as gifts) — are unallowable unless they have a specific and direct programmatic purpose and are included in a Federal award.
Budget or narrative includes social events, celebrations, amusement/diversion activities, or gifts
Costs of prizes or challenges are allowable only if they have a specific and direct programmatic purpose and are included in the Federal award.
Budget includes prizes, challenge awards, or participant incentive awards
Upload the funding notice and your draft budget or narrative, and ask. Grantable answers from its compliance database of federal, agency and state rules, with citations.
(a) Entertainment costs. Costs of entertainment, including amusement, diversion, and social activities and any associated costs (such as gifts), are unallowable unless they have a specific and direct programmatic purpose and are included in a Federal award.
(b) Prizes. Costs of prizes or challenges are allowable if they have a specific and direct programmatic purpose and are included in the Federal award. Federal agencies should refer to OMB guidance in M-10-11 “Guidance on the Use of Challenges and Prizes to Promote Open Government,” issued March 8, 2010, or its successor.
Source: eCFR · checked Sep 17, 2026
Entertainment costs — including amusement, diversion, and social activities and any associated costs (such as gifts) — are unallowable unless they have a specific and direct programmatic purpose and are included in a Federal award. Costs of prizes or challenges are allowable only if they have a specific and direct programmatic purpose and are included in the Federal award.
Budget or narrative includes social events, celebrations, amusement/diversion activities, or gifts. Budget includes prizes, challenge awards, or participant incentive awards.
Plain-English summaries for information only, not legal advice. Always check the regulation text, your award terms and your agency’s guidance.