FAR 31.205-8—Contributions or donations.
Plain-English Summary
FAR 31.205-8 is a very short but important cost principle that makes contributions or donations unallowable as a general rule. It covers donations in the form of cash, property, and services, and it applies regardless of who receives the contribution or donation. In practice, this means a contractor cannot charge the Government for voluntary gifts, charitable donations, sponsorship-style giveaways, donated equipment, or donated labor unless another FAR provision specifically allows the cost. The section exists to keep the Government from paying for expenditures that are not made for the direct performance of the contract and that are essentially voluntary transfers of value. The only express exception in this section is where 31.205-1(e)(3) provides otherwise, so contractors and contracting officers must read this rule together with that cross-reference before deciding whether a particular cost is allowable. For contractors, the practical significance is that the label attached to a payment or transfer does not control; the substance of the transaction does. For contracting officers and auditors, the key task is to identify whether an item is truly a donation or contribution and whether any specific FAR exception applies.
Key Rules
Contributions are unallowable
Any contribution or donation is unallowable as a contract cost unless a specific exception applies. This is a broad prohibition, so the default treatment is disallowance.
Covers cash, property, and services
The rule applies to all forms of value transfer, not just money. Donated equipment, materials, space, labor, professional services, and similar items are all within the scope of the prohibition.
Recipient does not matter
The unallowability applies regardless of who receives the contribution or donation. Charities, civic groups, employees, customers, affiliates, or any other recipient do not change the basic rule.
Cross-reference exception
The only exception stated in this section is where 31.205-1(e)(3) provides otherwise. Users must check that cross-reference before concluding a cost is unallowable.
Substance over label
Whether a cost is called a donation, sponsorship, gift, or contribution is less important than what actually happened. If the contractor voluntarily transferred value without a direct allowable contract purpose, the cost is generally unallowable.
Responsibilities
Contractor
Identify and exclude contributions or donations from claimed contract costs unless a specific FAR exception applies. Maintain documentation showing the nature of the transaction and support any claimed exception under 31.205-1(e)(3).
Contracting Officer
Review proposed or claimed costs for donation-like expenditures and disallow them when they fall within this rule. Ensure contract cost determinations follow the cross-reference to 31.205-1(e)(3) when relevant.
Auditor/Cost Reviewer
Test whether expenditures are voluntary transfers of value and verify that no exception applies. Challenge costs that are mislabeled as business development, public relations, or other categories when they are actually donations.
Agency
Apply the cost principle consistently in cost allowability determinations and contract administration. Avoid reimbursing or accepting claimed costs that are contributions or donations unless specifically authorized.
Practical Implications
Do not assume a charitable or community-related expense is allowable just because it may benefit the contractor’s reputation; if it is a donation, it is generally unallowable.
Watch for indirect attempts to charge donations through other accounts, such as marketing, employee relations, or miscellaneous operating expenses.
The form of the transfer matters: donated labor, free use of property, and in-kind services can be unallowable even when no cash changes hands.
Always check the cross-reference in 31.205-1(e)(3) before finalizing a cost decision, because this section itself contains the only stated exception.
For contractors, the safest practice is to segregate and clearly document any charitable or voluntary contributions so they are not billed to the Government.
Official Regulatory Text
Contributions or donations, including cash, property and services, regardless of recipient, are unallowable, except as provided in 31.205-1 (e)(3).