Charging Facilities and Administrative (Indirect) Costs to Sponsored Projects

Introduction

The research enterprise at the University of Minnesota is large, complex, and expensive. The burden of maintaining this enterprise is borne by the units incurring overhead costs, through the use of both Operations and Maintenance (O&M) funds and facilities and administrative (F&A) charges (perhaps better known as indirect costs) on sponsored projects. The maximum F&A amount that can be charged to a federally-sponsored project is negotiated with Health and Human Services and is based on the total amount of money spent by the University to support research. This same maximum rate is then also applied to other sponsored research.

Charging F&A / Indirect Costs

All applications for sponsored research, education, and outreach (public service) projects will generally have associated overhead or F&A costs. These F&A charges are real expenses incurred in the conduct of projects and need to be recovered from the sponsor. It is expected that the standard on and off-campus negotiated rates for research, instruction, other sponsored activity will be used whenever possible. If the sponsor has a published rate that is different from the University's rate, use the sponsor's rate. The appropriate F&A rate must be included in the proposal budget and Proposal Routing Form submitted to Sponsored Projects Administration. The University's standard rates can be found on the F&A cost rate chart.

To calculate the amount of F&A (overhead) that will be charged to a project, multiply the rate by the total direct costs, or, for most federal sponsors, the "modified total direct costs." Modified total direct costs are the total direct costs minus equipment, capital (Alterations & Renovations) expenditures, charges for patient care, graduate student fringe, space rental costs of off-site facilities, scholarships and fellowships as well as the portion of each subgrant or subcontract in excess of the first $25,000 per project period.

If principal investigators believe their projects should not be charged the full F&A rate, they can request a special waiver from the Office of the Vice President for Research (see Administrative Procedure: Requesting a Facilities and Administrative (Indirect) Cost Reduction). Lower rates will not be allowed simply because principal investigators believe that this will increase the competitiveness of proposals.