Indirect costs, which are officially termed "Facilities and Administrative (F&A) Costs" and are commonly referred to at the University as "IC", are costs that are real costs associated with carrying out sponsored projects but are difficult to quantify with respect to any given project. For example, heat, maintenance, building depreciation, administrative expenses and library use are all indirect costs. Funds received as indirect costs are reimbursement for funds expended for central and departmental administration, buildings and grounds and library costs.

Indirect costs are recovered on sponsored project proposals by multiplying the sponsor's indirect cost rate by the appropriate direct cost base and including that figure in the total cost of the budget. Depending upon the sponsor, the direct costs base may be either the simple total of all directs costs in the budget (Total Direct Costs or TDC), or the "modified" total direct costs (MTDC), i.e., TDC minus the total of certain items in the budget. Federal sponsors use MTDC. Some federal agencies, like the Department of Defense (DOD) have specific IC restrictions. For more information, contact SPA.

On budgets for federal sponsors, subtract the following line items from the direct cost base to arrive at MTDC:

• Equipment
• Participant support costs
• Subcontract costs in excess of the first $25,000 during the competing project period
• University computer services
• GRA tuition charges
• Alteration or renovation costs
• Inpatient/outpatient costs of routine and ancillary services provided by hospitals

In addition, the MTDC on training grants and fellowships exclude tuition, fees and health insurance. Non-federal sponsors may require indirect costs to be computed on a different base.

The University has a policy of recovering full indirect costs on all sponsored projects where specific written agency policy does not preclude it. The University will agree to an agency's indirect cost policy that is less than the federal negotiated rate provided that it is part of the agency's written policy and is applied uniformly to all institutions funded in that particular program area. If a written indirect cost policy does not exist, SPA will negotiate a mutually acceptable rate. In rare cases, agencies will not include the indirect cost reimbursement request as part of the application budget, but will reimburse the institution separately.

The University has negotiated different rates for research conducted on and off campus. As a rule of thumb, if a project is partially on-campus and partially off-campus, the rate utilized is the one associated with the space where 50% or more of the program or budget is located. If a grant has multiple budgets, the rate can be determined separately for each budget.

Government indirect cost rates are negotiated with the federal government. For service agreements and non-government clinical trials (which are a form of service agreement), the indirect cost rate is 33% of total cost. If you have any questions concerning the appropriate rate to use for any government or non-government sponsored projects or are unsure how to correctly calculate the indirect costs, contact either your Project Officer in SPA or, if applicable, the CTO or STV.

The University will grant a waiver of its indirect cost policy due to either extenuating circumstances or in cases of extreme hardship. To request a waiver, the investigator should write a letter, countersigned by his/her chair/dean/director, to the Director of SPA. This letter should present the reason for the waiver request, state what rate reduction is being requested for what budget period and indicate the school/department/institute/ center's contribution. SPA will consult with the appropriate individuals to reach a decision with respect to the waiver.

A special policy exists for federally funded sponsored projects being transferred from another institution whose indirect cost rate is lower than the University's. If the federal agency is unwilling to provide additional funds to compensate for the higher indirect cost rate during the first budget period or all remaining non- competitive period(s), the University will accept the lower rate until the next budget period.

To locate the appropriate indirect cost rate for your proposal, please refer to the Institutional Information Sheet.