INDIRECT COSTSINDIRECT COSTS

Aka: General Operating Funds, Administrative Overhead, F&A (Facilities

and Administrative), Overhead Costs

Indirect CostsIndirect Costs

• Covers services and products essential for your overall organization, and consumed, in some small degree, by your projects

Indirect CostsIndirect Costs

• Examples:• Telephone bill• Space rent or payment• Electricity• Insurance• Equipment used by everyone, not just for

your project (xerox, laboratory equipment, pencil sharpeners, file cabinets)

• Wear and tear on equipment

Indirect CostsIndirect Costs

• Examples:

• Custodial services

• Security

• Accounting

• Payroll

• Legal support

Indirect CostsIndirect Costs

• Calculated as a % of total direct costs • Indirect Cost Pool

Direct Cost Base = Indirect Cost Rate• Approved rate from a state or federal

agency• Range – 5% of a chartered school to

75% research university• Most – 48%-57%• Off Campus lower – 17% to 27%

Indirect CostsIndirect Costs

• Some grants restrict or cap the amount of indirect cost allowed, i.e. 5% or 10% of the total budget

• Equipment over a certain amount is excluded in the calculation - $500 to $5000 defines equipment

• Also excluded – off campus facility rental, patient care charges, scholarships, fellowships, tuition remission, subgrants

Indirect CostsIndirect Costs

• Bad Idea: Waive all or part of indirect cost rate as an inkind contribution

• Indirect costs contribute to the university’s ability to support research and grantsmanship. It is needed: it is planned for by the granting agency.

• DON’T WAIVE IT!!

Indirect CostsIndirect Costs

• Other uses:

• Sharing with the grant writer or principal investigator (PI) for support

• Sharing with the department sponsoring grant

• Sharing with the college sponsoring grant

Indirect CostsIndirect Costs

• Other uses:

• Building a fund for special purpose –

• Professional development

• Grant solicitation travel

• Student travel

• One-time purchase

• Faculty recognition

Indirect CostsIndirect Costs

• Oklahoma Higher Education Institutions

• Indirect cost range: 43-52%

• Some use only salary and fringe benefits

• Off campus – 13-28%

• Of the 25 institutions, 7 do not have an indirect cost rate established

Indirect costsIndirect costs

• Worksheet website• http://www.ccas.com/ccasrate.htmlCCAS is a software company, not a

government agency• http://www.dau.mil/pubs/gdbks/icmguide.a

spIndirect Cost Management Guide, 1998, a

whitepaper from Department of Defense

Indirect CostsIndirect Costs

• Indirect costs are reality – all institutions should negotiate a rate