Indirect Cost Recovery and Distribution Policy

Policy

Externally funded research, scholarship, and creative activities enhance the reputation of the College. It benefits both the careers of faculty and staff and the education of students who participate or are impacted by the externally funded work. These projects and programs incur both direct and indirect costs, the latter of which are recovered by applying a rate to the budget request portion of a funding proposal. This policy sets forth guidelines for requesting facilities and administrative (indirect) costs reimbursement on externally funded projects and programs. In the case of exceptions to full recovery, externally funded programs must budget administrative costs directly. This policy also outlines the method the College uses to distribute recovered indirect costs.

Background 

Facilities and Administrative Costs (often referred to as indirect costs or F&A) are costs paid by agencies that enter into grant or contract agreements with Gustavus for research and other projects. They are provided to the College as a reimbursement for real costs incurred in maintaining the infrastructure for research and programming at a federally negotiated rate. This rate is reviewed by the Department of Health and Human Services every four years, and is published by Research and Sponsored Programs (RSP). Typically, indirect costs cannot be readily identified with a particular project. Examples of indirect costs include, but are not limited to: maintenance of physical facilities, depreciation of buildings, insurance, utilities, information technology, instrumentation, library expenses, and administrative staff.

Guidelines

It is the expectation of the College that all externally funded sponsored program budgets will include a request for reimbursement of indirect costs regardless of whether or not the sponsor is a federal entity, because there are real facilities and administrative costs associated with every project. While some exceptions apply, these exceptional instances are nearly exclusively due to policies of the external entity or funding source.

Exceptions to application of the federally negotiated indirect cost rate:

  • The sponsor has a published rate that is either lower than the College’s rate or a rate that is applied to an alternative base (e.g. 15% of total direct costs). This rate must appear in the sponsor’s written guidelines, published on their website, or confirmed in a letter from an authorized official. This rate must be uniformly applied to all entities seeking funding from that agency for the relevant funding opportunity.
  • The program limits the indirect costs. A common example would be training grants issued by the US Department of Education.
  • When an award is transferred to Gustavus Adolphus College from another institution and Gustavus’ indirect cost rate is higher than the rate at the previously awarded institution, the College will adjust the rate, as needed, so funds designated for direct costs in the original budget remain available to the project.

In instances where an award is made with an inaccurate budget, the PI/PD will be responsible for the unrecovered indirect costs. 

Budgeting for Additional Administrative Costs

Submissions that do not recover indirect costs at the College’s full federally negotiated rate and meet at least one of the following criteria, are required to include budget support for administrative assistance in Research and Sponsored Programs. These criteria include:

  • A sub-award from Gustavus
  • Gustavus is the lead on a collaborative proposal involving non-Gustavus entities
  • Commitment of match or other long-term sustainability commitments from the College
  • Hiring of non-student personnel or staff/faculty reassignment time
  • Includes an international scholarly component that requires travel outside of the US
  • Includes international collaborators 
  • Award is for an amount equal to or larger than $300,000
  • Multiple separate projects are included within one grant
  • Training grants that include support for non-Gustavus participants 

Proposals that meet at least one of the above criteria must budget 5% of total direct costs for Grant Administration in the personnel section of the budget along with full benefits for those wages. Exceptions may be granted by the Director of RSP for small short term grants, but will be only approved in exceptional circumstances. 

Distributing Indirect Cost Recovery 

Purpose

Indirect costs are recovered for previously incurred, already paid real costs. The College has the opportunity to use these funds strategically for incentives, operations, and capacity building for research.

Distribution of Funds from Awards Receiving the Full Federally Negotiated Rate

50% to General College Budget to offset current College expenses

15% to Principal Investigator as Incentive Funds which must be spent within one year of the grant end date. Funds may be spent in the following ways:

  • Project-related costs not otherwise covered by the grant, including cost-share 
  • Equipment, materials, supplies, and fees directly related to the PI’s research or teaching 
  • Wages and benefits for faculty and students to conduct scholarly work or develop a course during the summer 
  • Travel expenses related to research, conference attendance/presentation for PI or students(s)
  • Equipment maintenance
  • Wages for students working during academic year and not receiving course credit
  • Computer hardware and/or software associated with research (must be purchased through GTS)
  • Up to one reassigned course per year, plus benefits, with prior Dean and Provost approval

35% to Provost’s Research Capacity Building Fund which must be spent within three years. Funds may be spent in the following ways:

  • Support of Research and Sponsored Programs office (e.g. staffing, salary, benefits, professional development) to ensure high quality support for programs, research, scholarship, and creative activities at the College 
  • Additional support of externally funded programs (e.g. required cost share)
  • Activities that will support submission of future external funding requests (e.g. internal grants)

Distribution of Funds for Indirect Costs Collected at a Reduced Rate 

50% to General College Budget to offset current College expenses

50% to Provost’s Research Capacity Building Fund which must be spent within three years. Funds may be spent as outlined above.

Approved by the President’s Executive Leadership Team: November 7, 2023, Effective January 1, 2024