Indirect Cost Distribution

Policy Approval Authority President
Responsible Division Division of Research and Innovation Partnerships
Responsible University Office Sponsored Programs Administration
Responsible Officer(s) Assistant Vice-President
Contact Person Dara Little,
Primary Audience Faculty
Status Active
Effective Adoption Date 07-01-2016
Last Review Date 03-07-2023
Policy Category/Categories Faculty & Academics
Finance / Risk Management
Research Ethics / Intellectual Property
Sponsored Funding/Grants and Contracts


Recovered indirect costs from external grants and contracts are essential for the support of NIU’s research, innovation, and academic goals. The purpose of this distribution policy is to incentivize full overhead recovery to uphold the following five (5) principles:

  • Ensure seed monies are available to develop research projects with the potential for external funding,
  • Incentivize staff to seek external funding for research,
  • Attract and retain excellent faculty and staff,
  • Compensate university units supporting research, and
  • Recognize the organizational structure of the institution.

Reason for Policy

As a doctoral-granting, comprehensive research university, NIU has an obligation to develop and administer externally funded research, instruction, service, and creative projects. Support for these programs is provided through the recovery of indirect costs or Facilities & Administrative (F&A) costs, which are intended to offset the cost of building and maintaining these programs.

Intended Audience

  • Dean
  • Senior Administration – Vice Provosts, Associate Deans
  • Director, Department Chair, Division Head
  • Faculty and Staff
  • Departmental/Divisional Business Administrators
  • Finance Personnel
  • Sponsored Programs Administration Personnel


There is no one-size-fits-all model for the distribution of indirect costs but the model should align with the structure, size, and scope of the institution. Indirect cost rates are calculated based on the University’s costs of providing project facilities and administering sponsored awards; however, these funds need not be allocated in the same categories and proportions used in determining the indirect cost rate. Accordingly, the University has the discretion to reinvest these funds to best benefit the research and scholarship enterprise.

At NIU, the following distribution recognizes the shared responsibility between faculty, central administration, academic units, and research centers in supporting research. Unit allocations are generally done monthly. Reimbursement is based on the amount of indirect costs earned for the preceding month. Indirect reimbursements are held in either the grant account or central fund until disbursement. 

Unit Allocation
Principal Investigator 5%
College/Division* 10%
Department/Unit 10%
Research Centers 0/15%
Office of the Vice President for Research 55/40%
General Fund 20%
Total 100%

* When no individual departments or units exist within a college/division, the college/division will receive the departmental share of indirect costs. Similarly, the college/division will also receive the department share when the PI’s primary appointment is at the college/division level (e.g. Dean).

Academic Deans/Division Heads and Department Chairs/Unit Heads whose faculty and staff conduct externally funded projects receive a share of indirect funds generated from their awards. These funds are intended to support both externally and institutionally funded projects and develop new programs in priority areas. These funds are not intended for general administration or support or other costs unrelated to research and sponsored funding.

When the PI or Co-PI is an emeritus faculty, the department or college should receive an allocation only if incurring costs supporting the project. Academic Deans/Division Heads are responsible for making these determinations.   

Office of the Vice President for Research

The Vice President for Research and Innovation Partnerships receives a share of indirect funds to support research, administration, and compliance.  The funds also support research development through faculty enrichment programs, cost shares, start-ups, core facilities, and new initiatives as permitted and conceived with university stakeholders.

Research Centers and Research Institutes

Research Centers and Institutes receive a share of indirect funds to support operations and growth. Research Centers qualify for indirect allocation based on the Guidance for Establishing and Assessing Emerging Research Initiatives, Research centers, and Institutes and approval from the Vice President for Research and Innovation Partnerships. Where the Investigator has an academic appointment, the Center/Institute share is in addition to the department share. No department distribution will be made if an academic appointment does not exist.

Central Administration receives a share of indirect funds to cover campus operations and personnel costs necessary to support campus-wide research and externally funded programs.

Principal Investigator

Principal Investigators recovering full indirect costs at the federally negotiated rate or other rate imposed by the sponsor in accordance with the sponsor’s published guidelines receive funds. Funds are provided to Principal Investigators through the Division of Research and Innovation Partnerships in recognition of their need to maintain flexible funds to cover costs that may not be funded by their grants (e.g. operational costs) and other project support and development costs.

Distribution of indirect funds to PIs is contingent on the PI meeting award requirements (e.g. progress reports). Indirect funds may not be used to pay PI salaries (i.e. add-pay/summer compensation).


Distribution under Multi-Investigator/Multi-Departmental Awards

Funds under multi-investigator awards or projects with Co-Investigators will be evenly split between the Investigators’ departments and colleges unless otherwise noted to Sponsored Programs Administration (SPA) and documented as part of the proposal approval. Investigators are encouraged to negotiate the split based on factors such as project effort and department resource needs and support for the project.

The Principal Investigator share of recovered indirect funds will be directed to the lead/contact PI. Investigators are encouraged to coordinate the expenditure of these funds to advance shared program goals.

Fund Balances

Principal Investigators may maintain balances as long as they are actively conducting grants and contracts and/or during bridge periods between grants.  Unless other arrangements are made with RIPS, any unused funds will revert to RIPS if the PI leaves NIU or fails to remain grant active.    RIPS reserves the right to review balances and request a spending plan at any time for unusually large or long-term balances.

College and departmental balances may also be carried forward at the end of the university fiscal year, with the understanding that RIPS and the Division of Administration and Finance may require periodic review of unusually large balances.


Pooling of Research Funds

Pooling of funds is encouraged. For example, Deans, Chairs, or groups of Principal Investigators may pool their funds to promote the University’s research agendas in areas of excellence, encourage interdisciplinary research, and/or to fund shared group needs, or meet cost share requirements.

Examples of appropriate uses of indirect funds are described below.

Operational Support
Clerical salaries, postage, phones, etc., needed to manage the project but for which the federal sponsor expects indirects to pay.
Bridge Funding
Salary support to retain key personnel between grants, as well as supplies, travel and clerical support to develop proposals for new funding.
Sponsor-required Cost Sharing
Costs to meet sponsor-required percentages or dollar amounts may be budgeted in proposals, according to expected research support funds that will be generated because the grant is funded.
Project Development Costs
Pilot projects; proposal writing; proposal typing/editing; travel to conferences and/or to meet with sponsors; expenses to host sponsors, prospective partners, or influential project supporters; specialized equipment; workshops leading to proposal submissions.
Research Faculty Recruitment and Initial Support
Salaries/equipment for new faculty or research faculty bringing grants to NIU; salaries for promising research associates or new faculty with the expectation they will write proposals and obtain future grants.
Research Center/Institute Support
Shared secretaries, technicians, equipment purchase or maintenance, other support for groups of investigators.

Effective: 07/01/16
Approval: Vice President for Research and Innovation Partnerships


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