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, dlittle@niu.edu
Primary Audience Faculty
Staff
Status Active
Effective Adoption Date 07-01-2016
Last Review Date 07-01-2016
Policy Category/Categories Faculty & Academics
Finance / Risk Management
Governance / Administration
Research Ethics / Intellectual Property

Purpose

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

Policy

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. Units receive their indirect cost allocation on a monthly basis and reimbursement is based on the amount of indirect costs recovered during the preceding month.

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).

College/Department
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.
Office of the Vice President for Research
The Vice President for Research and Innovation Partnerships receives a share of indirect funds to support research development through faculty enrichment programs, cost shares, start-ups, core facilities, and new initiatives as permitted and conceived with university stakeholders. As the Chief Research Officer, the Vice President is also responsible for ensuring compliance for research and sponsored funding.
Research Centers
Research Centers meeting the below criteria can receive a share of indirect funds to support Center operations and growth. These Centers are generally housed in the Office of the Vice President for Research (OVPR). The Vice President for Research and Innovation Partnerships will determine all Centers qualifying for recovery of indirect funds, regardless of where they are housed. The Center share is in addition to the PI/Co-PIs normal department share.

To qualify for indirect recovery, a Center should be able to demonstrate the following:

  • The Center has a well-defined interdisciplinary research focus with the potential to provide broad campus benefit; such focus should be stated in its written mission statement.
  • The Center has multiple externally funded projects or has the demonstrated potential to attract a substantial amount of external funding, generally with multiple PIs.
General Fund
Central Administration receives a share of indirect funds to cover campus operations and personnel costs necessary to support campus-wide research 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.
High Volume Principal Investigators
Principal Investigators (PIs) who consistently secure multiple grants recovering a high volume of indirect revenue may receive their share of indirect funds directly in a cost center designated for the PI. This is in recognition of the complex management and program development challenges and opportunities these PIs face. The separate allocation is intended to help these PIs develop proposals and manage awards, save for bridge funding, and continue competing for large, complex grant programs.
The Vice President for Research and Innovation Partnerships or his/her designee will determine PIs meeting this designation. The general assumption is that a PI will qualify for this designation when s/he incurs at least $2,000 a year in indirect cost recovery.

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). 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 automatically carry-over up to fifty (50%) of indirect funds remaining at the end of the university fiscal year (June 30). Balances above this threshold will require Division of Research and Innovation Partnerships (RIPS) approval. PIs may maintain balances as long as they are actively conducting grants and contracts and/or during bridge periods between grants. If the PI leaves NIU, unused indirect funds will be revert to RIPS.

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

Back to top of page