In accordance with the Facilities and Administrative Cost Recovery policy, the university’s federally negotiated indirect cost rates are applied to all sponsored projects regardless of the sponsor, unless an exception exists or an F&A waiver has been granted. The most common type of exception is when a sponsor’s published policy establishes a specific F&A rate for its projects.
There are three things to consider when budgeting indirect costs: calculation base, activity type and location of work. SPA will help investigators with these calculations as part of the proposal development process.
There are three possible base options:
Modified Total Direct Cost (MTDC) base is used when federally negotiated rates are applied. It is derived by excluding certain costs from the direct cost total. At NIU, MTDC excludes equipment and fabrication of equipment, capital expenditures, charges for patient care, participant support costs, tuition remission, rental costs of off-site facilities, scholarships and fellowships; as well as the amount of each subaward over $25,000. Always check the specific agency guidelines for instructions on budget calculations as some sponsoring agencies and funding programs vary in their application of these categories.
Total Direct Cost (TDC) base is used when a sponsor mandates an F&A rate that is less than NIU’s federally negotiated F&A rate. When using a TDC base, the sponsor’s allowed rate is applied to the total direct costs, and no exclusions are taken prior to calculating the indirect costs. If the sponsor’s published guidelines require certain costs to be excluded from the calculation base, NIU will honor that requirement.
Total Cost (TC) base is used when the sponsor states that only a certain percentage of total project costs can be charged for indirect (F&A) costs.
The following three examples are provided to illustrate how different indirect cost bases affect project costs:
In case #1 the table below, NIU is allowed to charge the federally negotiated on-campus rate for organized research. Direct costs total $100,000 and $10,000 of this amount is for equipment (an item excluded from MTDC under NIU’s F&A agreement with DHHS).
Case #1 MTDC Base | On-Campus Rate |
---|---|
Personnel Costs |
$90,000 |
Equipment |
$10,000 |
Total |
$100,000 |
MTDC Base |
$90,000 (less equipment) |
F&A rate (49% x MTDC) |
$44,100 |
Total Request |
$144,100 |
In case #2 in the table below, NIU is prohibited by official sponsor policy from charging the federally negotiated on-campus rate for organized research. The sponsor allows a rate of 10% with no exclusions. As in case # 1 direct costs total $100,000 and $10,000 of this amount is for equipment.
Case #2 TDC Base | On-Campus Rate |
---|---|
Personnel Costs |
$90,000 |
Equipment |
$10,000 |
Total |
$100,000 |
TDC Base |
$100,000 (equipment included) |
F&A rate (10% x TDC) |
$10,000 |
Total Request |
$110,000 |
In case #3 as presented in the table below, the sponsor has indicated that no more than 10% of the total costs (the total amount requested) can be used for F&A. Unlike case #2 above, it is not appropriate to simply multiply 10% against the Total Direct Cost base because in case #2 the F&A ($10,000) is only 9% of the Total Costs (10,000 divided by 110,000 equals .09). For such cases you will need to know both the maximum amount of F&A that can be charged as well as the “actual” F&A rate being used.
Case #3 TC Base | On-Campus Rate |
---|---|
Personnel Costs |
$90,000 |
Equipment |
$10,000 |
Total Direct Costs (TDC) |
$100,000 |
Total Cost (TC) ($100,000 / .90) |
$111,111 |
F&A rate (10% of TC)(.10 x $111,111) |
$11,111 |
Using the information provided above:
The F&A rate will vary when using a NIU federally negotiated rate because rates are set according to project type and the location where the work will be performed. The rates and general guiding definitions for allocating activity type and campus location are found below.
Activity Type | On-Campus Rate | Off-Campus Rate |
---|---|---|
Instruction and Training |
49% |
26% |
Organized Research |
49% |
26% |
Other Sponsored Activities/Public Service |
32.9% |
26% |
Teaching and training activities of the institution – with the exception of research training which should be identified as research - that are intended to elicit some measure of “educational change” in a learner or in a group of learners. Instruction includes all teaching and training activities, whether they are offered for credit(s) towards a degree or certificate on a non-credit basis, and whether they are offered through regular academic departments or separate divisions, such as a summer school division or an extension division.
All research and development activities that are sponsored by Federal and non-Federal agencies and organizations including the training of individuals in research techniques (commonly called research training) where such activities utilize the same facilities as other research and development activities. The definition does not include sales and service or testing activities.
Experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts without any commercial applications or particular uses in mind.
Basic research probes compelling questions such as:
Original investigation undertaken in order to acquire new knowledge to meet a specific recognized need and to solve practical real-world problems.
Applied research seeks to investigate ways to:
Programs and projects sponsored by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research.
Other Sponsored Activities/Public Service include (but are not limited to):
*When the preponderance of activity is data collection, evaluation and reporting – such projects will be defined as research when the intended goal is to contribute to generalizable knowledge beyond the population or program from which the data was collected.
One factor in determining the appropriate F&A rate to apply to a project budget is whether the project is designated as “on-campus” or “off-campus.” An on-campus F&A rate includes both the Facilities (e.g., buildings and maintenance, utilities, library resources, IT infrastructure, etc.) and Administrative (e.g., departmental administration, sponsored programs administration, etc.) components of the F&A. Projects using the off-campus rate do not recover the Facilities component and can result in lower rate calculations when the university negotiates rates with the federal government.
Based on the university’s federally approved indirect cost rates, on-campus locations include space in buildings owned and/or leased by the university. These locations include the university’s regional campuses. An on-campus designation is appropriate when university facilities are required and used for the project. When a sponsored project receives an on-campus designation, reimbursement of facilities-related costs occurs indirectly through the application of the F&A rate rather than through a direct space charge (i.e. rental costs).
Off-campus locations include space not owned by the university and where the university bears no lease cost for occupying the space. An off-campus designation is appropriate when university facilities are not necessary or used for the project and/or any reimbursement of facilities-related costs occurs through a direct space charge (e.g. lease). The off-campus F&A rate is lower than an on-campus rate because it does not include the Facilities component of the rate.
Circumstances under which the off-campus rate may be applied to NIU projects include:
The extent of subcontract work (i.e. non-NIU collaborating institutions) included in a project is not a factor in classifying a project as on or off-campus. The federal government already limits the amount of F&A the university can recover on these contracts by restricting F&A to the first $25,000 for each subcontract per competitive award period. Only one F&A rate (i.e., on vs off campus) will generally be applied to NIU projects. Application of the off-campus rate outside of the above circumstances must be discussed with the assistant vice president for research, and may require documented approval.
Pre-award and Proposals
asosp@niu.edu
Post-award and Award Management
GrantsFiscal@niu.edu
InfoEd Questions
erahelp@niu.edu