Facilities and Administrative (F&A) Cost Policies

Scope

This policy applies to all proposals for sponsored program funding (grants, contracts, and cooperative agreements).

Back to top

Policy Statement

Proposal budgets for sponsored program funding should include Facilities and Administrative Costs (also referred to as F&A, indirect costs, or overhead) to the greatest extent possible. Aside from limitations imposed by policy or regulation, there may be exceptional circumstances that justify a waiver from applying F&A costs to a sponsored program. Waiver requests for federal funding (including pass-through, with the exception of State of Indiana sponsors) require approval of the Associate Vice President for Research Administration. All other waiver requests may be approved by the appropriate Dean or Responsibility Center head or their appointed delegates. The appropriate F&A rate is dependent on the type of activity (research, instruction, or other sponsored programs) as defined in SPA-11-027, Functional Activities for Sponsored Projects and the location (on- or off-campus). IU’s F&A rates are established through an agreement with the federal government and can be found on the IU Research website.

Back to top

Reason for Policy

1. The cost of conducting sponsored programs includes both the directly identifiable costs (e.g. salaries, supplies, travel, etc.) as well as the physical and administrative infrastructure required to conduct such activity. Physical infrastructure includes the costs of constructing and maintaining appropriate facilities. Administrative infrastructure includes administrative support in the form of departmental administration, regulatory compliance, purchasing, human resources, academic affairs and other critical support units required for carrying out activities funded by sponsored programs.
2. F&A rates are established based on an extensive and tightly regulated cost study that is reviewed by the federal government. This cost study includes all the expenditures of the university, regardless of funding source, and allocates infrastructure costs based on activity. Typically, the duration of the rate agreement with the federal government is four years but may be extended for an additional term of up to four years with approval. 2 CFR 200 “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards" provides guidance on determining whether a cost can be directly charged to a sponsored project or if it should instead be included as F&A. 
3. It is important to collect F&A costs in order to offset the full costs of conducting research and other sponsored programs. On average, the university only collects a fraction of these costs, which then must be funded through other funding sources available to the university.

Back to top

Procedures

1. Full F&A cost recovery should be included in all sponsored program proposals unless a waiver is granted or where sponsor guidelines or written policies limit the F&A rate to less than the university’s negotiated rate. Proposal budgets for non-federal organizations whose guidelines will not permit F&A costs should be reviewed to determine if some of the F&A items might be included as direct costs. Proposals to commercial sponsors or for federal funds (including pass-through) should normally include full F&A recovery.
2. Waiver requests for Federal (including pass-through) funding are to be initiated by the academic unit and approved by the school/responsibility center and the Associate Vice President for Research Administration or that individual’s designee. Waiver requests for all other funding sources require school/responsibility center approval.
3. Indiana University’s specific F&A rate is dependent on the type of activity and the location (on- or off-campus). Definitions of these activity types are provided in SPA-11-027, Functional Activities for Sponsored Projects.

For sponsored projects incorporating both on- and off-campus components, separate accounts will be maintained, and costs should be allocated between the on/off campus accounts based on the user’s location (e.g., travel and supplies for off-campus personnel should be charged to the off-campus component). If personnel operate at both locations, their appointments should be split proportionally among the on/off campus accounts and related travel/supplies should be charged to location benefiting from the expense.

 D. See the following website for additional guidance: IU F&A Rates.

Back to top

Definitions

Facilities and Administrative Costs (F&A): Costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. F&A costs are synonymous with indirect costs and overhead costs.

Off-campus rate: The off-campus rate excludes all facilities-related costs. In accordance with Indiana University's F&A rate agreement with the federal government, the criteria for determining if an off-campus rate is appropriate are as follows:

• Performance of the project involves facilities not owned by IU and where the facilities costs are not included in IU’s indirect cost study. In some cases, specific IU facilities leases or rent are included in the cost study and should bear the on-campus rate.  Where this is not the case, rent may be directly and proportionally allocated to the project and the off-campus rate should be utilized. Questions about specific spaces should be directed to ORA.
• Off-campus rates are not appropriate in cases where IU facilities are utilized but the project also involves work off campus (e.g. field work) that is neither of sufficient distance or time away from the campus such that the cost of IU facilities does not benefit the project. Sufficient time is normally a full semester, summer term, or the period of performance of the project.

Questions about utilization of off-campus rates may be directed to the Office for Research Administration.

On-campus rates: Full F&A rates applicable to projects utilizing university owned or maintained facilities and to which rent is not charged as a direct expenditure to sponsored programs. Intermittent performance away from campus should use the on-campus rate. Subaward and other third-party costs are not a determinant in classifying project costs as on- or off-campus.

Back to top

Sanctions

Failure to adhere to the principles and processes in this policy may result in the adjustment of budgets and expenditures or the use of departmental funds to ensure that appropriate F&A costs are collected. 

Back to top

History

This policy was adopted in 2011 and updated in 2016, 2017, 2019, and 2023.

A non-substantive revision to the title of the Responsible Administrator was made on March 20, 2024. Substantive revisions to the policy were made on June 17, 2024.

Back to top