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- Full recovery of indirect costs is expected on all grants or contracts.
- In early discussions with Private Sponsors, defer discussions of indirect cost arrangements to ORSP.
- New proposals for federally-supported projects should include the indirect cost rates listed, and the relevant rate applied to each year for which funding is anticipated.
- Questions about indirect cost rates should be directed your school/college/institute/center administration.
- Finance-Sponsored Programs maintains PDFs of the Rate Agreement letters are maintained on the Sponsored Programs website
- Class Codes for Sponsored Projects provides definitions of "research," "instruction," "other sponsored activity," and "clinical trial site activity."
- Budget & Cost Resources
- Cost Accounting Standards
- Direct and Indirect Costs
- Salaries in Sponsored Projects
- Staff Fringe Benefits
- GSRA Cost Estimates
- Participant Support Costs
"Indirect costs" (also known as Facilities & Administrative, F&A, or IDC) are real costs of University operations that are not readily assignable to a particular project. Indirect cost rates are determined by the Federal government under the Uniform Guidance, 2 CFR Part 220, "Cost Principles for Educational Institutions" (formerly OMB Circular A-21).
All Sponsors* July 1, 2015 - June 30, 2016
- Research: on campus: 55.0% | off campus: 26.0%
- Instruction: on campus: 54.0% | off campus: 26.0%
- Other Sponsored Activity: on campus: 29.0% | off campus: 26.0%
These rates are provisional after June 30, 2016 until a new agreement is negotiated.
*This excludes State of Michigan.
State of Michigan
Varies widely, depending on the specifics of individual projects. Contact your school/college/institute/center administration for assistance with State of Michigan indirect cost rates.
Non-Profit Sponsors and Full Recovery of Indirect Costs
After thorough consultation with U-M stakeholders and benchmarking against U-M's peer institutions, ORSP announced in May 2104 a change to the standard indirect cost rate to be used in proposals to foundations and non-profit sponsors.
Effective May 1, 2014, all proposals to non-profit sponsors should use the same indirect cost rate as is used for federal and industry sponsors.
Please also reference our new Standard Operating Procedure (SOP) on indirect cost policy. The University's policy continues to require the full recovery of indirect costs whenever possible. However, when full recovery is not possible, policies and procedures for waving full recovery of indirect costs will be enforced at the level of U-M's schools, colleges, institutes and centers (as well as the Flint and Dearborn campuses).
ORSP delegates responsibility for:
- Establishing criteria for when a sponsor-capped IDC rate will be accepted.
- Establishing criteria for what constitutes an IDC waiver.
- Determining how IDC waiver requests should be submitted and reviewed.
- Determining who is authorized to approve IDC waiver requests.
- Documenting whether an IDC waiver request has been approved.
Requests for waivers must be submitted and reviewed in accordance with the relevant school/college/institute/center's requirements.
ORSP will not assess whether the IDC rate used on a PAF is a waiver; nor will it require documentation that an IDC waiver has been approved. Instead, ORSP will consider approval of the PAF to be evidence of school/college/institute/center approval of the IDC rate, regardless of what rate is used.
If the University offers to cost share a portion of the direct costs of a project, the indirect costs associated with those direct costs may also be used for cost sharing (with prior approval in the case of federal funds). If the sponsor limits indirect costs, the difference between the full recovery of indirect cost and what is allowed by the sponsor may be shown as a University cost-sharing contribution.
Class Codes for Sponsored Projects provides definitions of "research," "instruction," "other sponsored activity," and "clinical trial site activity."
- Equipment with a unit value of $5000 or more and a life expectancy of one year or greater. (Nonexpendable items valued at less than $5000 or with less than a one-year life expectancy should be budgeted as materials and supplies.)
- Capital expenditures.
- Participant support costs.
- Charges for patient care.
- The amount of each subcontract or subgrant exceeding $25,000.
- Rental costs for off-site facilities.
- Student tuition remission, scholarships and fellowships.
TDC: The indirect cost rates for most non-federal projects are applied to a total direct cost (TDC) base. The rates are applicable to all direct costs.
- For federally-sponsored clinical trial site activity, use the OSA rate based on modified total direct costs (MTDC).
- For industry-sponsored clinical trial site activity, use the OSA rate based on the total direct costs (TDC).
Is it an Off Campus Project?
To determine whether a project qualifies for the off-campus rate, read the off campus definition and hints provided below in the FAQ.
Specialized Service Facilities
The University no longer applies or recovers a Specialized Service Facility Fee (SSFEIDC) or Quality Assurance Fee (QAF) related to animal charges on sponsored projects (funds 20000, 25000). All animal purchase and housing for all external sponsors are now treated as any other supply or service cost with no change to the Indirect Cost recovery.
The QAF at 20% will be applied to all animal charges on non-sponsored projects (funds 10000, 30000, 40000, 54010) within the Medical School.
First note that:
- Responsibility for demonstrating that the off-campus rate is appropriate rests with the project team.
- The approved indirect cost rates applicable to all proposed projects are shown in Indirect Cost Rates chart.
- Full recovery of these costs is expected on all grants or contracts.
- Any variance from stated indirect cost rates must be discussed with your School/College/Institute/Center administration in advance of proposal submission.
Following are questions to help you determine the criteria that must be met to determine whether a project is "on campus" or "off-campus."
Is the proposed effort of U-M personnel working off-campus (including cost shared effort) greater than the proposed effort of those working on-campus?
Yes? Use off-campus rate.
However, if Test #1 is not definitive, then apply Test 2:
Are the total direct costs incurred off-campus greater than those incurred on-campus?
Yes? Use off-campus rate.
Responsibility for demonstrating that the off-campus rate is appropriate rests with the project team. The approved indirect cost rates applicable to all proposed projects are shown in Indirect Costs & Rates chart.
Full recovery of these costs is expected on all grants or contracts.
References and Resources
- If you have any questions about indirect cost rates, contact your school/college/institute/center administration.
Procedures for applying for IDC Waivers
- IDC Waivers are processed at the level of the school/college/institute/center. Contact your school/college/institute/center administration with questions.
- Please see Standard Operating Procedure (SOP) 200.02 - Indirect Cost Recovery