Indirect Cost Recovery (F&A), Distribution, and Allowable Use

The below established guidelines for the recovery, distribution, and use of reimbursements of Indirect Costs (IDC), also known as Facilities and Administrative Costs (F&A), from externally funded grants, contracts, and cooperative agreements, are in accordance with the United States Office of Management and Budget Circular (OMB) 2 CFR 200.

The purpose of these guidelines strives to convey a clear and transparent allocation process that fosters rational, accountable, and well-informed institutional investments into projects and infrastructure that significantly enhance research at VSU.

These guidelines apply to all/any VSU faculty, staff, student, and organization with an externally funded project, whether federal or non-federal (state, local, private, non-profit, etc.).

F&A costs are real costs incurred by the University that cannot be identified with and charged directly to a project, program, or activity with any reasonable degree of accuracy or without an inordinate amount of accounting. Examples include operation and maintenance of buildings and grounds, utilization of equipment and libraries, and administration of projects or programs at the institutional, college, and department levels.

Federally Negotiated Rate

VSU’s F&A rate is negotiated through the United States Department of Health and Human Services. At this time, VSU’s negotiated F&A rate on campus is 43.3% and off campus is 16.0%.

This rate includes all direct costs in a proposal budget EXCEPT the following:

  1. Capital expenditures
  2. The portion of each sub-award in excess of $25,000
  3. Rental maintenance of off-site activities
  4. Student tuition remission
  5. Student support costs (e.g. student aid, stipends, dependency allowances, scholarships, and fellowships)

Distribution of F&A Cost

F&A cost (Indirect) funding recovered from grants and contracts are distributed as follows:

  • Principle Investigator – 35%
  • Dean of PI’s College – 15%
  • Department Head of PI’s department – 15%
  • Office of Sponsored Programs – 35%

The Restricted Funds Accountant in Financial Services will be responsible for posting of IDC funds to the 15000 fund code accounts.

Rationale for Use of F&A Cost

At this time there are no federal or state restrictions on how recovered F&A costs can be used by the receiving institution. These funds need not be allocated in the same categories and proportions used in determining the institutional indirect cost recovery rate. Accordingly, the institution has the discretion to reinvest such funds to best benefit the promotion and recruitment of research.

Therefore, these guidelines redirect the allocation of indirect costs captured in connection with externally funded grants and contracts in ways that 1) enhance institutional support for research and scholarship; 2) increase faculty competitiveness in statewide and national grant competitions; 3) magnify the impact of current internal and external investments in faculty-driven research; 4) provide direct and significant incentive for faculty, academic departments and collegiate units to invest in faculty research; and 5) enhance the national profile of the University.

The following are examples of acceptable uses of F&A recovery:

  1. Conducting early pre-grant feasibility studies
  2. Preparing competitive proposals for sponsored program/grant writing support
  3. To cover budget overruns or bridge project cost between renewals
  4. Purchasing of equipment directly related to expanding research
  5. Purchasing of research supplies
  6. Related research travel/professional development
  7. Matching funds commitment for sponsored project
  8. Laboratory renovations and or repairs
  9. Administrative support
  10. Graduate student support
  11. Student support
  12. Graduate student support tuition
  13. Consultants
  14. Seeding/supporting research initiatives

 

In the case of budget overruns or disallowed expenditures, the F&A allocation will be reduced first by the PI’s allocated account, second the Department Head’s allocated account and third the Dean’s allocated account.