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4.4 Grants and Sponsored Projects

It is the policy of the university to collect full Facilities and Administrative (F&A) costs associated with an external grant or contract. These indirect costs are absorbed by the university to support the implementation of a sponsored project.

Indirect Cost Allocation Policy
University of North Georgia
Philosophy/Overview

The University of North Georgia encourages grant writing that promotes the mission and goals of the university, and adequately funds facility, administrative, and other costs associated with grant activities. Moreover, UNG understands that faculty pursuit of grants is incentivized by appropriate compensation to the Principal Investigator (PI) and the home academic unit.  Accordingly, the institution seeks to encourage grant writing by allocating indirect funds in a manner that rewards faculty effort, innovation and expertise, while ensuring that general institutional expenditures associated with grant activities are funded appropriately.

Definitions and Examples

Direct costs are costs that can be specifically identified and assigned with relative ease and with a high degree of accuracy to sponsored projects. However, there are other costs associated with sponsored projects that are not so easily identified or assigned to the specific project.

In order to qualify as direct costs and be included in the budget for a project, the costs must be:

  • Reasonable and necessary for the performance of the project
  • Allowable – Costs that are specifically allowed under the terms and conditions of federally sponsored projects and the Office of Management and Budget (OMB) Circular A-21
  • Allocable and easily identifiable – The costs must have a direct benefit and be directly attributable to the project or activity being performed

These indirect or facilities and administrative (F&A) costs are general institutional expenditures that are incurred for multiple or shared projects, functions or activities and therefore cannot be identified with relative ease and with a high degree of accuracy to a specific sponsored project, instructional account, or any other institutional account.

Costs incurred for multiple projects/activities must be identified as follows:

If the cost is specific and benefits more than one project, the cost can only be assigned and allocated to the project(s) based on the portion of the expense that represents the direct benefit to the project

This allocation of costs should be made at the time of purchase

  • If an appropriate basis, such as actual usage, cannot be identified to allocate the costs with relative ease and with a high degree of accuracy, such costs must be considered indirect costs
  • Generally, if these costs benefit multiple (e.g., four or five) projects or activities, the ability to accurately allocate the cost to the appropriate projects/activities diminishes and therefore becomes questionable as a direct cost.
  • If the benefit is spread over multiple projects to serve common shared activities and it is difficult to identify a direct benefit to each activity or project, the cost must be considered an indirect cost.

Indirect costs are incurred in the following areas:

Depreciation, maintenance, and utilities for university buildings and equipment

  • Academic colleges and departments for the administrative effort of clerical, faculty and other professional personnel involved in various missions of the unit
  • Expenses for offices serving the entire university, such as the President’s Office, Human Resources, Purchasing and Finance
  • Central operations, such as facilities management, telecommunications, sponsored projects administration and libraries

The Indirect Cost Rate is a composite rate applied to sponsored projects as a percentage of the sponsored project’s direct costs. A federally negotiated indirect cost rate for organized research is developed by the University in accordance with OMB circular A-21 and negotiated with the Department of Health and Human Services, the university’s federal cognizant audit agency. This rate allows the university to recover some of the indirect costs of performing the scope of work on sponsored projects.

Unacceptable Direct Cost Charging Practices

The following are examples of unacceptable practices for direct charging:

  • Rotating charges among projects without establishing that the charges accurately reflect the relative benefit to each project during that specified period of time
  • Allocating indirect expenses directly to a project
  • Transferring expenses from other accounts at the end of a project period for the sole purpose of expending a residual balance

Unallowable Costs are defined in OMB Circulars A-21 and A-110. These costs cannot be included in the development of the indirect cost rate, charged as a direct cost to federally sponsored projects, or included in university service center rates. Such costs include alumni activities, development and fund raising, entertainment and lobbying. Unallowable costs must be charged to non-federal accounts and appropriate sub-codes as defined by the university’s Business Office.

Exceptions:

Costs normally charged as indirect are charged as direct when:

  • There is a functional difference in the work performed by individuals in the same job classification
  • Size, nature and complexity goes well beyond normal departmental support,  e.g., center awards, epidemiology studies, clinical trials, multidisciplinary awards
  • The cost is incurred for the sole benefit of a grant, e.g., mailing a progress report to a sponsor
  • Costs listed as “indirect” can be charged directly on non-federal agreements

Costs listed as ‘direct’ become indirect when they are for general institutional purposes or support multiple project/activities, and they cannot be charged with relative ease and a high degree of accuracy to those projects/activities.

Typical Direct and Indirect Costs

 

Direct

Indirect

 

Salaries & Wages/Fringe Benefits

Faculty, technicians, scientists, research assistants, postdoctoral associates, or other  programmatic personnel who are necessary to accomplish the goals of the project

Computer Costs

  Software, supplies  and services

Long Distance Telephone Charges

Scientific & Technical Equipment

Maintenance agreements related to scientific and technical equipment

Materials

  Including non-capitalized  equipment

Participant Expenses (NSF awards)

Lab Supplies

  Items solely consumed by the  project

Services Obtained

  From outside vendors

Consultant/Professional services

Subcontracts

Human Subjects Fees

Travel

 

Salaries & Wages/Fringe Benefits

  Clerical and administrative positions such as

  fiscal officers, accountants, secretaries, directors,

  vice presidents, president, office personnel,

  executive assistants, and administrators

Telephone

  Data lines, equipment, recurring, installation and

  maintenance

Equipment

  Office and general purpose

Janitorial Services

Sanitation Services

  Including hazardous waste

Repair & Maintenance

  Buildings, grounds, equipment, remodeling, etc.

Subscriptions, Library Books, Periodicals, etc.

Postage

Memberships

Office Supplies

Photocopy

  For general office use

Utilities

Recruitment Travel

 

 Allocation Formula and Rationale

Indirect costs must be included in all grant submissions except those grants prohibiting indirect cost reimbursement.  Indirect costs must be calculated at the university’s approved, negotiated rate unless the grant announcement sets forth a rate that must be used.  For grants that do not allow full recovery of indirect costs, but require a match, the difference between the recovery amount allowed and the university’s negotiated rate can be used as a portion of the match requirement for the grant, if allowed by the sponsor.

Indirect costs recovered on grants will be distributed among the following in the percentages listed:

                       

                      Principal Investigator(s)                                         30%

                      Academic Affairs                                                    30%

Dean                                                                       20%

                      Business Office                                                      10%

                      Grants & Contracts                                                10%

                                               

Each entity listed above will determine how funds under their purview will be used within university expenditures guidelines. Funds will be disbursed to the accounts of the entities listed above, with funds for the PI going into the PI’s department, college or unit account.  In such cases as the Principal Investigator has a joint appointment or there are multiple PI’s, possibly in different units, indirect cost distribution will be negotiated between those units prior to proposal submission as reflected on the Indirect Cost Distribution Agreement form found on the Grants and Contracts website.  Funds will be distributed quarterly on a Fiscal Year (July 1-June 30) basis with funds becoming available after they have been recovered from the sponsor.  Distribution may be delayed due to reporting requirements and schedules of grantor agencies. Principal Investigators who do not meet grant obligations successfully and in a timely manner will not receive any portion of the indirect cost distribution. 

Other Considerations (Waivers)

In order to facilitate service to smaller community agencies and opportunities for students to be involved in paid internships and other forms of service learning, the university will waive indirect cost recovery for grants and contracts totaling $5,000 or less. For sponsored projects over $5,000, waivers may be requested and will be considered by stakeholders on a case-by-case basis.

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