Indirect Costs

What are facilities and administration (F&A) or indirect costs?

Facilities and Administration (F&A) costs are sometimes referred to as indirect or over head costs.    They are 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.  (OMB A-21.E.1)

These types of expenses (administration, depreciation, water, electric, janitorial, maintenance etc.) are virtually impossible to identify on a grant by grant basis.

How are indirect costs calculated?

Through a formula negotiated with the Department of Health and Human Services.  Our budget director, negotiates the rate for LCSC every 5 years.

The LCSC Indirect cost recovery rate is 32.5% of direct costs EXCLUDING:

	•	Capital outlay/equipment (over $5K)
	•	Tuition
	•	Stipends
	•	Scholarships
	•	Rental cost of off-site facilities
	•	Any amount over  $25,000 on subcontracts
	•	Federal training grants (eg TRIO programs) can only recover indirect at a rate of 8%

If you have any questions about what qualifies for indirect cost please contact the Office of Grants & Contracts at 792-2460 or 792-2461.

Federal agencies shall use the negotiated rates for F&A costs in effect at the time of the initial award throughout the life of the sponsored agreement.  (OMB A-21 G7)

Why should we collect indirect costs on every grant?

An institution cannot afford to administer grants free of charge.  It costs money to pay those who track grant budgets, prepare for audits, pay for the facilities, computers, and equipment used to support grant projects.

Federal agencies shall use the negotiated rates for F&A costs in effect at the time of the initial award throughout the life of the sponsored agreement.  (OMB A-21 G7)

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