Indirect Costs

The total cost of a sponsored project includes direct costs and facilities and administration (F&A) costs, or indirect costs. The direct costs are those that can be specifically and easily identified with a particular project or activity and are allowable under the sponsoring organization’s guidelines.

What are indirect costs?

Indirect costs include operating and maintenance costs (e.g., utility costs, security costs, custodial costs, etc.), and common administrative functions (e.g., student administration and services expenses, library expenses, payroll, purchasing, etc.). Most federal agencies and other sponsoring organizations pay the College for indirect costs in addition to the direct costs of a sponsored project.  Refer to  2 CFR 200.414. 

 

The PI/PD must include indirect costs in their grant proposal at the maximum level allowable by the grant.   Approval from the Vice President and President is required for a waiver of indirect costs.  The Program Investigator/Project Director (PI/PD) must complete the Facilities and Administrative (F&A) Waiver Request Form located under Pre-Award Forms on the Office of Grants and Contracts website.  NOTE: Indirect fee waiver requests are typically not approved due to the facilities and administrative costs associated with operating a grant.

 

Indirect costs are not profit; instead, they are the real costs of using the College’s facilities and administrative support to conduct and manage externally funded projects. By collecting indirect costs from the sponsor/donor, the College is recovering those expenses. The federal government has established what costs may be charged as direct costs and what costs are considered indirect costs.

 

Recently, several federal government agencies adopted policies reducing their indirect rate from our current negotiated rate of 35% to 15%; however, these policies have not been implemented as they are currently blocked by courts. 

 

 The current Indirect Cost Allocation Model* is:

 

  • Central Administration: 25%
  • PI/PD's Department: 30%
  • Office of Grants & Contracts: 40%
  • Grants Culture & Undergraduate Research: 5%

In the event the federal indirect rate is reduced, the LC State Indirect Cost Allocation Model* will be adjusted as follows:

 

  • Central Administration: 80%
  • PI/PD's Department: 20%

*Values associated with the indirect cost allocation may vary from year to year.