Memorandum 41a – Indirect Cost Recovery and Use

Revised September 2012
Revised June 2014

Introduction

Faculty and Staff of Norwich University are encouraged to seek grants to support research efforts within the University. When such grants allow recovery of indirect costs, now referred to by Federal funding agencies as facilities and administrative costs (F&A), every effort should be made to do so. At the direction of the President, these Recovered Indirect Costs (RICs) will be distributed according to an established formula and are to be used to operate and support the research programs at Norwich University. The process that Norwich employees are to use when submitting grants for external funding is detailed in Administrative Memorandum 41.

Rate for Recovery of Indirect Costs

Calculations for indirect cost recovery rates for Federal grants are based on the total amount of salaries and wages paid to all employees of the institution, together with expenditures for operation and maintenance of physical plant, depreciation and use allowances, library, and administration expenses for academic units. This calculated indirect cost rate for Norwich University is periodically evaluated by the Office of Naval Research, which sets the allowable rate for fully funded Federal awards. Because the Federal government has “capped” certain expenses that comprise the indirect cost base, the University does not recover the full amount of indirect costs incurred. This limitation makes it even more important to recover indirect costs at the federally approved rate on sponsored projects.

The University’s negotiated indirect cost rate should be applied to the salary and wages cost base of all research proposal and award budgets on which it is allowed. Reductions in the approved indirect cost rate should occur only when mandated by specific program restrictions or when approved in advance by the Senior Vice President for Academic Affairs (SVPAA).

Distribution and Use of Recovered Indirect Costs (RICs)

The following policy regarding the distribution and use of RICs applies to PI-driven research grants. It is guided by goals set forth in the University’s 2019 Strategic Plan to increase the scholarly productivity of the Faculty and to enhance the academic reputation of the University.

Distribution:

RICs derived from PI-driven research grants are distributed with 20% to the PI, 15% to the PI’s Department/School, 10% to the PI’s College, 30% to the Office of Academic Research, and 25% to the University General Fund. The SVPAA, with the approval of the President, may modify the allocations. Each resulting Indirect Research fund is designated by an Activity Code linked to a researcher, a department/school, a college or the Office of Academic Research. Distribution is ongoing as billing cycles are completed, and all funds roll over at the end of each fiscal year. These “soft money” accounts reside outside departmental and school operating budgets, and the use of RICs is restricted to the support of research. An assigned Office Manager or Administrative Assistant in each School/College is provided with access to determine the status of these funds, and will be able to process purchases for the researchers, chairs, and deans. The OAR will also provide monthly reports to appropriate PIs, the chairs and deans on the status of their funds.

Use:

Decisions regarding the use of RICs will be guided by their intent, which is to serve the research efforts of the University’s faculty, staff and students. The portion of grant-generated income in the OAR Activity Code is also intended to support the research efforts of the institution, both for sustaining ongoing activities and generating new projects.

Uses include activities such as the following:

  • develop new funding for sponsored research projects and programs;
  • increase university research capabilities;
  • provide matching funds for new external research contracts or grants;
  • support research administrative and management services;
  • develop intellectual property related to research efforts;
  • build or renovate research facilities;
  • purchase equipment or materials as needed to support research;
  • purchase release time for faculty to engage in research;
  • support research in departments where outside grant funding is not available;
  • provide internal matching support for organized research.

If individual researchers, department chairs and deans are unsure if a desired transaction follows these guidelines, they should confer with the Associate Vice President for Research (AVPR).

Financial transactions using RIC funds are initiated at the request of individuals who have been assigned an Activity Code for their RIC fund. Requests to expend funds should normally go electronically to designated School/College administrative assistants, who can then process purchase orders and follow all other normal accounting procedures to use these funds. Pertinent supervisors should be copied on all requests. It is critical that appropriate Activity Codes be attached to each financial transaction. RICs may not be used to increase a principal investigator’s annual compensation; nor may they be used to build endowments.

Individuals and offices receiving funds will prepare an annual summary for the AVPR noting how these funds have been used, and any identifiable associated accomplishments. The Indirect Cost Recovery and Use Policy will be periodically reviewed by a committee appointed by the SVPAA. This committee, composed of faculty and administrative personnel and chaired by the AVPR, will report their recommendations to the SVPAA.

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