UNCG announces new Indirect cost rates

Posted on May 16, 2024

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UNCG’s Office of Sponsored Programs (OSP) has announced new indirect cost rates. These rates should be used for all new grant proposals with a start date of July 1, 2024 or later, and are based on UNCG’s new federally-negotiated indirect cost rate agreement, dated March 26, 2024. These rates will not affect current projects.

Sometimes called facilities and administrative (“F&A”) costs or overhead costs, indirect costs are used to cover expenses that cannot be readily identified with a particular sponsored program, such as the cost of building operations and maintenance, equipment upkeep, general administrative expenses, sponsored projects’ administration, technology, and library expenses.

The new agreement specifies different rate categories:

  • On-Campus Research Rate:
    • 47% of Modified Total Direct Costs (MTDC) from 7/1/2024 through 6/30/2027
    • 48% of MTDC from 7/1/2027 until revised.
  • Off-Campus Rate: 26% until revised.
    Off campus rates are generally used when the sponsored research takes place (or predominantly takes place) in a facility not owned by the University. An individual project may no longer be split between on- and off-campus rates. If more than 50% of a project is performed off-campus, the off-campus rate applies. Otherwise, the on-campus rate applies.
  • Other Sponsored Activities (OSA) Rate: 30% until revised.
    This is a new rate category for activities that are not research or instruction. Projects claiming this rate will be scrutinized by OSP to insure it is appropriate for the proposal. Typically, OSA activities will benefit the general public or sections of the community. Examples include: community health or public education programs, artistic performances, library acquisitions, travel grants, collecting data for entry into a registry (not for analysis), and conferences, symposia, or seminars.

Per UNCG’s indirect cost rate agreement, the F&A rate cannot be applied to tuition & fees or “equipment” (i.e, single items over $10,000) and only to the first $25,000 of each subcontract (over the life the subcontract). To calculate the indirect costs for a project:

  1. Calculate the Total Direct Costs (TDC), which is simply the sum of all direct costs (salaries, benefits, supplies, equipment, etc.).
  2. Calculate the base against which the F&A rate will be multiplied by subtracting exempt items (e.g., capital equipment, graduate student tuition and required fees, and subcontract/subrecipient agreement costs in excess of the first $25,000 of each subcontract/subrecipient agreement over the life of the subcontract/subrecipient agreement) from TDC. This will give the MTDC.
  3. Apply the F&A rate against the MTDC base to calculate the indirect costs (IDC) for the project.
  4. Add the TDC to the indirect costs to calculate the Total Project Costs.

Sponsors with explicit policies regarding indirect costs can dictate another rate (or disallow indirect costs altogether). This information should appear in the RFP or proposal guidance. If a PI wishes to use a reduced F&A rate (that is not explicitly dictated by the sponsor), they must submit the F&A Rate Reduction / Waiver Form to ORE / CGA for approval before the Cayuse record is routed.

On some federal budgets or justifications, the sponsor requires info about UNCG’s negotiated rate. Our current boilerplate language is:

Indirect Costs: Indirect costs through June 30, 2027, are calculated at UNCG’s federally negotiated indirect cost rate of 47% of MTDC for on-campus research. Beginning on July 1, 2027, indirect costs are calculated at UNCG’s federally negotiated indirect cost rate of 48% of MTDC for on-campus research. UNCG’s IDC agreement is dated March 26th, 2024, Cognizant Agency U.S. Department of Health and Human Services, HHS representative Ernest Kinneer, (301) 492-4855.

Check out OSP’s “Budget Preparation” page for more info.

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