The University of Wisconsin-Madison
Research and Sponsored Programs
Notice 98-4
June 19, 1998
| TO: |
Deans, Directors, and Department Chairpersons and Secretaries
(for distribution to all Faculty) |
| FROM: |
William J. Vance, Assistant Dean |
| SUBJECT: |
Collection of Indirect Costs |
In previous Research and Sponsored Programs Notices you have been apprised
of UW-Madison’s policies and guidelines on the collection of indirect costs.
The purpose of this Notice is to republish the "collection of indirect
cost" policy and to add a new section covering "Unrestricted Grants".
The following paragraphs will briefly explain what indirect costs are, who
audits and approves the rates, and the policy and rate to apply to various
types of awards or awards from specific sponsors. The attached table can be
used as an easy reference guide.
I. INDIRECT COSTS - DESCRIPTION AND RATE DEVELOPMENT
Indirect costs are real costs that provide reimbursement for actual institutional
expenses that support extramural activities but cannot be directly charged
to a grant or contract. The costs result from shared services such as libraries,
physical plant operation and maintenance, utility costs, general, departmental
and sponsored projects administrative expenses, and depreciation or use allowance
for buildings and equipment.
Indirect cost rates for all Federal grants and contracts are computed on
the basis of actual costs incurred and regulations from the U.S. Office of
Management and Budget that define the cost categories that are eligible for
reimbursement. Indirect cost reimbursement rates are periodically negotiated
with our cognizant Federal audit agency, the Department of Health and Human
Services (DHHS). A signed agreement, that establishes the allowable rates
of reimbursement, is entered into between the University and the Government.
These Federally audited and approved rates are also applied to some categories
of Nonfederal awards as explained in each section.
II. GRANTS AND CONTRACTS - FEDERAL
A. Funds received directly from Federal agencies:
III. GRANTS AND CONTRACTS - NONFEDERAL
A. Nonfederal grants and contracts from for-profit
entities:
All grant and contract applications to and awards from Nonfederal for-profit
entities must include indirect costs at the agreed upon Federal rate as set
forth in the University/DHHS Negotiation Agreement, except as provided otherwise
by Federal regulations. Awards that do not include the full indirect cost
rate will not be accepted.
The following exceptions
to the collection of full indirect costs will apply:
1. The Clinical Trial rate will continue at a rate of 20 percent of Total
Direct Costs.1
2. For matching funds for a federal, state or non-profit
funded grant or contract, the required rate on the matching funds from a for-profit
entity will be limited to the rate approved for the applicable Federal, State
or non-profit agency. 3.
Grants and contracts of $5,000 or less will be subject to previously applicable
provisions. These requirements are specified in III.B. below (Nonfederal Grants
and Contracts from Non-Profit Entities). B.
Nonfederal grants and contracts from non-profit entitles:
All grant and contract applications to Nonfederal non-profit entities must include
indirect costs at the agreed upon Federal rate as set forth in the University/DHHS
Negotiation Agreement, except as provided otherwise by Federal regulations. If
the sponsoring non-profit agency has a University-approved policy that differs
from the Federal rate (as discussed below), the application may include indirect
costs at the University-approved rate. If
the sponsoring non-profit agency has a policy that it will not pay indirect costs,
or has an indirect cost rate that is less than the Federal rate, the University
will review the policy only upon receipt of a document on sponsor letterhead certifying:
1. That the policy and rate are published;
2. That it is an agency-wide policy; and
3. That the policy is consistently applied by that organization to all of its
outside grants and contracts with educational institutions.
A copy of the agency’s non-profit status as certified by the Internal
Revenue Service may also be required.
Requests for rate exceptions with documented justification must be included
with the submission of the original transmittal form. All material must be submitted
via the appropriate Dean/Director (for his/her review and approval) to the Director
of Research and Sponsored Programs for final approval.
Research and Sponsored Programs maintains a Nonfederal Indirect Cost Exceptions
index of sponsors and rates that are approved. The current list is available
on the RSP Web site at http://www.rsp.wisc.edu/rates/fnaexcept.cfm.
IV. GIFTS
Extramural funds received by the University that meet all of the
following criteria will qualify as "gifts" and are not subject to indirect
costs:
A. Provide general or unrestricted support for broadly defined
activities in one or more program areas, such as research, public service,
instruction, fellowships, traineeships, etc.;
B. No detailed fiscal or technical reports are required--either
periodic or final. The principal investigator may provide the donor with a
brief statement that the expenditures were in accord with the intent of the
gift or a brief summary of the results of the supported activities;
C. No patents, copyrights, or other intellectual
property rights that result from the gift are claimed by the donor;
D. No provisions (e.g., delays, advance notice)
are imposed by the donor concerning publication or dissemination of data
and information derived from the activity;
E. There is no specific time limit on the expenditure
of funds;
.
F. The donor’s gift is irrevocable.
Extramurally funded activities that do not meet all of these criteria for
designation as a gift will be treated as a Nonfederal grant or contract, subject
to assessment of indirect costs as provided in this policy.
V. UNRESTRICTED GRANTS
When a for-profit sponsor wishes to give an unrestricted grant, indirect costs
will be assessed unless all of the following conditions exist:
A. The award is prepaid, or a payment schedule is provided
at the time of award. Scheduled payments cannot be conditional on receipt
of any report or deliverable by the principal investigator or the University.
Awards for $10,000 or less must be prepaid;
B. No detailed fiscal or technical reports are required--either
periodic or final. The principal investigator may provide the donor with a
brief statement that the expenditures were in accord with the intent of the
gift or a brief summary of the results of the supported activities;
C. No patents, copyrights, or other intellectual
property rights that result from the gift are claimed by the donor;
D. No provisions (e.g., delays, advance notice)
are imposed by the donor concerning publication or dissemination of data
and information derived from the activity;
E. There is no time limit on the expenditure of
funds, and the grant is irrevocable. Acknowledgement of the above items by
the sponsor must be obtained and made available to RSP when requesting an
indirect cost waiver.
VI. GRANTS AND CONTRACTS - FROM OTHER GOVERNMENTAL UNITS (i.e., foreign or
domestic, states, counties, or local municipalities).
A. Wisconsin State Agencies, Counties, or Local Municipalities:
1. Indirect costs on all new, renewal, and continuing applications
to Wisconsin governmental units shall be requested at:
a. 15% of total direct costs; or
b. 8% of total direct costs for WI Dept. of Public Instruction; WI Technical
College System Board; and all divisions (except Health and Community Services)
of WI Dept. of Health and Family Services.
2. The application budget should include indirect costs,
along with a footnote, which states, "If funded from state GPR funds or Nonfederal
funds that do not provide indirect costs, indirect costs should be excluded
from the award."
3. At the time an award is made, if the Wisconsin governmental
unit provides verification that the project will be funded from Nonfederal
funds that do not provide indirect costs, the award will be accepted without
indirect costs.
B. Other Foreign or Domestic Governmental Units (countries,
states, counties, or local municipalities:
1. All grant and contract applications to other governmental
units must include indirect costs at the agreed upon Federal rate as set forth
in the University/DHHS Negotiation Agreement, except as provided otherwise
by Federal regulations.
2. At the time of award, if the other governmental unit
has a policy that it will not pay indirect costs or will provide indirect
costs at a rate less than the Federal rate, the University will review the
policy only upon receipt of a document on agency letterhead certifying the
following:
a. That the policy and rate are published;
b. That it is an agency-wide policy; and
c. That the policy is consistently applied by that governmental unit to all of
its outside grants and contracts with educational institutions.
Requests for rate exceptions
with the aforementioned justification must be included with the submission of
the original extramural support transmittal form. All materials must be submitted
via the appropriate Dean/Director (for his/her review and approval) to the Director
of Research and Sponsored Programs for final approval. C.
Proposals submitted jointly by the University and any of the above governmental
units to the Federal Government must include indirect costs on the University
portion of the budget at the Federal rate currently in effect.Any questions
about this notice should be directed to Research and Sponsored Programs at 608-262-3822.
xc: School/College Research Administrators
Links and contact names/number have been updated on:
August 24, 2005
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