Facilities and Administrative Cost Allocation Policy

Purpose

To provide policy and procedures for the application of facilities and administrative costs allocations to sponsored programs, including allocation guidance for F&A transfers, and allowable uses for F&A allocations.

Definitions

Sponsored Programs - Sponsored programs are projects supported by non-university (external) funds that are awarded as a result of an application submitted to a potential sponsor by the university on behalf of a faculty or staff member. Sponsors include the federal government, states, municipalities and government agencies, and private organizations.

Facilities and Administrative (F&A) Costs - Facilities and administrative costs are costs that are not readily identifiable with individual sponsored programs, and represent the University’s recovery for overhead and other indirect expenses associated with managing sponsored programs.

Indirect Costs - Another term often used interchangeably with facilities and administrative costs.

F&A Rate - The federally approved rate for reimbursement of facilities and administrative costs on sponsored programs. The F&A rate is renegotiated periodically for use on grants, contracts and other agreements with the Federal Government. The federal F&A rate may be used for non-federal grants, although a separate rate may also be negotiated.

F&A Recovery or F&A Transfer - Funds budgeted as part of project proposals, based on the F&A rate, and transferred from sponsor funds to reimburse the University for F&A costs.

Modified Total Direct Costs (MTDC) - MTDC constitute the base for F&A calculations, and consists of all salaries and wages, fringe benefits, materials, supplies, services, travel and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract.  MTDC shall exclude equipment, capital expenditures, student tuition remission, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000.

Principal Investigator (PI) - A Principal Investigator is the primary individual responsible for the preparation, conduct, and administration of a sponsored program.

Policy

Distribution of F&A Allocation: In order to stimulate further research and to provide reimbursement for costs incurred in administering sponsored programs, the University has elected to allocate the F&A recovery as follows on an individual grant basis, depending on the actual amount recovered from the sponsor.

Usage of F&A Allocations: All F&A allocations are University funds, and shall be expended for University-related purposes in accordance with existing University policies and procedures, as well as relevant IRS and other government regulations. These funds are intended to support research related costs, and may not be used for personal expenses. Examples of appropriate uses of F&A funds include:

1. Operations support: Clerical salaries, postage, phones, etc., needed to manage the project but for which the federal sponsor expects F&A to pay.
2. Bridge funding: Salaries and benefits for key personnel to retain them between grants, as well as supplies, travel and clerical support to develop proposals for new funding.
3. Sponsor-required cost sharing: Costs to meet sponsor-required percentages or dollar amounts for cost sharing or matching funds as documented in proposals or grant agreements.
4. Allowable project costs: Salaries for research assistants, chemical supplies, travel for grant purposes, or other types of support approved but not fully-funded by the sponsor.
5. Non-allowable but related project costs: Items such as participant food, promotional items, office equipment, boat rental fees, space rent, etc. that the sponsor does not allow but that are needed to conduct or enhance the project.
6. Project development costs: Pilot projects; proposal writing; proposal typing/editing; travel to conferences and/or to meet with sponsors; expenses to host sponsors, prospective partners, or influential project supporters; specialized equipment; and workshops leading to proposal submissions.
7. Research faculty recruitment and initial support: Salaries/equipment for new faculty or research faculty bringing grants with them; salaries for promising research associates or new faculty with the expectation they will write proposals and obtain future grants.
8. Research center/institute support: Shared administrative/executive assistants, technicians, equipment purchases or maintenance, and other support for groups of principal investigators.
9. Over-expenditures or disallowed costs: Although rare, if these occur they will be deducted from the annual distribution, in consultation with the Dean and the PI.

In accordance with the University’s Use of Institutional Funds Policy, F&A funds may not be spent on a deficit basis without prior approval from the Vice President for Finance and Treasurer.

Procedure

1. Accounting will process F&A allocation transfers on a quarterly basis, approximately 30 days after the end of the quarter.
2. F&A allocations will be calculated by applying the appropriate F&A rate to expenditures to date, less transfers processed for previous periods.
3. F&A funds will be established for each PI or program in fund 20, the University’s designated funds.
4. If a project has co-principal investigators, an allocation should be determined when the project is configured, and transfers will be made to the individual F&A funds for each PI.
5. Expenditures of F&A allocations may only be made after the funds have been transferred into the appropriate fund, unless permission has been obtained in advance for deficit spending as required above.

Status: Approved
Effective Date: January 1, 2021
Last Revision Date: November 2, 2020
Last Review Date: November 2, 2020
Responsible University Administrator: Scott Schaefer, Controller
Responsible University Office: Accounting
Primary Policy Contact:   For Questions and Suggestions Contact: Scott Schaefer
Phone: 503-370-6710, Email: sschaefer@willamette.edu