Facilities and Administrative (F&A) Costs

Faculty researchers when preparing a proposal for the support of a research project, or for another sponsored activity, include an amount for indirect costs in the total cost of the project's budget. For many, the concept of indirect costs associated with their proposals is somewhat abstract because there seems to be no direct relationship between these costs and the activities for which support is requested. Others believe the necessity for a sponsor to provide funding for these "indirect" costs reduces the amount available to them to pay salaries and buy the necessary supplies and equipment to carry out their proposed project. While there is an acknowledgment that such costs are necessary, how these costs are determined and reimbursed through individual sponsored agreements is not always readily understood.

It is important to note the term "Facilities and Administrative" costs or "F&A" costs has recently been adopted by the Federal Government to replace the term "indirect" cots. The reason the government renamed this term was to help clarify the nature of these costs in terms that more appropriately described their purpose in support of research and other sponsored activities at colleges and universities.

F&A Costs:

The costs associated with providing facilities and administrative support for the conduct of research and other sponsored activities are necessary if faculty and staff are to be successful in their efforts. These real costs of a university are not readily identifiable with a particular project or activity but, nonetheless, are necessary to the general operation of a university and the conduct of its activities. They include the costs of operating and maintaining buildings and grounds, equipment, and of providing administration at the university, college and department levels as well as at the ODU Research Foundation.

Direct costs, on the other hand, are those costs which can be identified with a sponsored project with relative ease and a high degree of accuracy. They might include costs such as salaries and benefits, equipment, supplies and services, and travel.

Components of F&A rates:

F&A costs are divided into seven components. They are:

• Building Depreciation (in terms of sq. ft.)
• Equipment Depreciation (in terms of sq. ft.)
• Operations & Maintenance (in terms of sq. ft.)
• Interest Expense (in terms of sq. ft.)
• General/Departmental Administration ( in terms of MTDC)
• Sponsored Project Administration (in terms of MTDC)
• Library (in terms of Users and FTE salary/wages)

Current F&A rates for ODU

• On-campus Research = 53%
• Off-campus Research = 26%
• Interpersonal Personnel Act (IPA) program = 10%
• On-campus Instruction = 46%

Sponsored Programs vs. Gifts

A sponsored program is an award to an organization to fund, under the guidance of a principal investigator, a specific project, program, or center of research or other scholarly activity. Award is contingent on many constraints including judged merit of a project, consistency with the agency's objectives, a timed cycle for the use of funds, restriction of funds to "allowable" cost categories (which may vary depending on the agency), and a formal reporting requirement as to progress and at the end of the funding period. There is less, or in some cases, no discretion as to how funds may be used and the use of funds must be auditable by the agency, upon request. Hence, the onus for the proper use of funds and the documentation of such is much greater for a sponsored program, increasing the administration that is necessary to assure that all of the requirements are met by the recipient institution. All proposals/contracts for sponsored programs, whether they be from a company, federal agency, or profit/ non-profit organization, MUST BE submitted via the ODU Research Foundation.

A gift is an award that is bestowed upon the institution with few or no conditions or constraints. Gifts may be provided to establish an endowment, to support existing programs, or may be given to the university for entirely discretionary use. Although gifts might be targeted to a particular area of endeavor, or a benefactor's favorite topic (e.g. to support research on the Chesapeake Bay), there are usually no prescribed conditions beyond that for how the money may be used. There is not usually a detailed budget required beforehand and, once awarded, there are no formal reporting requirements for progress in a particular project, although a benefactor may enjoy hearing informally of the good results of the gift. Most institutions voluntarily provide such information. Flexibility and lack of restrictions make gifts attractive sources of support. At Old Dominion University, gifts are managed by the Office of Development.

One might occasionally encounter gray zones in the nature of funding - "Is it a gift or a grant?," especially in dealing with some of the private foundations. Assistance in making these distinctions can be found within the Office of Research at (757) 683-3148 and the Office of Development at (757) 683-4471.