Facilities and Administrative (F&A) Costs are expenses associated with maintaining facilities and providing administrative support for the conduct of research and other sponsored activities. F&A Costs are not readily identifiable with a particular project or activity, but are real expenses incurred in the general operation of the University and the conduct of its activities. To a considerable degree, a healthy research environment depends on the expenditure and recovery of F&A funding.
The University of Iowa ’s F&A rates are determined through extensive analysis of UI costs and require lengthy negotiation and mutual agreement with the federal government. Due to its fundamental reliance on the recovery of F&A costs, the UI requires those applying for a grant or contract to budget F&A reimbursement at the maximum negotiated rate, with exceptions made for specific governmental programs and nonprofit entities that, according to published policy, expressly limit F&A recovery to a lower rate.
The policy of requesting the maximum F&A cost reimbursement rate applies to any project seeking external grant or contract funding, regardless of the funding source – be it a government agency, a private foundation or, as we emphasize here, an industry sponsor. Reducing F&A rates for industry-sponsored projects constitutes a gift of public funds for private benefit, as the industry sponsor benefits from the project but fails to reimburse the University for the full cost of the project. Such gifts are contrary to the University’s responsibilities.
In order to expedite budget negotiations with industry, the UI has developed various budget templates specific to industry, conforming to budget formats familiar to industry. The primary distinction between budgets submitted to industry and budgets submitted to other sources is that, with industry budgets, F&A costs do not appear as a distinct line item dedicated to F&A expenses, but are listed separately within each budget line item. In other words, each budget category reflects the full costs of the proposed work, including both the direct costs and the F&A costs.
On the Division of Sponsored Programs website is a workbook file containing three Excel worksheets and five sample budgets for use when proposing a project to industry. These worksheets were developed for use in all types of industry proposals that are routed to the Division of Sponsored Programs, but are not intended for use in corporate-sponsored clinical trials. Industry proposals routed through DSP, then, must include an internal budget worksheet and an industry budget worksheet, selected from the options that follow:
Internal Industry Budget Worksheet: Source Data
An internal budget for UI use should be included with any industry proposal as it’s routed through departments, colleges, and the Division of Sponsored Programs. This worksheet provides the budget format to be used for internal purposes, offering sample budget data with the appropriate UI cost descriptions.
Industry Budget Worksheets: Detailed and Simplified
Beginning October 15, 2007, any new proposal to an industry sponsor – i.e., a proposal seeking funding that originates with industry, as opposed to funding that originates with a federal agency and flows through industry – must include an industry budget worksheet at the time of routing. Budgets should adhere to one of four worksheet formats, as appropriate to the project:
- Industry Detailed Budget – This industry worksheet is expected to be the most commonly used option, converting the source data to fully burdened cost descriptions – i.e., the F&A costs are allocated and reflected in each direct cost category.
- Industry Simplified Budget Worksheet – fully burdened by budget category, including both direct and F&A costs within each category.
- Industry Simplified Budget Worksheet – bottom-line total costs, usually resulting in a fixed-price amount by deliverable.*
- Industry Simplified Budget Worksheet – costs by unit or deliverable, usually resulting in a fixed-price amount by deliverable.*
* Note: While use of the latter two, fixed-price options may be appropriate when conducting applied research (e.g., testing widgets) for which costs can be predicted with a great degree of accuracy, fixed-price contracts do leave principal investigators and departments at some financial risk, as the contracted work must still be completed even if the costs exceed the budget.
Please review the updated UI policy on F&A Costs.
Please also download the budget workbook (Microsoft Excel File) and use it for creating your budgets.
After reviewing the current policy and new budget templates, questions may be directed to the following individuals, as appropriate:
- Questions on how the F&A rate is determined: Kirby Tenhulzen, University Financial Analyst, 335-0083.
- Questions on how the F&A rate is calculated once awarded: Audra Haddy, Associate Controller, Grant Accounting, 335-0827.
- Questions on F&A policy and budgeting format: an Associate or Assistant Director in the Division of Sponsored Programs, 335-2123.