What are Indirect Costs?

What are Indirect Costs?

Indirect costs, also known as overhead or Facilities and Administrative (F&A) costs, are the costs of UM facilities, services, and administration incurred for common objectives that cannot be identified easily with a particular sponsored project. 

Some examples of the pooled costs used by the University in determining its indirect cost rates and which the recovered indirect costs help pay for include:

  • Maintaining and operating a physical plant
  • Utilities
  • General administration
  • Library
  • Use of capital assets
  • Staff services such as purchasing, payroll, grants and contracts, and accounting.

What Indirect Cost Rate should I use?

The appropriate rate to use is determined by several factors:

Are there any exceptions?

Indirect costs must be included in your proposal budget unless there is an exception as noted below:

  • The sponsor has a written published policy of not paying indirect costs that is documented either within the guidelines, program announcement, RFP, etc. or is published on their website
  • The Vice Chancellor for Research and Engagement has approved a reduction or waiver. There is a timeline and process for requesting reductions or waivers. Please see the Indirect Cost Waiver/Reduction Request Form.