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:

  • Project Type, please see Definitions of Project Types for F&A purposes.
  • Sponsor Type: Federal, Foundation, Industry, etc., please see the Fact Sheet
  • Location of Sponsored Activity: On Campus/Off Campus, please see Policy
  • Sponsor's published written rate (as contained in the program announcement, request for proposal, proposal preparation guide, or published on their website)

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.