The purpose of this Notice is to republish the "collection of indirect cost" policy and to add a new section covering "Unrestricted Grants". The following paragraphs will briefly explain what indirect costs are, who audits and approves the rates, and the policy and rate to apply to various types of awards or awards from specific sponsors.
Indirect costs are real costs that provide reimbursement for actual institutional expenses that support extramural activities but cannot be directly charged to a grant or contract. The costs result from shared services such as libraries, physical plant operation and maintenance, utility costs, general, departmental and sponsored projects administrative expenses, and depreciation or use allowance for buildings and equipment.
Indirect cost rates for all Federal grants and contracts are computed on the basis of actual costs incurred and regulations from the U.S. Office of Management and Budget that define the cost categories that are eligible for reimbursement. Indirect cost reimbursement rates are periodically negotiated with our cognizant Federal audit agency, the Department of Health and Human Services (DHHS). A signed agreement, that establishes the allowable rates of reimbursement, is entered into between the University and the Government. These Federally audited and approved rates are also applied to some categories of Nonfederal awards as explained in each section.
All faculty and staff who engage in or propose to engage in sponsored projects; All extramural support received by UW-Madison, including all federal and nonfederal grants and contracts
All grant and contract applications to and awards from Nonfederal for-profit entities must include indirect costs at the agreed upon Federal rate as set forth in the University/DHHS Negotiation Agreement, except as provided otherwise by Federal regulations. Awards that do not include the full indirect cost rate will not be accepted.
The following exceptions to the collection of full indirect costs will apply:
All grant and contract applications to Nonfederal non-profit entities must include indirect costs at the agreed upon Federal rate as set forth in the University/DHHS Negotiation Agreement, except as provided otherwise by Federal regulations. If the sponsoring non-profit agency has a University-approved policy that differs from the Federal rate (as discussed below), the application may include indirect costs at the University-approved rate.
If the sponsoring non-profit agency has a policy that it will not pay indirect costs, or has an indirect cost rate that is less than the Federal rate, the University will review the policy only upon receipt of a document on sponsor letterhead certifying:
A copy of the agency’s non-profit status as certified by the Internal Revenue Service may also be required.
Requests for rate exceptions with documented justification must be included with the submission of the original transmittal form. All material must be submitted via the appropriate Dean/Director (for his/her review and approval) to the Director of Research and Sponsored Programs for final approval.
Research and Sponsored Programs maintains a Nonfederal Indirect Cost Exceptions index of sponsors and rates that are approved. The current list is available on the RSP Web site.
Extramural funds received by the University that meet all of the following criteria will qualify as "gifts" and are not subject to indirect costs:
Extramurally funded activities that do not meet all of these criteria for designation as a gift will be treated as a Nonfederal grant or contract, subject to assessment of indirect costs as provided in this policy.
When a for-profit sponsor wishes to give an unrestricted grant, indirect costs will be assessed unless all of the following conditions exist:
Requests for rate exceptions with the aforementioned justification must be included with the submission of the original extramural support transmittal form. All materials must be submitted via the appropriate Dean/Director (for his/her review and approval) to the Director of Research and Sponsored Programs for final approval.
Any questions about this notice should be directed to Research and Sponsored Programs at 608-262-3822.