Indirect costs

Indirect costs (IDCs)

IDCs, a term that is used interchangeably with F&A or overhead, are real expenses incurred by the university to support research activities that cannot be quantified or allocated to a specific project or grant. IDCs provide and maintain the infrastructure that are essential to conduct research effectively at Ohio State. This includes central and college-based personnel and operating costs related to Human Resources, Payroll, Finance, Research Administration and Legal. It also includes physical facility expenses such as electricity, heating, snow removal, custodial and maintenance services, and shared equipment in labs, offices and other spaces used for performing research. Ohio State has a federally approved IDC rate that is reflective of real expenses to support its infrastructure.

Ohio State indirect cost rate

Ohio State has two basic rates that are used for most sponsors: On-campus organized research and on-campus research related/other sponsored activities. Ohio State also has a rate for industry sponsors. The grants manager provides guidance on the appropriate rate to use in the budget based on the scope of work, sponsor type and the FOA or any proposal guidelines outlined by the sponsor. The U.S. Department of Health and Human Services periodically reviews the university’s rates to determine if they need to be modified. The indirect cost rate that should be applied to MOUs for internal-university non-OSP grant funds is 10% or the maximum rate permitted by the internal university sponsor.

Exceptions 

An exception to Ohio State’s standard IDC rates is granted when the prime sponsor — whether federal, state, industry, nonprofit or other — has a published FOA or guidelines that explicitly cap overhead rates regardless of the applicant’s official IDC rate. In these instances, Ohio State will follow the sponsor’s published proposal guidelines. Ohio State encourages PIs to prioritize the submission of proposals to sponsors who allow full recovery of its negotiated IDC rates over mechanisms with lower rates.

If an investigator wants to voluntarily propose a lower IDC rate and request an exception to the Ohio State indirect cost rate, their grants manager coordinates a justification for the ADR to review. A brief statement of work, budget, proposal guidelines and a justification describing how the project would benefit CPH's mission and strategic plan is required. If the ADR agrees with the PI that a lower rate should be requested for approval from the college, the ADR confers with the assistant dean of finance and administration and presents the specific situation, including the statement of work and the proposed rate to be used. If the assistant dean for finance and administration approves, the PI is notified by email. The investigator provides the email approval to the grants manager to draft the adjusted budget and the approval is documented and attached to the ePA005.

Ohio State strongly discourages voluntarily lowering the indirect cost rate whenever the sponsor accepts its negotiated rates. Ohio State monitors this activity campus-wide. Lower IDC rates have financial implications for the university and CPH.