F&A costs (sometimes referred to as indirect costs) are defined in 2 CFR 200 as costs that are "incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved.” Examples of F&A costs include:
- Depreciation and interest costs
- Operating and maintenance costs such as utility costs, security costs, and custodial costs
- Common administrative functions such as payroll and purchasing
Because it is impractical to account separately for these costs, F&A costs are normally not charged directly to sponsored agreements.
The University’s F&A rates are established by negotiation with our cognizant agency, the Department of Health and Human Services.
It is University policy to charge the maximum, federally negotiated F&A cost rate on all sponsored projects whenever possible. See Charging Facilities and Administrative (F&A) Costs to Grant and Contracts for additional information.
Other related information:
How are F&A Rates applied?
F&A costs are charged as a percentage of the direct costs “base”. The base will be determined by sponsor policy. Normally, the base is defined as the modified total direct costs (MTDC) of an award. MTDC excludes equipment, capital expenditures, patient care, tuition/fees, facility rental and the portion of an individual sub-award in excess of $25,000.
Rebudgeting and F&A Adjustments
Rebudgeting involves moving funds from one budget category to another without increasing the total amount of the award. Sponsors may have limits on how much funding can be shifted between budget categories or which categories can be rebudgeted. If necessary, appropriate approvals may need to be obtained in advance of rebudgeting.
Unless specifically restricted by the sponsor, when rebudgeting between MTDC (non-exempt) and non-MTDC (exempt) budget categories, the impact on F&A must also be considered. Moving budget dollars from an exempt to non-exempt category requires an increase to F&A budget. For example: If $30,000 of equipment was originally budgeted but it was determined at a later point in the project that the equipment was not needed after all and the funds would be needed for supplies instead, the $30,000 should be rebudgeted to $19,867.55 supplies and $10,132.45 F&A (assuming a 51% F&A rate). Moving budget dollars from non-exempt to exempt requires a decrease to F&A budget. For example: If $30,000 was originally budgeted for supplies, but it was determined at a later point in the project that the supplies were not needed after all and the funds would be needed for equipment instead, the $30,000 supplies + $15,300 F&A = $45,300 of funds that should be rebudgeted from supplies and F&A to equipment.
Last updated 8/1/2014