Facilities & Administrative (IDC) Cost Waiver

Facilities & Administrative (Indirect) Costs Rate Policy

It is the goal of the University of Michigan to recover full costs of each sponsored project where permitted by the sponsor's policies.

Full costs are defined as all costs that can reasonably be associated with a particular project. They include costs that are generally treated as direct costs (costs that can be readily and specifically allocated to a particular sponsored project) and facilitates & administrative costs (costs that are incurred for common or joint objectives and, therefore, cannot be easily identified or specifically allocated to a particular sponsored project--also known as indirect costs--including shared resources such as administrative support and office equipment like printers).

The F&A revenue that is generated by UM-Dearborn research and other sponsored activities is returned to campus. These funds are distributed in part to the UM-Dearborn general fund to cover the cost of central business services at both the Ann Arbor and Dearborn campuses,  and with the remainder being distributed to the respective colleges, proportionate to the amounts each unit has generated.

Standard Expected Indirect Cost Rates

All projects funded by Federal sponsors are expected to recover the full, federally negotiated Facilities & Administrative  rate unless this is limited by a specific federal sponsor, program, or solicitation. UM-Dearborn will accept the reduced rate as long as the rate is published and applicable to all applicants.

All projects to Industry sponsors are expected to recover the full, federally negotiated Facilities & Administrative  rate. UM-Dearborn will accept a reduced rate when there is a published rate or competitive announcement in which all applicants are held to the same published rate.

Foundations and Non-Profits
A Non-Profit’s standard published rate will be acceptable as long as it is accessible in the terms and conditions, guidelines, and/or entity by-laws. If there is no published rate, 20% should be applied. Emails, phone calls, letters, or other project-specific communication from the sponsor will not be accepted as a standard published rate.

Facilities & Administrative (IDC) Cost Waiver

If a unit believes that the standard rate cannot be used on the proposed project, the Dean may choose to waive the college/unit portion of the indirect cost return (see table below). The waiver request will need to be approved by the unit prior to the PAF being routed and documentation from the Dean’s office must be provided to the Office of Research. The portion of the F&A rate that covers campus expenses (e.g., Ann Arbor business services, general fund contribution, ORSP administrative salaries and campus grant program) cannot be waived except by prior approval from the Provost, which the requesting department must obtain.

ActivityOn CampusOn Campus Effective Rate with Unit WaiverOff CampusOff Campus Effective Rate with Unit Waiver
Other Sponsored Activity29%19%26%17%

Estimated Effective IDC Rates for Unit Waivers July 1, 2020 - June 30, 2024 Based on FY20 Total F&A Recovery


Awards solicited by faculty who contact the sponsor directly, or invitations for proposals communicated from the sponsor directly to faculty must both adhere to this policy. Sponsors may call an award a "gift" but the determination of whether funds are processed as a gift or as a sponsored project must be made by the U-M Office of Research and Sponsored Projects. In such cases, if the University considers the activity to be a sponsored project, indirect costs will be applied.

Policy owned by: Office of Research

Last revised: 5/6/2021