Facilities and Administrative (IDC) Cost Return Distribution

(July 1, 2003, implemented in FY2004; Rev. 12/20/07; 11/5/09; 9/1/11; 12/1/15; 7/1/2019; 5/1/2021; 6/1/2022)

Distribution of Facility & Administrative (F&A) Cost (aka Indirect Cost / IDC) Revenues from Research and Sponsored Projects effective for fiscal year 2023 and beyond

Facilities & Administrative (F&A) costs–also referred to as Indirect Costs and/or IDC–are real campus operational costs related to the conduct of externally funded research and other program activities that are not readily assignable to a specific project. F&A rates are negotiated and documented through an agreement between the federal government and the University of Michigan. Full recovery of indirect costs is expected on all grants/contracts whenever feasible, at the rate appropriate for the planned activity, and regardless of the sponsor type. Questions about indirect cost rates should be directed to the UM-Dearborn Office of Research.

F&A cost recovered from externally sponsored project activity will be distributed to each college according to the RCM budget model as established in fiscal year 2023.  The total amount budgeted for campus will be equal to the total prior calendar year F&A generated.  The RCM budget model will then distribute the revenue to each college based on the actual F&A generated for the same calendar year.  This will ensure each college receives a direct budget allocation for the earned resources (on a calendar year basis, not fiscal year).  The RCM budget model process will direct resources to central, campus, and overhead research costs.  No distributions will occur to units outside an academic college.

Each college is responsible for developing and implementing a F&A recovery distribution model  for their unit and budgeting appropriately for that.   Colleges are also responsible for ensuring distributions are performed under this model.

Policy owned by: Office of Research Administration and Financial Services

Last reviewed: 6/1/2022

Last updated: 6/1/2022

Next review: 6/30/22