Distribution of Indirect Cost Recovery to Academic Units from Sponsored Programs Policy
Purpose
The purpose of this policy is to provide funding to stimulate research, scholarship, and new proposal submissions by returning a portion of the sponsored research indirect cost recovery to academic schools/departments.
Scope
This policy applies to academic units, including schools/colleges, deans, and chairpersons.
Policy History
Effective Date: November 23, 1970
Approval: September 24, 2025
Policy History:
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Approved in original form: November 23, 1970
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Approved as amended: October 4, 1977
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Approved as amended: June 13, 1995
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Approved as amended: June 26, 2000
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Approved as amended: June 21, 2008
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Approved as amended: January 8, 2015
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Approved as amended: May 24, 2016
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Approved as amended: September 24, 2025
Maintenance of Policy: Vice President for Academic Research, Office of Academic Research
Policy
A sound indirect cost recovery and distribution policy should meet tests of reasonableness and fair-sharing while, at the same time, providing incentives to faculty and staff to stimulate research, scholarly activity, and the submission of new high-quality proposals for sponsored programs. Sponsored programs are defined as externally funded research or scholarly activity for which a written agreement, i.e., a grant or contract, is entered into between the University and the sponsor. The agreement has a defined scope of work or set of objectives, which provides a basis for accountability and sponsor expectations. A sound indirect cost recovery and distribution policy must also recognize that indirect costs are real and cost-sharing must be met out of indirect cost distributions and/or discretionary monies each year.
The University of Dayton Research Institute (UDRI) and the Office of Academic Research are the designated fiscal agents for sponsored research and scholarship at the University. All proposals requesting government (federal, state, county, city) or non-government funds for research or scholarly activity must be reviewed and processed by the University of Dayton Contracts and Grants Office or the Office of Academic Research (OAR), as applicable. This Policy shall cover Indirect Cost Recovery for contracts managed by OAR.
When contract/grant budgets are developed, they are carefully reviewed to ensure all costs, direct and indirect, are considered. Indirect costs (facilities and administrative, F&A) represent the expense of doing business that are not readily identified with a particular grant, contract, project function, or activity, but are necessary for the general operation of the University and the conduct of activities it performs. Indirect costs result from shared services such as physical plant operation and maintenance, utility costs, use allowance for buildings and equipment, library materials, and general administrative expense. Indirect cost recovery offsets these real and actual costs incurred by the University. The University operates within the guidelines established by the Office of Naval Research (which sets maximum indirect cost rates) and the funding agency(ies) of the project in question.
All proposals for equipment or research, development, training, and scholarly activity must include indirect costs calculated using the University’s federally approved indirect cost rate. Exceptions to proposing the federally approved indirect cost rate require prior approval in accordance with the Cost Sharing Policy for Sponsored Programs.
Guidelines for the distribution of indirect cost recovery and cost-sharing follow.
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Indirect costs collected from the sponsor on programs where the full indirect cost rate is applied will be shared according to the guidelines adopted by Office of Academic Research.
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Reduced indirect cost recovery due to a sponsor limitation on the indirect cost rate will result in no distribution of indirect costs to the Academic Unit in which the program is conducted. Any recovered indirect costs will be distributed to the General Fund. If exceptional circumstances warrant, an alternate arrangement can be approved by the Vice President for Academic Research.
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Cost overruns will be charged against the Academic Unit’s indirect cost distribution.
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Indirect costs returned to the Academic Unit should be used to stimulate research, scholarship, and new proposal submissions. Normally, it is expected that the Dean will share returned indirect costs on a basis with the generating department. Indirect Costs on agreements that involve investigators from more than one college shall require the deans of the respective colleges to agree to indirect cost distribution consistent with guidelines adopted by OAR and signed before any proposal is submitted.
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Each Dean shall annually submit a report to the Provost illustrating how returned indirect cost monies were used to expand faculty research and scholarly activities.
RESPONSIBILITY FOR ENFORCEMENT, REMEDIES, SANCTIONS
The Vice President for Academic Research is responsible for administering the policy. The Provost and the Vice President for Finance Administrative Services are responsible for resolving issues related to the use of the policy.
APPEAL PROCESS
It is understood that this Policy cannot foresee all issues which may arise in the future; in such cases, the Provost, Vice President for Academic Research, and the Vice President for Finance and Administrative Services will consult to resolve such issues within 30 working days after the issues are brought to their attention.