Indirect Costs: An Important Topic for the I2SL Community to Understand Because of its Impacts on Lab Sustainability at Universities

Kathryn Ramirez-Aguilar, University of Colorado Boulder

Indirect costs are essentially overhead costs associated with supporting research at an institution. They are costs which cannot easily be connected with just one research project or costs that serve multiple projects or causes on campus. Some examples include costs resulting from grant administration, energy use, building maintenance, custodial services, and internet service. Direct costs on the other hand are costs that can be directly connected with a single research project such as researcher salary & benefits, supplies, and equipment. The federal government divides indirect costs into two general categories: facilities and administration. Negotiations occur between an individual university and the federal government, presently every 3-5 years, to determine that university's Facilities and Administrative (FA) rate for the coming years. That FA rate, also commonly known as the rate for Indirect Cost Recovery (ICR), is used by that university to recoup indirect costs from sponsors (federal and non-federal) who fund research projects at their university for the coming years. This presentation will explain how the FA rate is calculated for universities with over $10 million/year in direct costs, missed opportunities in the facilities portion of the FA rate calculation to promote efficiency, how the process dis-incentivizes efficiency, and actions that universities could take to incorporate efficiency into the process. Because universities end up cost sharing indirect costs with sponsors, any reduction in indirect costs resulting from efficiency efforts should help minimize the need for both sponsor funding and university funding to cover indirect costs, all while reducing the environmental footprint of research.

Learning Objectives

  • Understand the difference between indirect costs and direct costs associated with sponsor-funded research at institutions.
  • Learn how the Facilities and Administrative (F&A) rate is calculated for universities with over $10 million/year in direct costs.
  • Understand missed opportunities in facilities portion of the F&A rate calculation to promote efficiency and how the process dis-incentivizes efficiency.
  • Learn about actions that universities could take to incorporate efficiency into the F&A process.


Kathy has a doctorate in Analytical Chemistry and 15 years of laboratory research experience. She manages the CU Green Labs Program at the University of Colorado-Boulder, a program she has been building & creating since 2009. She is also dedicated to the Bringing Efficiency to Research (BETR) Grants effort aimed at connecting efficient resource use with the receipt of research funding from sponsors. BETR Grants is presently the focus of the I2SL University Alliance Group that Kathy chairs.


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