Indirect costs of research

Indirect costs are institutional costs related to research. They include:

  • operation and maintenance of facilities and equipment (i.e. labs and libraries)
  • administrative processes supporting research -- from providing seed funds and supporting the preparation of grant applications and externally funded research agreements, to Research Accounting and through to the commercialization and dissemination of results)
  • regulation and safety compliance (including human ethics, animal care and bio-safety)

Recovering indirect costs

Effective January 1, 2010 the university recovers indirect costs from all new or renewed research funding agreements at a flat minimum rate of 25%. Exceptions are Tri-Council grants or rates agreed to by the university through the Vice-President Research. To learn more about this, please refer to the UVic Policy on Indirect Costs of Research.

Contact the Contracts office at contract@uvic.ca for help with calculating indirect costs when preparing your budgets.

To request an exception to the 25% flat rate, please complete the Exceptions Request for Funders (Application for negotiated indirect cost rate).

  1. What are indirect costs of research?
  2. Why do we need revisions to the current policy?
  3. What is the new UVic indirect cost of research rate and how has it changed?
  4. Does this indirect rate also apply to funding from the Tri-Council Funding Agencies (i.e. NSERC, CIHR, SSHRC)
  5. What about funders that won’t or can’t pay the full indirect rate?
  6. Will the proposed policy put UVic at a competitive disadvantage to other universities?
  7. Is the new rate retroactive?
  8. Will the new rate apply to future instalments of existing grants, contracts or agreements?
  9. Will amendments to existing external research funding agreements (grants and contracts) fall under the new policy?
  10. Does this mean I will get less funding for my research project?
  11. If I build in the indirect costs into the price of a research project, isn’t this deceptive?
  12. How will the university communicate the new policy to external funders and what support will researchers receive in meeting the requirements of the new policy and procedures?
  13. Who negotiates the indirect cost of research rates and payments with individual agencies and companies?
  14. Will indirects apply to awards made directly to graduate students?
  15. How will this affect my NSERC Collaborative Research & Development grant (CRD) application or other similar leveraging funding programs?
  16. How are the indirect costs to be calculated?
  17. When UVic collects indirects, where does it go?
  18. How may the indirects be used?
  19. Will sub-awards to UVic from other institutions be subject to indirects?
  20. Will equipment-only grants and contracts be subject to indirects?
  1. What are indirect costs of research?
    • The costs of doing research may be separated into direct costs and indirect costs (formerly referred to as “overheads”).

      Direct costs are directly related to research projects. They can be identified specifically and accurately with a specific project) and may include salaries and benefits, supplies, equipment, research-related travel, fees and consultant costs.

      Indirect costs are real costs indirectly related to research projects or incurred for common or joint objectives. They may include:

    • building operating costs including heating, cooling, power, cleaning, maintenance and landscaping
    • faculty and departmental services such as machine and electrical shops, secretarial and office assistance, purchasing, shared equipment, etc.
    • academic services such as the library and computing service
    • university-provided administrative services such as Purchasing, Finance and Human Resources, as well as the university administration itself, president’s office, deans, department heads and directors and administrative staff
    • research and contract administration and regulatory support such as Office of Research Services (ORS), Occupational Health and Safety, Innovation and Development Corporation (IDC), Office of Community-based Research (OCBR), etc
    • faculty salaries

    The university is dependent on maximizing the recovery of indirect costs in order to maintain the infrastructure necessary to support externally-funded research. 

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  2. Why do we need revisions to the current policy?
    • The demand and need for indirect funding, and the services provided through indirect funding, is outstripping available resources (everywhere, not just at UVic).
    • Funders should pay the fair costs of research, both direct and indirect.
    • There has been a significant increase in the number and complexity of research funding agreements without a corresponding increase in the amount of indirect funding.
    • There is a national push to increase funding of the indirect costs of research – it is the highest priority for the Association of Universities and Colleges Canada.
    • There is agreement amongst BC research-intensive universities for greater harmonization of university funding agreement policies on indirect costs.
    • Existing UVic procedures were difficult to administer and lacked transparency and consistency.
    • There is a desire and need to increase support for research.
    • The policy was scheduled for review as part of the normal cyclical review of Board of Governors policies – the policy was revised according to new formatting standards which included separating the procedures from the policy.

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  3. What is the UVic indirect cost of research rate and how has it changed?
    • To a significant extent, the new policy on the indirect costs of research is similar to our current policy on overhead. One key difference is replacing a confusing array of variable rates with a flat minimum rate of 25%.

      The new single rate will be far easier to administer and gives greater certainty to researchers and funders during budget preparation.

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  4. Does this indirect rate also apply to funding from the Tri-Council Funding Agencies (i.e. NSERC, CIHR, SSHRC)
    • No, the indirect costs rate will not apply to funding from the Tri-Council Funding Agencies. The Tri-Council already provides indirect costs to UVic through the Federal Indirect Costs of Research Program.

      The amount of indirect cost funding from the federal program is based on the amount of direct funding that UVic receives from the Tri-Council programs. However, the indirect rate may have application to contributions by industrial sponsors under certain Tri-Council programs, see FAQ No. 16.

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  5. What about funders that won’t or can’t pay the full indirect rate?
    • The university will accept modified indirect rates from government or non-profit agencies as long as those rates are published and there is sufficient evidence that the rate is applied to all Canadian universities. The indirect rates for various funders are included in the toolkit on the forms page.

      The criteria and process for requesting an exception to UVic’s indirect cost of research is explained in the proposed Procedures for the Approval of External Research Funding Agreements (Sections 22 to 27).

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  6. Will the proposed policy put UVic at a competitive disadvantage to other universities?
    • No. The indirect rates we will charge are, still at the low end of what's charged by other universities. We are harmonizing our rates with UBC and SFU as much as possible and working collaboratively with other universities across Canada. Most Canadian universities charge between 15-30% of direct costs on grants, and 40% on contracts and agreements. Most U.S. universities have negotiated federal indirect cost rates that range between 45-65% of salaries, wages and benefits.

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  7. Is the new rate retroactive?
    • No, it applies only to projects that are initiated on or after January 1, 2010.

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  8. Will the new rate apply to future instalments of existing grants, contracts or agreements?
    • No, the new policy will not apply to future instalments of existing funding agreements unless there is a substantial change in the nature of the agreement. Please see FAQ 10.

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  9. Will amendments to existing external research funding agreements (grants and contracts) fall under the new policy?
    • Normally, no. The terms of existing agreements have already been accepted by both parties and can't be charged unless agreed upon by both parties. In cases where implementing the new policy is possible and in the interest of the university, the new policy may apply.

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  10. Does this mean I will get less funding for my research project?
    • No. The indirect costs of research are in addition to the funding provided for the direct costs of the research. It is intended that the indirect costs are built into each budget item so that the funder understands that the indirects are a legitimate component of the actual cost of research and not an “added” cost.

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  11. If I include the indirect costs into the price of a research project, isn’t this deceptive?
    • No. Indirect costs or “overhead” is normally included in the price of goods and services, worldwide.

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  12. How will the university communicate the new policy to external funders and what support will researchers receive in meeting the requirements of the new policy and procedures?
    • The Office of the Vice-President Research and Office of Research Services (ORS) are preparing materials to help explain our policy to external funders. In addition to the assistance ORS and Innovation and Development Corporation (IDC) already provide, see the new tool kit for help preparing external research funding agreements.

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  13. Who negotiates the indirect cost of research rates and payments with individual agencies and companies?
    • It is the university’s responsibility, through the Office of the Vice-President Research (OVPR), to set or adjust indirect rates charged to funders. It is the responsibility of researchers to apply the appropriate indirects charge to budgets of all research projects. Faculty are not authorized to negotiate indirect rates on with funders independently without consultation with the university. However, requests for exceptions may be proposed as per the Procedures for the Approval of External Research Funding Agreements (Sections 22 to 27).

      The Vice President Research, in collaboration with the consortium of Canadian research-intensive universities, will continue to negotiate with national agencies and foundations that do not include indirect costs as eligible costs.

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  14. Will indirects apply to awards made directly to graduate students?
    • No, awards made directly to a student or post-doctoral fellow in a competitive process will not be subject to indirects. Indirects will, however, be charged against salaries or stipends paid to student and post-doctoral assistants from external research funding agreements (e.g. contracts and grants etc.), excluding Tri-Council funds. The Tri-Council funding agencies already provide indirect costs of research on salaries paid to all grant-funded employees, including students. The university has provided a standing indirect cost rate of 0% for certain research programs involving graduate students such as the MITACS accelerate program.

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  15. How will this affect my NSERC Collaborative Research & Development grant (CRD) application or other similar leveraging funding programs?
    • The NSERC CRD grant will match the direct costs of research charged to industry sponsors. The university receives indirects on the NSERC portion of the direct costs separately through the Federal Indirect Costs Program. The change to the policy simply eliminates the previous waiver of indirect costs of research to the industry funder.

      Example: If NSERC provides $100k for a project (salaries, graduate support, equipment etc.), the university will actually receive an additional $25k from the Federal Indirects Program. If there is an equal match from industry, they will also provide a total of $125k to cover the direct and indirect costs of the research. Thus, the leveraging of the NSERC funding remains 100% from industry. See the table of agencies with UVic-approved special rates in the tool kit.

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  16. How are the indirect costs to be calculated?
    • Whenever appropriate, budgets should build the indirect costs into each line item. For example, personnel costs are calculated as (salary + benefits) x 125% = total salary cost. When a government or non-profit agency requires that indirect costs be presented as a separate line item, budgets should include an indirects line item equal to a minimum of 25% of the total costs (or other, agency-specific rate).

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  17. When UVic collects indirects, where does it go?
    • The indirect costs of research recovered by the university from external research funding agreements, except for Tri-Council indirects, will be distributed as follows:

      Dean and/or Research Entity Director (as per procedures) 40%
      University 35%
      Vice-President Research 10%
      Research Initiatives Fund 15%

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  18. How may the indirects be used?
    • Indirects are to be used to cover indirect costs of research at the university, faculty, department, research entity or project levels, as appropriate. Examples include administrative support, equipment maintenance, technical support, etc.

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  19. Will sub-awards to UVic from other institutions be subject to indirects?
    • Yes. It’s the responsibility of the prime awardee to negotiate on behalf of the sub-awardee(s) sufficient funds so the appropriate indirect cost of research rate for each institution is included in the transfer of funds.

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  20. Will equipment-only grants and contracts be subject to indirects?
    • Equipment-only grants are not universally exempt from indirect costs. Tri-Council funding agencies provide indirect costs on equipment. Certain programs such as CFI will have a standing indirect rate of 0%.

      See the indirect cost of research rates schedule in the tool kit for information about specific equipment-only funding programs.

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Check out the tool kit for researchers preparing external research funding applications and agreements.

Research Contracts
Email: contract@uvic.ca

Debra Anderson, Manager Research Finances & Budgets
Tel: 250-721-8079
Email: orsfince@uvic.ca

Nicole Kitson, Senior Grants Officer (Pre-Award)
Tel: 250-853-3103
Email: grants@uvic.ca

Nykita Downie, Research Programs Liaison
Tel: 250-472-4986
Email: resprog3@uvic.ca