Indirect Cost Recovery and Community-Engaged Work

Guideline Statement:

In principle, funded projects that involve community-engaged work are no different than any other externally funded activity in terms of how indirect costs can and will be charged. All projects are subject to particular requirements by the University of Minnesota for charging Facilities and Administrative Costs (i.e., indirect costs).

Reason for Guideline:

Partners in community-engaged research/CBPR typically have minimal or no capacity to pay direct costs as part of grants and contracts that are negotiated with UMN investigators. Current budgetary realities require faculty undergoing research projects to consider how an engagement research project will affect indirect costs rates and if there are any alternative options.


Question: Why is it important for faculty and staff at the University to generate Facilities and Administrative Costs (also known as indirect costs) as part of their funded community-based research and contract work?

F&A (or indirect) cost recovery from grants and contracts helps cover the costs of administering and supporting grant work and fulfilling all the requirements of research conducted at a university. Currently, at the University of Minnesota, colleges and campuses (as Resource Responsibility Centers, RRCs) pay into a central pool for their share of the university’s facility and administrative costs for research. The charges for this cost pool are allocated to academic units based on their proportionate share of the average of the last three years of total sponsored expenditures. This shows up as a direct cost to the colleges and campuses. Currently, the total resources generated by the indirect costs for a grant or contract are returned to the respective college/campus, thereby, helping to defray the cost pool charges to colleges/campuses. Units that allow more waivers from the full share of F&A rates receive less indirect cost revenue to offset the research cost pool charges. Therefore, each college/campus must do a careful calculation on the amount of F&A revenue that it can forego for any research project that generates less than the full rate.

Question: What should I do if my funder will not allow the University to charge the full Facilities and Administrative (F&A) costs for the research I am proposing?

There are some circumstances that qualify as exceptions to the full F&A rate. These include situations where: the governmental or non-profit sponsor has a published rate lower than the full applicable rate; the award is being transferred from another institution with the same direct costs; or a project receives additional funding through a supplement or renewal (provided that it is 25% or less of the original award amount).

Under any other circumstance, each college/campus is different, so there is no uniform answer to this question. You should always contact your department chair, associate dean for research, or dean to discuss your options for doing this research. You may be able to get a “waiver” from the full F&A rate and go ahead with the research project.

Question: How do I secure a waiver for all or part of the published F&A (ICR) rate?

Waivers are decided by the Sponsored Project Administration office in the Office of the Vice President for Research. Waivers of full F&A rates are currently available under three circumstances. First, small projects that are under $50,000 of direct costs per year can receive an automatic waiver, if approved by the department and college. Second, if the funder publishes a specific maximum indirect cost rate that they will pay, a waiver of the full rate down to that rate is automatic, if approved by the department and college. The third category of waivers can occur for strategic reasons; that is, when it is in the overall best interest of the University to waive the full rate, often for strategic purposes. Details about securing a waiver are contained on the Research Policy page (

Question: Is a pool of resources available to offset the difference from full F&A to the rate generated for community-based projects?


Question: What other ways are there to generate resources to cover the cost of facility and administration of my research project, if the funder will not pay the full F&A rate?

In some instances, you may be able to include additional allowable administrative costs as direct costs of the project. These direct revenues coming from the project, if used to offset state or tuition supported expenditures, result in the equivalent of added revenues to the college. However, if these additional resources are used to pay for additional personnel or offset “soft money” expenditures (i.e., from ‘grant revenues’), there will be no net gain.

Question: When I work with community partners on research projects, the University receives the grant funds, but the community partner often also accepts additional administrative work, without compensation. Is it possible to share some of the indirect costs generated by my grant with my community partner?

No, it is not advisable to share indirect cost recovery with your community partner. Alternatively, it is possible to include community organizations or partners as “subcontractors” or “contractors for professional services” on grants and contracts. Instructions about the differences between subcontracts and contracts for professional services are found at Additional information about subcontracts can be found at