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LSA Indirect Cost (IDC) Recovery Policy

Indirect costs (IDC) pay for the expenses associated with research, including space, research support staff (e.g., accounting), and a tax from the Provost of ~20% on all LSA expenditures.  The U-M IDC rate is negotiated every three years based on U-M expenditures, and (due to Federal caps on administrative costs) typically funds only ~70% of the research-related costs.  LSA policy requires full recovery of IDC on sponsored projects whenever possible.  In those cases where an exception may be considered (below) a comment should be added to the PAF explaining the request for exception.  This will be reviewed by the College and if approved, the PI will be notified. 

  • Some sponsors have a published IDC rate that is less than the University’s negotiated rate (Note:  IDC is sometimes referred to by different names, such as Administrative Allowance).  In cases where there is a published IDC rate below the U-M rate, please post a comment to the PAF noting this and include a PDF of the sponsor’s IDC policy or provide a link to their website that states their rate. 
  • Some organizations do not have a published IDC rate, but nevertheless have a policy of not paying IDC or paying IDC at a rate below the University’s rate.  In such cases please post a comment to the PAF noting this and include a PDF of the correspondence documenting the sponsor’s policy. 
  • When grants are transferred from another institution, they will keep the IDC rate of the transferring institution for one year.  Any additional years’ IDC will be at the UM IDC rate.

In a few cases, departments have chosen to provide cost-sharing that is equal in dollar value to the IDC that the University collects (thus, effectively, foregoing the IDC).  Please contact the Research Office to discuss how to display this option on the PAF (note – some Federal agencies do not allow cost-sharing and are statutorily required to reject proposals that list cost-sharing).

Awards solicited by faculty who contact the sponsor directly must still adhere to this policy.


June 3, 2014