Understanding F&A Costs

To reliably and successfully conduct research on behalf of the government, UNMC must maintain a robust, compliant, and efficient research environment.

F&A provides the vital funding for the "behind-the-scenes" infrastructure that makes this possible.

Federal funding for research projects covers the total cost of the project, which includes both direct costs and Facilities and Administrative (F&A) costs.

• F&A costs, also known as indirect costs or overhead, represent the essential support costs the institution incurs to keep research running smoothly and meet all necessary safety, ethical, and operational standards.
• F&A does NOT cover the costs of buildings, spaces, or administrative functions that are not used to support sponsored research.

The 'Costs' of Doing Research

From groundbreaking discoveries to improved patient care, research is fundamental to the health and well-being of individuals in our community, fueling progress that benefits our state and strengthens our nation's health.

Understanding how this crucial work is funded can be complex, as these awards are structured to account for all necessary expenses, encompassing both the direct costs of investigation and the indirect, yet critical, F&A costs.

Here is a breakdown of the two main cost categories that are part of a typical sponsored award:

Direct Costs

• salaries and benefits of the researchers working on the project
• materials, supplies, and specialized equipment needed for the project
• travel to conferences or research sites and payments to other organizations or consultants involved in the project (subcontracts)

Indirect Costs (F&A)

These are shared costs that support many research projects at once and aren't easily linked to just one, covering essential infrastructure and required administrative functions, such as:

• Facilities: costs of keeping the research spaces functional and safe, such as
  • utilities like electricity and water
  • routine maintenance and repairs to buildings and equipment
  • depreciation (wear and tear) of these facilities
• Administration: costs of essential administrative support needed to conduct research at an institution, including
  • managing research grants and contracts
  • ensuring compliance with regulations (like biosafety and ethical reviews)
  • general administrative support for research departments
  • upkeep of research libraries.

UNMC is a member institution of the Council on Governmental Relations (COGR), which has partnered with other associations to create several resources regarding the federal transition. To learn more about F&A and research costs, check out the following:

F&A Cost Rates are not a percent of the total award

F&A cost rates, expressed as a percentage, are how the institution recovers the essential overhead costs that support research projects, but they are applied only to certain direct costs, not the entire award.

It's a common misconception that the F&A rate represents a percentage of the total grant amount spent on indirect costs. For example, if the F&A rate is 50%, it does NOT mean that half of the total award goes towards these overhead expenses.

Here's a clearer breakdown:

• The total award encompasses all costs associated with a research project: the direct costs (e.g., researcher salaries, lab supplies directly used in the study) plus the indirect costs (F&A; e.g., building utilities/maintenance, administrative support).

• Example: Consider a research project with a total award of $300,000 and an F&A rate of 50%.

  • The F&A rate is applied to the direct costs, in this case, $200,000 (50% of $200,000 = $100,000 in indirect costs).
  • Adding the direct and indirect costs together equals the total award ($200,000 direct costs + $100,000 indirect costs = $300,000 total award).

In most cases, F&A costs make up only 25% - 30% of the total funding (in the example scenario above, the F&A of $100,000 is only one-third of the total award amount).

Learn More: F&A Rates Infographic (COGR)

 

Other Resources & Information

Several groups have put together lists of "Frequently Asked Questions" related to F&A Costs of Federally Sponsored University Research, including:

• FAQ Webpage from the Association of American Universities (AAU)
• FAQ Document from COGR

United for Medical Research, a coalition of leading research institutions, advocacy groups, and private industry partners, put out a 2025 update to their report advocating for increased funding for the NIH:

• NIH’s Role in Sustaining the US Economy