Indirect Cost (F&A) Recovery

Indirect cost rates are established in CU Boulder’s federally negotiated Indirect Cost Rate Agreement and apply to the following activities: instruction, intergovernmental personnel act agreements, organized research, and other sponsored activities. As defined in 2 CFR 200 Appendix III, these activities are defined as:

1. Instruction: The teaching and training activities of an institution. Except for research training as provided in subsection b, this term includes all teaching and training activities, whether they are offered for credits toward a degree or certificate or on a non-credit basis, and whether they are offered through regular academic departments or separate divisions, such as a summer school division or an extension division. Also considered part of this major function are departmental research, and, where agreed to, university research.  
2. Intergovernmental Personnel Act Agreements (IPAs): IPAs allow for the temporary assignment of personnel between the Federal Government and CU Boulder to facilitate cooperation between both parties.
3. Organized Research: Organized research means all research and development activities of an institution that are separately budgeted and accounted for. It includes:
   1. Sponsored research means all research and development activities that are sponsored by Federal and non-Federal agencies and organizations. This term includes activities involving the training of individuals in research techniques (commonly called research training) where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function.
   2. University research means all research and development activities that are separately budgeted and accounted for by the institution under an internal application of institutional funds. University research, for purposes of this document, must be combined with sponsored research under the function of organized research.  
4. Other Sponsored Activities: Other sponsored activities means programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research. Examples of such programs and projects are health service projects and community service programs. However, when any of these activities are undertaken by the institution without outside support, they may be classified as other institutional activities.

In addition to these activities, CU Boulder’s negotiated Indirect Cost Rate Agreement includes a rate specific to the Laboratory for Atmospheric Space Physics (LASP) as defined below.

Direct costs are costs that can be readily or easily assigned to a funded project. These costs include, among others, materials and supplies needed to carry out the project; salaries and fringe benefits for faculty, graduate students, postdocs, research assistants, and other project personnel; project travel; and others.

Sponsored Services are activities performed by university personnel using university facilities and/or equipment that have excess capacity to perform work for external entities similar to tasks done on sponsored research projects but without the scientific investigation and conclusions. 

Indirect costs (also known as IDC, overhead, facilities and administrative costs, or F&A) are real costs to CU Boulder that are not readily or easily assignable to a specific funded project. Indirect costs help promote organized research at CU Boulder by providing funds for research-related expenses such as heat, light, water, electricity and custodial services in offices and laboratory spaces; occupational safety and hazardous waste removal; telecommunications; computers and internet access; and many other support services.

Indirect costs are negotiated with the federal government regularly, in accordance with guidelines set forth in Appendix III to 2 CFR 200. CU Boulder recovers indirect costs as a percentage of some or all of the direct cost expenses of funded projects.

Indirect costs are calculated as a percentage of some or all of the direct project costs. The three possible rate bases at CU Boulder are as follows:

1. Modified Total Direct Costs (MTDC): This is the rate base used when the campus federally negotiated indirect cost rates are applied. It is derived by excluding certain costs from the direct cost total: equipment, capital expenditures, charges for patient care, student tuition remission, rental costs of off-site facilities, scholarships, fellowships, and that portion of each subaward and subcontract in excess of $25,000.  

   Note: As of October 1, 2024, 2 CFR 200’s definition of MTDC increases the subaward/subcontract portion subject to indirect costs to $50,000; however, CU Boulder cannot implement the new threshold until a new negotiated rate agreement is approved by the Department of Health and Human Services. CUB will adopt the new threshold as of the date that DHHS approves CU Boulder’s negotiated rate agreement with the new threshold included.

2. Total Direct Costs: If a sponsor requires an IDC rate that is less than CU Boulder’s federally negotiated rate the IDC rate is applied to all direct costs. The base includes all of the direct costs on the project, without exclusions. In some cases, a sponsor may require that certain types of costs be excluded from the indirect cost calculation; in these cases, CU Boulder will adhere to that requirement.
3. Total Project Costs: The total project cost base is used when a sponsor states that only a certain percentage of total costs can be charged for indirect costs. None of the standard MTDC exemptions apply when using this base.

CU Boulder’s federally negotiated rates vary based on project location: on-campus and off-campus:

1. On-campus locations: On-campus locations include space in buildings owned by CU Boulder and may include buildings or spaces rented or leased by CU Boulder itself or some CU Boulder entity, as long as the rental or lease costs are not charged directly to the project. The indirect cost rate for on-campus locations includes both the Facilities and the Administrative components of the rate.
2. Off-campus locations: Off-campus locations include space not owned by CU Boulder, and buildings or spaces not rented or leased by CU Boulder itself or some CU Boulder entity, where those rental or lease costs are charged directly to the project and do not form a portion of CU Boulder’s indirect cost pool. Off-campus locations also include field work locations without any associated rental or lease costs. A home or other off-campus office does not  constitute an off-campus work location for the purposes of determining if the off-campus rate can be used. Each situation where a home office is used as a permanent work location for project personnel must be approved on a case-by-case basis. The indirect cost rate for off-campus locations is lower than the on-campus rate, because it only includes the Administrative component and not the Facilities component. In cases where University capital equipment is used off-site the on-campus rate will be applied. Standard conference travel is not considered an off-campus cost because the purpose of a standard conference is to gather information, network with other professionals, and disseminate results rather than to conduct any of the scope of work for the project.
3. Projects performed in both on- and off-campus locations: In accordance with the terms of CU Boulder’s federally negotiated indirect cost rate agreement, and as detailed in the Application of Indirect Costs (F&A) on Sponsored Projects, projects that are partially located off-campus may not charge both the on-campus and the off-campus rate to the respective components. Only one indirect cost rate may be used for the whole project.

The Laboratory for Atmospheric and Space Physics (LASP) has a separate negotiated indirect cost rate that is used for all LASP projects. See Section 1 item (1) on the University of Colorado Boulder’s Indirect Cost Rate Agreement.