Page Updated: July 30, 2021
Definition of F&A Costs: Facilities & Administrative (F&A) costs are real costs that the institution incurs in support of extramural activities but which cannot be directly charged to a specific grant or contract. The costs result from shared services such as libraries, physical plant operation and maintenance, utility costs, general, departmental and sponsored projects' administrative expenses, and depreciation or use allowance for buildings and equipment. F&A costs also are sometimes called indirect costs or institutional overhead.
F&A rates for all Federal grants and contracts are periodically negotiated with our cognizant Federal audit agency, the Department of Health & Human Services. For more information on F&A cost policies at UW-Madison, please see Collection of Indirect Costs UW-4011.
Application of F&A Rates: It is the policy of UW-Madison to charge the maximum allowable federally negotiated F&A cost rate on all sponsored projects regardless of funding source unless a not-for-profit sponsoring agency's written policy will not allow full recovery of F&A costs. For-profit entities are always charged full F&A costs. (Please see the UW-Madison Table of F&A Rates for a current list of appropriate federally negotiated F&A rates.) Deviations from this policy occur for unrestricted gifts and unrestricted grants, as defined in Research & Sponsored Programs Notice 98-4.
With the exception of for-profit sponsors, if a solicitation or agency's written guidelines specify an F&A rate less than the rate currently approved by the University, the rate is accepted as the maximum rate allowed by the funding agency. For example, certain Federal training grant program guidelines allow only an 8% F&A rate, as specified in the relevant training grant program announcement. Similarly, the American Cancer Society's (ACS) published guidelines specify that the ACS will pay only 20% on its research grant programs.
Definition of F&A Exception: Historically, UW-Madison has referred to the published F&A rates of non-profit foundations and voluntary health organizations which are lower than UW-Madison's established Federal negotiated rate as F&A Exceptions. Please note that this policy document makes a distinction between an F&A Exception and an F&A Waiver, as defined below. UW-Madison procedures for the two categories differ as outlined below.
Application of F&A Exceptions: Rates prescribed by formal written non-profit sponsor policy uniformly applied to all university grant recipients do not require F&A waivers under UW-Madison policy. As noted above, UW-Madison accepts non-profit sponsor F&A exceptions without any special approval process as long as their rates are published and applied consistently to all university grant recipients. Therefore, non-profit Foundation and voluntary health organization F&A rates should be considered to be pre-approved by UW-Madison whenever the organization has an explicit published policy limiting the amount that they will allow for F&A costs. When routing a grant proposal for institutional signature, Principal Investigators must provide RSP with evidence of the sponsor's published rate either in the sponsor application forms or by including a copy of the sponsor's guidelines.
If a non-profit sponsor does not specify the maximum amount it will allow, or if its policy states the F&A rate as "negotiable," any application to such a program must include F&A costs at the fully negotiated rate or a waiver should be requested per the guidelines below.
Federal grant programs that have published F&A caps lower than UW-Madison's negotiated Federal F&A rate will be automatically approved. Thus, for Federal grant programs that have published F&A rates lower than UW-Madison's negotiated Federal IDC rate, it is not required to route documentation of the rate with the proposal. (For example, Federal training grants with rates of 8%.) However, if the PI or department has a copy of the program announcement or RFP, we will appreciate your routing it with the proposal as a courtesy to RSP.
Definition of F&A Waiver: An F&A waiver is an institutional agreement that F&A costs will be charged at a lower rate than the sponsor's published rate. These waivers are obtained on a case-by-case basis from the Director of Research & Sponsored Programs. Please contact your Dean's office as soon as you become aware of the need for the request.