Budget Policy and Budget Preparation

The Costs of Conducting Research

The university depends heavily on gifts, grants, and contracts from federal and state governments, industry, and foundations to provide much of the support for the cost of the extensive research enterprise. Many of these research expenses — salaries and fringe benefits of researchers, travel, equipment, etc. — appear as direct charges (e.g. specific line items in the budgets of sponsored projects). Sponsors also pay a fraction of other equally essential costs that are less readily allocable to specific individual projects — the cost for administrative support, the operation and maintenance of space, libraries, etc. — as a percentage of direct costs. These indirect costs, also called facilities and administrative (F&A) costs or overhead, are carefully audited by the federal government and are chargeable to all federal and nonfederal sponsors.