FAQ: Facilities & Administrative (F&A) Costs on Sponsored Projects

Facilities & Administrative (F&A) costs, sometimes referred to as indirect costs, are costs incurred for common or joint objectives and therefore are not readily identifiable with a particular sponsored project, an instructional activity or any other institutional activity. Because these are actual (real) costs of doing business, we seek their recovery from grant awards in the form of F&A costs.

Facilities costs can include, but are not limited to, utilities, custodial services, plant operations such as heating and cooling services, and maintenance expenses. Administrative costs can include, but are not limited to, payroll and accounting services, office supplies, departmental administration, procurement services, library services and sponsored projects administration. An example of an administrative cost might be a portion of the salary for a payroll clerk who processes biweekly and monthly payroll for an employee being paid from a grant. A portion of that clerk’s time is indirectly benefiting the grant.

How Are F&A Rates Determined?

How Are F&A Costs Applied to Project Expenses?

What are the Current F&A Rates at UNL?

How is the Correct F&A Rate for a Project Determined?

How is F&A Distributed at UNL?

What is UNL’s F&A Distribution Policy?

How Were F&A Funds Allocated in FY22?

FY2018 F&A Distribution Memo from VCRED

Are F&A Waivers Allowed?

How Are F&A Rates Determined?

The federal government recognizes that it is not possible to accurately capture all costs of an organization that are allocable to a particular grant. Guidelines in OMB Uniform Guidance (2 CFR 200, Subpart E-Cost Principles) define a process for grouping costs into specified cost pools, which are then distributed to appropriate activities in a cost allocation process. Once the cost allocations are made, negotiations take place between the university and its cognizant agency, an agency designated to negotiate federal indirect cost rates. The University of Nebraska–Lincoln negotiates with the Department of Health and Human Services. Rates are generally renegotiated every three to four years. More than one rate has been negotiated by UNL. Rates cover organized research, instruction, Agricultural Research Division, Cooperative Extension Service and other sponsored activities.

How Are F&A Costs Applied to Project Expenses?

Federally negotiated F&A costs are charged against modified total direct costs (MTDC). Modified total direct costs exclude equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarships and fellowships, as well as the portion of each subaward in excess of $25,000. Equipment is defined as an item having an acquisition cost of $5,000 or more and a useful life of more than one year. Please note that on projects whose budgets include F&A rates other than our federally negotiated rates, F&A is generally charged against total (all) direct costs.

You should be aware of the effect of rebudgeting on the F&A costs charged to a project. F&A costs are based on actual award expenditures, which may differ from expenditures originally budgeted in the proposal.

In the example shown below, equipment expenditures (non-F&A bearing) were $5,000 more than the budgeted amount, while other direct expenditures were $3,215 less than budgeted, resulting in a $1,785 reduction in F&A costs.

Salaries and Benefits25,00021,785
Operating Expenses5,0005,000
Total Direct Costs (TDC)42,00043,785
Total MTDC30,00026,785
F&A (55.5% of MTDC)16,65014,865
Total (TDC + F&A)58,65058,650

*excluded from TDC in calculating MTDC

If you budget for a non-F&A bearing expense but then spend more in an F&A bearing account category, you must reduce the amount you can spend on total direct costs for the correct F&A to post. In the next example, equipment expenditures were $7,000 under the budgeted amount, while other direct charges were $4,502 more than the budgeted amount. The result is a $2,498 increase in F&A costs.

Salaries and Benefits25,00029,502
Operating Expenses5,0005,000
Total Direct Costs (TDC)42,00039,502
Total MTDC30,00034,502
F&A (55.5% of MTDC)16,65019,148
Total (TDC + F&A)58,65058,650

*excluded from TDC in calculating MTDC

What are the Current F&A Rates at UNL?

For the latest F&A rates, visit the Facilities and Administrative Cost Rates page.

How is the Correct F&A Rate for a Project Determined?

It is UNL’s practice to apply only one F&A rate to each sponsored project. The rate most appropriate to the type of activity being performed in the project should be used. In addition, the off-campus rate should be applied only when the preponderance of project activities is performed in facilities not owned by the institution and/or to which rent is directly allocated to the project.

How is F&A Distributed at UNL?

F&A funds are shared with colleges across campus and used to build and maintain infrastructure and facilities, support faculty start-ups, fund required cost-share and fund costs of compliance.

What is UNL’s F&A Distribution Policy?

The Office of Research will allocate F&A costs to various campus units each fall based on the F&A costs recovered in the previous fiscal year as follows:

Of the remaining net amount:

This policy will be reviewed periodically by the Office of Research to determine its continuing effectiveness in strengthening the growth of research at UNL. Questions about this policy should be directed to the Office of Research (402-472-3123 or UNLresearch@unl.edu). Last rev. 7/22/2008.

How Were F&A Funds Allocated in FY23?

FY2022 F&A Distribution Memo from VCRED

To:  Deans, Chairs, Directors & Campus Administrators,
Subject: F&A Costs and Distribution
Date: September 27, 2022

I would like to share with campus leaders information about how Facilities & Administrative (F&A) costs were reimbursed, distributed and expended at UNL over the past year. F&A funds are intended to cover the costs of research. UNL has a well-established process for distributing recovered F&A. Some of these funds are held centrally for the general operating budget. The remaining portion is divided three ways. One portion supports units in ORED to ensure compliance and responsible management of sponsored projects. A second share of these funds is distributed to deans, departments, centers and faculty. The final amount is strategically invested in research at Nebraska to support faculty start-ups, recruitment and retention, facilities, renovation and equipment; to fund opportunities for collaboration, including retreats and education/training programs; and to provide other support in the form of seed grants, bridge funding, travel, cost share, etc. for faculty who are pursuing external funding. 

Background: F&A costs, sometimes referred to as indirect costs or overhead, are those actual costs necessary to support research and other sponsored projects, but which cannot be readily assigned to individual projects. F&A costs include support costs related to facilities, libraries, departmental administration and general administration to comply with federal guidelines (procurement services, library services, research compliance and sponsored projects administration). Basic information about F&A costs and the policy for distribution of these funds are available on our website.

Rates: UNL’s F&A rate is calculated in accordance with federal cost principles and is negotiated periodically (usually every 3-4 years) with the federal government. It is important to remember that application of the F&A rate to sponsored projects actually represents a recovery of costs already incurred by the University during the preceding year. UNL’s last F&A rate negotiation was in 2019 and this table outlines the most recently calculated and negotiated F&A rates:

On Campus Rate Category



Organized Research



Ag Research Division






Other Sponsored Activity



Cooperative Extension Services



Distribution Model: F&A funds at UNL are used to ensure responsible conduct of research and compliance as well as supporting well selected, strategic opportunities that leverage UNL’s research growth goals. 

The Office of Research and Economic Development (ORED) allocates funds to various campus units each fall based on the F&A costs recovered during the previous fiscal year. 

FY2022 Expenditures: Expenditures: F&A research expenditures at UNL totaled $24.6M in FY2022. 28% of these expenditures supported compliance efforts and the responsible management of sponsored projects; 29% supported personnel costs for various faculty, staff and students working to support research at UNL; 21% supported capital research and lab equipment, the library’s permanent collection, or capital construction or renovation of research space on campus; 16% supported research operating costs primarily related to contracted services; 6% supported research, lab and computing supplies; and 1% funded research travel-related costs.

FY2022 F&A Research Expenditures by Type of Expense

FY2022 F&A Research Expenditures by Purpose

Purpose of InvestmentPercent of Expenditures
Faculty start-up, recruitment & retention30%
Staffing for the compliance/management of research28%
Facilities, renovation & equipment6%
Faculty support for external funding (seed grants, bridge funding, travel, cost share, etc.)33%
Collaboration (retreats & education/training programs)2%

Beginning next year, for expenditures in FY2023, we will add reporting related to investments as they align with university-prioritized Grand Challenges in response to the N2025 target of at least 50% of strategic research investments aligned with university-prioritized Grand Challenges.

If you have any questions, please feel free to contact my office (402-472-3123 or UNLresearch@unl.edu). Thanks for everything you do to support our growing research university. 

Best regards,

Bob Wilhelm
Vice Chancellor for Research and Economic Development

Are F&A Waivers Allowed?

The Vice Chancellor for Research and Economic Development retains authority for waivers of F&A costs on proposals and awards. Because F&A costs represent true costs of a project, waiver requests should be limited only to those rare circumstances where the benefit to the university outweighs the monetary loss to the university. Some circumstances under which a waiver will be considered include: 1) the sponsoring agency has published policies limiting or prohibiting the payment of full F&A or indirect costs; 2) the project requires significant cost sharing that cannot be met by other sources; or 3) there are extenuating circumstances that support such a waiver.Because corporate sponsors are expected to benefit financially from the sponsored research, they are expected to pay UNL’s full F&A Rate.

Any request for a reduction of full F&A must be thoroughly justified and signed by the cognizant department chair and dean, prior to submission to the Office of Sponsored Programs for consideration and submitted well in advance of the proposal due date. The Vice Chancellor for Research and Economic Development makes the final determination for all waiver requests. You will be notified via email of the final determination.

For federal, state, and foundation proposals, if a sponsor’s published policy exists limiting our full F&A rate, a copy of the published policy (or a website where it can be found) is sufficient for justification. This request does not require approval by the department chair and dean.

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