A. Obtaining an F&A Cost Waiver/Reduction:
A facilities & administrative (F&A) cost waiver/reduction is an institutional agreement that the University will charge F&A costs at a lower rate than the rate published by the Office of the Vice President for Research. Unless a project falls into a limited number of pre-established exceptions (see Section B below), Principal investigators (PIs) must petition for such a waiver/reduction on a case-by-case basis. Waivers/reductions are not granted for an entire type or class of project.
B. Determining if an Individual Project Waiver or Reduction is Needed:
Review the Facilities & Administrative (Indirect) Cost Rates table to determine the full applicable rate for your type of project (research, instruction, other sponsored activity), taking into consideration whether your project will be conducted on or off-campus. Most projects will adhere to these published rates. These projects are considered to be carrying "full F&A".
In addition to these projects, an individual project waiver/reduction as outlined in Section D does not have to be obtained if one or more of the following criteria exists:
- The rate applied to the project is the full applicable rate for your type of project. A note should be added to the Proposal Routing Form identifying the reduced rate and noting that the reduced rate is posted on the Other Sponsor-Established Rates table.
- The project is a fellowship (as defined in the Facilities & Administrative (Indirect) Cost Rates table and has an F&A rate of 8% total direct costs or greater. This includes fellowships from for-profit sponsors.
- The U.S. federal government or non-profit sponsor has a published rate lower than the full applicable rate. [This global exception does not apply to for profit agencies, which are expected to pay the full applicable rate except as noted elsewhere for fellowships and industry-funded clinical trials] To be acceptable, the published rate of the non-profit or federal agency must appear in its guidelines (request for proposal, request for application, broad agency announcement, or other published guidelines), or be published on their web site, or be confirmed in writing by their grants office (not a program official). The lower rate must apply universally to all proposals submitted for that particular program or that agency (not solely our proposal). The Principal investigator must furnish evidence of the published rate by the time the proposal budget and Proposal Routing Form is submitted to Sponsored Projects Administration for institutional endorsement of the proposal, or the sponsor's rate must appear on SPA's Other Sponsor-Established Rates table. If such documentation cannot be provided, the Principal Investigator must include the full applicable F&A rate in the proposal.
- The award is being transferred from another institution/entity with direct cost equivalency (the amount of direct costs remaining at the old institution will be the same as the direct costs awarded to the University). In this instance, Sponsored Projects Administration will establish an F&A rate that ensures that our Principal Investigator is held harmless (e.g., the same amount of direct costs remaining upon departure from the old institution/entity will be made available; UMN will adjust its F&A rate as needed to ensure direct cost equivalency.) Evidence of the direct cost amounts remaining at the time of the transfer (e.g, via a PHS relinquishing statement, final financial report, or similar documentation endorsed by an institutional official) is required. A note should be added to the Proposal Routing Form identifying the reduced rate and that it is due to a PI transfer. Note that any additional reduction in rate (beyond maintaining direct cost equivalency) requires an individual project waiver.
- The project has an approved individual project waiver in place, and any additional funding (e.g., supplement or renewal) provided by the sponsor does not exceed 25% of the original amount anticipated on the award. Funding added to a project above these levels require their own waiver. A note should be added to the Proposal Routing form identifying that this project is subject to a previously-approved individual waiver and the supplement does not exceed 25% of the original amount anticipated on the award.
C. Reasons for Individual Project F&A Waivers/Reductions:
Reasons Taken into Consideration. Some of the reasons the University will consider when reviewing an F&A waiver include the following. This list is not exhaustive, and investigators should NOT assume that the presence of one or more of these conditions will be sufficiently compelling to justify a waiver or reduction. However, if such conditions exist, they should be noted in the waiver request. Each circumstance is different and requests are treated on a case-by-case basis.
- Seed grants which may attract larger awards (these waivers are approved with the stipulation that all future funding on the project will carry full F&A)
- Hardship for new PI
- Awards which include significant funding for shared equipment or building funds
- Community relations or library projects
- Student services projects (or increase funding to pay for students)
- Capped awards containing unusual circumstances, such as a pilot program for an agency (note that in general, a capped award is not considered a valid reason as an investigator is expected to design their project to fit within an agency’s cap, including payment of direct and full F&A)
- Department committed to undertake the research regardless of external funding (e.g, any dollar gained is better than nothing)
- Small cost
- Junior faculty or incoming faculty member
- Enhance cultural/artistic activities
- Only available source of funds in a topical area
- Strategic partnerships
Unacceptable Reasons. University policy does not allow F&A waivers/reductions to be granted in the following circumstances:
- To increase (or perceive to increase) the competitiveness of a proposal.
- Because the sponsor is unwilling to pay the university’s applicable F&A rate.
- The Principal Investigator failed to submit the proposal via approved institutional channels (e.g., through Sponsored Projects Administration or other approved institutional channel) prior to submission to the Sponsor. In these cases, the Sponsor will be expected to pay the full applicable F&A rate or the department will be responsible for cost-sharing that portion of the F&A the sponsor refuses to pay.
D. How to Request an Individual Project F&A Waiver/Reduction:
Each request is subject to departmental and collegiate approval, which is not guaranteed and depends on the unique circumstances of the request. Strategic waivers are also subject to institutional approval. Principal Investigators may not offer or promise a reduced rate to a sponsor in advance of receipt of an approved waiver. The University will not alter its review procedures or approval criteria because of such promises. Principal Investigators and their units are responsible for requesting any waivers needed in a timely manner; recommended turnaround times are shown below.
There are three types of Individual Project F&A Waivers/Reductions:
- Small Project Waivers (projects requesting $50,000 of direct costs or less per year).
Eligible projects for this type of waiver are those projects requesting $50,000 direct costs per year or less, from any type of sponsor (including for-profit). If the proposal requests more than $50,000 in any single year of the project, a regular or strategic waiver must be used.
Department heads and collegiate research associate deans or deans have the authority to make the decision to waive or reduce F&A on small projects based on their assessment of the compelling nature of the request, the importance of the individual project, the best interest of the college, fairness to other investigators, and the ability of the department or college to financially forego the F&A that would otherwise have been recovered. Principal Investigators should not assume that such waiver requests will be granted.
Departments and colleges may establish their own processes and timelines for such waiver requests (including requiring use of the institutional Individual Project F&A Waiver/Reduction form) or they may use the Proposal Routing Form for gathering requested data; consult with your unit for their process. SPA accepts the signature of the collegiate official(s) on the Proposal Routing Form as evidence of approval; submission of a completed Individual Project F&A Waiver/Reduction form is not required by SPA. Data of these waivers are not tracked by SPA and are not furnished to the Budget Office.
- Regular Waivers.
Regular waivers are a request to waive or reduce indirect cost for projects that do not fit within the Small Project category, but whose rate reductions are within certain published levels. Requests beyond those published levels must be considered under the “Strategic” category. Collegiate research associate deans or college deans have the authority to make the decision to waive or reduce F&A on these types of projects based on their assessment of the compelling nature of the request, the importance of the individual project, the best interest of the college, fairness to other investigators, and the ability of the department or college to financially forego the F&A that would otherwise have been provided. SPA also endorses these requests to verify that the waiver meets the eligibility requirements of this category, but does not otherwise participate in the decision-making process. Principal Investigators should not, however, assume that such waiver requests will be granted.
Completion of an Individual Project F&A Waiver/Reduction form is required, and a fully approved copy of the form must be furnished to Sponsored Projects Administration before the proposal will be submitted.
The recommended lead time for submission of such waivers to the unit head is eight business days before the proposal is due to the sponsor (five business days before the proposal is due at SPA).
- Strategic Waivers.
Strategic waivers are a request to waive or reduce indirect costs beyond certain published levels. This type of waiver is granted only rarely, and only when it is in the overall best interest of the institution. This type of waiver requires the approval of the Office of the Vice President for Research in addition to departmental and collegiate approval.
Completion of an Individual Project F&A Waiver/Reduction form is required, and a fully approved copy of the form must be in place before the proposal will be submitted by SPA.
Since this type of waiver may necessitate discussion between collegiate deans and the Office of the Vice President for Research, additional lead time is needed. The recommended lead time for submission of a waiver request form to the unit head is ten business days before the proposal is due (seven business days before the proposal is due at SPA). SPA should receive any collegiate-endorsed strategic waiver requests at least five business days before the proposal is due (2 days before the proposal is due to SPA). Later requests may not be able to be considered.
E. Processing of Reduced-Rate Proposals without Evidence of an Approved Waiver:
If a proposal is submitted to Sponsored Projects Administration at a reduced rate without evidence of an approved reduction/waiver, SPA will contact the principal investigator or the PI's unit to determine whether an Individual Project F&A Waiver/Reduction form or collegiate signature on a PRF (small project waivers) is in process. If a reduction request is in process, the grant administrator will facilitate a decision. If the process cannot be completed prior to the Sponsor's proposal deadline, the Principal Investigator is responsible for updating the proposal to use the full institutional F&A rate applicable to that type of project prior to its submission to the Sponsor.
F. At the End of the Project:
For fixed-price awards or other awards where the University is allowed to retain the unexpended balance, all reductions are granted with an understanding that if there is a balance at the end of the project, the F&A rate reduction will be rescinded. The published rate will be charged to the entire project and the value of the reduction will be subtracted from the remaining balance. For example, if a balance of $5000 remains at project end and the principal investigator was granted a reduction valued at $1500, $3500 would be available for transfer to departmental account. However, if the balance was $500, no funds would be available for transfer to the departmental account and the effective reduction would then be $1000.