Indirect Costs (also known as Facility and Administrative Costs)

Indirect costs (IC), also known as facilities and administrative costs, are defined as those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. The recovery and distribution of IC is governed by URP: 02.475 Indirect Cost Recovery and Distribution.

Recovery of IC

TWU's federally negotiated facility & administrative (F&A) costs rates are 1) on-campus - 42.7% of salaries and wages and 2) off-campus - 14.3% of salaries and wages. The facility & administrative cost base is total salaries and wages (S&W Base) only; fringe benefits are not included in the calculation. The date of the university's current DHHS Finance & Administrative Cost Negotiation Agreement is September 1, 2020, and the rate is effective until August 31, 2024. TWU's Point of Contact (POC) for our federally negotiated F&A rate is Joel McKenzie (Phone: 214-767-3261). Some agencies and particularly foundations and corporations will not agree to pay our federally negotiated rate. One exception is the U.S. Department of Education which frequently indicates on budget forms that the maximum allowable indirect cost rate is 8% of total direct costs (not of salaries and wages). Indirect cost rates cannot be changed arbitrarily. TWU may agree to waive collection of all or a portion of indirect costs when required by a sponsor or for other valid reasons. Such waivers must be requested and approved by the Vice Provost for Research prior to submission of the proposal.

Distribution of IC 

100% of recovered IC is distributed as shown below to further the University's research endeavors in accordance with the Texas Education Code, 145.001:

• Office of the Provost / VPAA– 15%
• ORSP – 25%
• TWU Libraries—6%
• Center for Research Design and Analysis – 5%
• Principal Investigators (PIs) – 12%
• Departments – 12%
• College or Institute/Center - 25%

(for new distributions after 9/1/2024) (FY 2025)

Distributions are made on a quarterly basis. These funds may be expended in subsequent fiscal years (they will carry forward to the next fiscal year) and are to be used to further the research efforts of the department and investigators. 

The funds in indirect cost (IDC) accounts are somewhat flexible and may be used for most expenses that support research. This includes, but is not limited to, purchasing supplies, paying students, salary support, travel, memberships, publication costs, subject incentives, etc. Please note that TWU purchasing, travel, and payroll guidelines must always be followed when expending funds. The funds have been placed in the budget category of maintenance and operations (M&O) because that category offers the most flexibility for use. If you wish to use the funds for items other than M&O purchases (i.e., travel, salaries, wages, or capital equipment), the funds must be transferred to the appropriate category.

Residual accounts are established when a funding agency does not require grants or contracts to be returned and a balance remains. Residual accounts are typically created at the faculty level but ORSP in collaboration with the department/dean’s office may determine that a department-level or dean-level account would be more appropriate. Residual accounts can be used in a similar way as IDC accounts.

When a faculty member leaves the University, their IDC and or/residual accounts will be closed or reassigned. If any funds remain, ORSP will work with the department and or/college to determine how the remaining funds will be distributed.

Indirect cost and residual accounts are monitored by the Office of Research and Sponsored Programs.