IDC Waivers

Procedures for Applying for Indirect Cost Waivers

The waiver of any portion of eligible indirect cost recoveries must be approved in advance by a designated official of the University. Requests for waivers should be submitted in writing by the principal investigator, through the department chairperson and the office of the dean, prior to circulation of the final proposal for internal review and processing.

The following information should be included in the waiver request:
(a) Amount of the waiver and the reason for the request
(b) Significance of the proposed research and support
(c) Consequences of accepting or denying the waiver

A waiver request may be made for the following reasons:

The total funding available from the sponsor is relatively small or a predetermined fixed amount, and the full recovery of indirect costs from the dollars available would make the implementation of the project very difficult.
The funding is seed money for a project which, if successfully carried out, subsequently will be funded to a much greater extent, including full indirect costs. Identifying the appropriate indirect cost rate in the seed money project and cost-sharing a portion of the indirect costs should avoid any misunderstanding with the sponsor when budget for the follow-up project is presented with the full indirect cost rate.
The department is going to undertake the proposed research regardless of the funding from any particular sponsor and therefore, the availability of external funds to support this effort can be viewed as a partial offset to University commitments.

All requests will be reviewed by DRDA to clarify sponsor policy, to determine past and potential precedents, and to provide a recommendation. The financial implications of the waiver should be clearly spelled out. Waiver requests for amounts greater than $50,000 must be approved by the Office of the Vice President for Research. DRDA will carry the request to the OVPR with its recommendation.

Several factors will be considered in determining if an indirect cost waiver is appropriate for a particular proposal:

The significance of the research to the principal investigator, department chairperson, and dean, and the willingness of the responsible unit to cost-share its portion of the indirect cost recoveries.
Total proposed budget, amount of the requested waiver, and the precedent that will be established for the university unit, type of research, and/or sponsor category.
Availability of support from other sources.
History and anticipated future support from the sponsor.
Nature of the support (e.g., student stipends, interim support between other projects, support which complements other projects).
Whether other universities involved in the proposed research have accepted lowered indirect cost recoveries.

Other Indirect Cost Rates

The University may accept an indirect cost rate lower than the federally negotiated rate from a not-for-profit sponsor if: (1) this lower rate is published as part of the general policies of the organizations (e.g., in conjunction with the proposal solicitation) and (2) this lower rate is applied uniformly to all award recipients.

Other indirect cost rates may be accepted under the following circumstances:

Grants-in-Aid: Awards made to an individual or to an institution on behalf of an individual to support his or her educational pursuits (e.g., a fellowship, traineeship, or assistantship).

To the extent that a sponsored award is solely for this purpose, the direct support (stipend and operating funds) may be exempted from the recovery of indirect costs.
Graduate student support (wages, stipends, and tuition remissions) included as part of larger sponsored projects, however, are subject to the application of the appropriate indirect cost rate.

Training Projects: Provide support for one or more students who are performing research in areas of interest to the sponsor. Generally, very little direct faculty or staff support is included in these projects.

In cases where training grants accompany regular research projects, the training portion of the project may be segregated into its own project account with an indirect cost rate of 8% TDC.
The regular research project portion should carry full indirect cost, however, at the appropriate rate.

Conferences and International Travel: Federal agencies and foundations may offer support for research related activities, such as special seminars and conferences, international travel, honoraria, and participant stipends.

These programs may stipulate limitations on the recovery of indirect costs.
Funds may be made available on a matching basis, where a partial waiver of eligible indirect costs can serve as the University's matching contribution.
In some cases, the desire to maximize the funds available in direct support of the activities may prompt a request for the waiver of indirect costs. Such requests will be considered on a case-by-case basis, with the overall benefits to the University that might arise from the granting of such waivers being a prime determinant.

Industrial Affiliates: Multiple sponsor support for an identified area or program of research for a stated period of time, with each participant receiving the same benefits from membership in the program.

Affiliate membership fees should be applied to advance the general field of knowledge, to provide student stipends, to assist in the conduct of meetings, seminars, and conferences, to disseminate research findings and other forms of technology transfer, and to support other areas with potential benefit to all participants.
Income from the program may not be used to benefit a single participant/affiliate.
To the extent that a formal solicitation of industrial affiliate members meets these criteria, the membership fees may be exempted from the recovery of indirect costs.

Corporate Cooperative Research Programs: Designated for the support of new research initiatives at universities, these programs may have maximum allowable indirect cost rates different than those normally charged to industrial sponsors.

The University will accept a predesignated indirect cost rate for such cooperative research if that rate is formally established and consistently followed.
Some reasons given for predesignating indirect cost rates are: corporate limitation on funds provided for this purpose, similarity of this funding to the support provided by foundation-type organizations (i.e., intent of the donor), need for uniformity, desire to spread the funds over as many institutions as possible, and amount of discretion allowed in selection and performance of the research, making results directly beneficial to the sponsor less likely.

Nonprofit Foundations: The University may accept the policy of a non-profit foundation with regards to the payment of indirect costs if that policy is formally established and consistently followed.

When it is anticipated that a proposal will be submitted to a foundation that supports an indirect cost rate lower than the University's federally negotiated rate, the principal investigator should contact the Division of Research Development and Administration to ensure that a written statement concerning the policy of the foundation is on file with the University.

State of Michigan: Allows as a charge for indirect costs a maximum of 20% of total direct costs, except in instances where the funding represents flow through moneys that originate with a federal agency or other sponsor source.

In the case of flow through funds, the indirect cost rate will be the same as that granted to the State agency by the federal sponsor.

Technology Transfer: The University may be willing to accept a negotiated indirect cost rate if it can be clearly demonstrated that the proposed research has potential for the development and dissemination of technology of benefit to the economic well-being of the State of Michigan. Such projects may involve rights to intellectual properties that should be negotiated at the time the proposal is reviewed and approved.

Please direct comments on this guideline to Marvin Parnes, 936-3933; or email to: mgparnes@umich.edu