Indirect Costs of Research

Indirect Costs of Research increased May 1, 2020.

Indirect costs of research (ICR) rate is now 30% for all research funding; limited exceptions are noted in the UAPPOL Procedure. Applications/proposals submitted after May 1, 2020 must include 30% ICR rate in the budget. 100% of the indirect costs go to the faculty holding the research funds.

One procedure - Application for Indirect Cost Recovery Rate Procedure - was rescinded as of May 1, 2020. This means, there will now be no automatic adjustment to industry matching funding for awards involving matching contributions from a major granting agency (eg. NSERC, SSHRC, CIHR) and a private company to the University. Indirect costs will apply at 30% (vs. previous 0%) for matching industry funding under the new procedure.

The former ICR rate in any grants, contracts, applications, proposals submitted before May 1, 2020 will be honoured until the end of that grant/contract or until its renewal.

Please contact your Research Partner with any additional questions. 

What are Indirect Costs of Research?

ICR (or “overhead”) are expenditures incurred that are not directly attributed or traceable to specific expense activities to a specific research effort, yet are real costs that must be included in a research project budget. Maintaining and improving our research infrastructure requires continued investment on a significant scale. Therefore, research funding should cover the full cost of the research. As such, the University requires that all research project budgets include both indirect and direct costs, except where expressly prohibited by a sponsor.

Indirect costs include:

  • infrastructure and space maintenance
  • research support services, including central research and financial services
  • environmental health and safety supports and resources
  • regulatory certification requirements
  • resources such as library and computer information services

The minimum indirect cost recovery rate for research grants, contracts and technical service agreements is 30% of direct costs. Proposals and applications that do not include ICR will not be approved unless there are exceptional circumstances.

How to Calculate Indirect Costs

The overhead amount is calculated based on the direct cost of research. It can be calculated on the total award amount using the percentage amount stated for the sponsored project. For example, for a total budget of $50,000 with 30% indirect costs, the calculation is as follows:

  • (50,000 x 0.3) / 1.30 = $11,538.46

Or it can be calculated by subtracting the direct costs from the total award. The same example above would be calculated as follows:

  • 50,000 - (50,000 / 1.30) = $50,000 - $38,461.54 = $11,538.46

Finally, it can be calculated as a percentage amount of direct costs. For example, for a project with direct costs of $25,000 and 30% indirect costs, the calculation is as follows:

  • (25,000 x 0.30) = $7,500.00. In this case, the total award would be $32,500.