Understanding Indirect Costs at NIH

Few topics prompt more questions or seem to stir up more controversy than the subject of Indirect Costs. Everyone seems to have an opinion about how they are calculated, on what a grantee’s institution spends them, and whether any portion should be funneled back to the grantee and his/her department or school. Invariably, my clients who are research development staff, research administrators, and research deans voice loud and often contradictory opinions on this topic (sometimes contradictory to my own opinions!)

For those of us involved in NIH extramural grants, the more we can understand about this controversial topic, the better. Here are two resources I have found helpful as I dig around to educate myself on the topic. I hope you find them helpful as well:

  • “Indirect Costs 101- How NIH Supports Research Infrastructure for Extramural Research”
    Sally Rockey, PhD, Deputy Director of NIH Extramural Research
    September 2015
    This ~22-min presentation gave me some historical perspective on IDC and dispelled some common myths. It is a useful primer to understand the intent of IDC and how it is used to pay for grant-related services at an institution that cannot be tied to a specific project, such as administrative costs, facility costs, etc. It also explains that NIH does not negotiate the indirect rate with institutions, and that this trans-federal negotiated rate is re-negotiated typically every four years.
  • “Indirect Costs: Keeping the Lights On”
    by Heidi Ledford, published in Nature, November 19, 2014
    This article talks about the wide variability between indirect rates at universities (ranges from 20%-85%). The spread is even greater at hospitals and non-profits. Non-profits have the highest indirect rates. This information is graphically displayed in a cool interactive scatter plot—if you hover your mouse over a data point, the stats for institution pop up. The article also discusses that institutions often receive less than the amount negotiated because of restrictions placed on what they can receive for particular types of support (for example, there is a cap on the amount devoted to administrative costs.)

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