Does this apply to allowing a portion of the collected IDC go to the PI's department for use by the PI for such things as travel to professional conferences, purchase of lab equipment, computer etc for work use - not direct pay to the PI?

"If we knew what it was we were doing, It would not be research would it?"
Albert Einstein

Susan W. Meslang
Director of Grants and Sponsored  Programs
Tidewater Community College
500 East Main Street
Norfolk VA 23510
P.O. Box 9000
Norfolk VA 23509
Office 757 822-1773
Cell 757 409-2887
Fax 757 822-1007
xxxxxx@tcc.edu

>>> xxxxxx@NORTHWESTERN.EDU 11/10/05 11:14 AM >>>

If when using the terminology "Faculty Incentives" you mean Incentive
Compensation based on Research Dollars, from a HHS perspective you may have
no issues "recovered F&A is really just university funds that can be used
in anyway the university chooses," but from an IRS standpoint you may.

Organizations which are exempt under § 501(c)(3), of the Internal Revenue
Code ("IRC") e.g., academic and research institutions and many hospitals,
that allow incentive compensation based on research revenues may run afoul
of IRC § 4958 and become subject to "intermediate sanctions."  Certain
research incentive compensation arrangements may be determined to be an
"excess benefit transactions" under IRC § 4958 by the IRS and could subject
"disqualified individuals" and "managers" of 501(c)(3) organizations to
intermediate sanctions.

The intermediate sanction penalties include return of the excess amount by
the disqualified person(s), 25% or 200% in excise tax assessments depending
on the time of return, and up to a $10,000 per incident penalty, for
non-profit managers who knowingly, willfully, and without reasonable cause
allow an excess benefit transaction.

Any research incentive compensation scheme should be reviewed carefully by
Counsel experienced in the above area, most experienced health care
attorneys are aware of this issue because of its application to incentive
compensation schemes based on revenues (i.e., Medicare, Medicaid dollars
brought in) as applied to physicians.

A § 501(c)(3) entity should never use a formula when calculating research
incentive compensation based on research revenues.

Deborah

Deborah Everds, JD
CMB, Feinberg School of Medicine
Northwestern University

xxxxxx@northwestern.edu

>Date:    Wed, 9 Nov 2005 09:16:55 -0500
>From:    Robert O Webster <xxxxxx@UAMAIL.ALBANY.EDU>
>Subject: Faculty Incentives
>
>This is a multi-part message in MIME format.
>
>------_=_NextPart_001_01C5E538.3D02704A
>Content-Type: text/plain;
>         charset="iso-8859-1"
>Content-Transfer-Encoding: quoted-printable
>
>The University at Albany SUNY has proposed to return some of the F&A =
>recovery back to PI's as a way to incentivize them to apply for Federal =
>awards. One proposed strategy that is being explored is having a sliding =
>scale based on the F&A amount requested by the PI. For example, those =
>PI's who apply to Federal agencies using our Federal negotiated rate =
>would receive a higher return than PI's who apply to foundations or =
>other agencies that only return a fraction of the Federal F&A rate. We =
>would be interested in identifying any institution that has used such a =
>scheme and to learn whether it has been successful in increasing the =
>number of Federal applications.=20
>
>
>Robert Webster, Ph.D.
>Associate VP for Research
>The Research Foundation of State University of New York
>University at Albany
>1400 Washington Avenue, MSC 312
>Albany, New York 12222
>Phone: 518-437-4550
>Fax: 518-437-4560
>email: xxxxxx@uamail.albany.edu
>------------------------------
>
>Date:    Wed, 9 Nov 2005 11:32:30 -0500
>From:    Charlie Hathaway <xxxxxx@AECOM.YU.EDU>
>Subject: Re: Faculty Incentives
>
>This question appears regularly.  And I seem to remember Chuck Chermside
>reminding everyone that recovered F&A is really just university funds that
>can be used in anyway the university chooses.  So, regardless of the
>formulas used, isn't the concept of handing indirect cost dollars over to
>PIs problematic?   Admittedly, I am only slightly more knowledgeable about
>matters of finance than my 8 year old who thinks that the dollar molecules
>he deposits in the bank will be the same molecules he withdraws, but are
>we sending the wrong message to PIs and the public when we talk about
>using indirects as incentive money?
>
>Charlie
>
>
>
>Date:    Wed, 9 Nov 2005 10:39:29 -0600
>From:    Mike McCallister <xxxxxx@UALR.EDU>
>Subject: Re: Faculty Incentives
>
>
>I explain the redistribution to the PI's as the university "choosing
>to loose even more money on their projects."  It's the university
>money, payment for services rendered, and we can do what we want with
>it.  We've already lost money on the project because F&A rates never
>really cover the costs, and we decide to lose a little more to tell
>the PI it's a good thing.  And to buy the Dean's good favor, too.
>
>SPanky
>
>Date:    Wed, 9 Nov 2005 15:11:36 -0500
>From:    "Herbert B. Chermside" <xxxxxx@VERIZON.NET>
>Subject: Re: Faculty Incentives
>
>--=====================_1730585780==.ALT
>Content-Type: text/plain; charset="us-ascii"; format=flowed
>
>But remember, green rectangles are excellent motivators.
>If you can afford to, you can use some/all of recovered F&A as
>motivators.  But be sure that the program is clearly one that does
>not become a "right" in the PI's eyes -- or anyone else who gets some
>of the recovered F&A.  Maybe a program that is reviewed annually?
>
>Chuck
>

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