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Re: administrative fee Sherry A. Marts 15 Oct 1994 02:22 EST

I am the research grants director for a small private foundation that
provides grants for research on Alzheimer's disease, glaucoma, and heart
disease and stroke. The foundation I work for does not pay indirect costs.
The Board of Directors believe this is necessary because the money for the
grants comes from contributions from the general public, and our contributors
would want all of the grant funds to go to research. I realize this is a
perception problem, and that indirect costs are part of the cost of doing
research, but that "indirect" or "administrative" tag is enough to set the
BoD's teeth on edge.

The other reason why charities like the one I work for don't pay indirect
costs. It is accepted practice in non-profit accounting to include such costs
as in-kind contributions to the charity. This means that if we give a $100K
grant to a university and that university's indirect cost rate is 60%, we get
to add a $60,000 contribution to our revenue for the year.

I want to warn against trying to hide indirect costs in a budget that is
supposed to include only direct costs. We have run across this a few times
and have required that the budget be re-done
before we issued the check for the grant. If we were to find out that an
institution had used funds from our grant for indirect or administrative
costs, we would consider that a serious violation of the terms of the grant
award and would take whatever action seemed appropriate, and would consider
turning back any future applications from that institution.

A more constructive way to address this issue would be to assemble all the
arguments in favor of private foundations/ charities paying indirect costs.

Sherry Marts