Good question.  At University of Wisconsin-River Falls, 50% goes
to the vice chancellor's office and 50% goes to the PI's
department.  The VC's share helps support the grants office as
well as a variety of other things.  The department's share can be
used for anything a state budget can pay for.  Our system isn't
bad.  PI's feel as if they get a piece of it, departments are
reimbursed for their efforts, and deans sometimes capture the
money to use for grant-related activities.  I use some of the
funds which come to the grants office to support grant-related
activities also--I'll buy a little release time for faculty
writing high-yield proposals or send folks to DC to schmooze.  I
have argued for reducing these two shares to 40% and using the
20% thus recaptured to fund an undergraduate research program, so
far to no avail.

Regards, WEC
Director, Grants & Research
UW-River Falls
xxxxxx@uwrf.edu