It has always been my position, though unpopular with my faculty colleagues,
that the "return" of indirect costs to faculty or departments is equivalent to
the waiver of indirect costs on a project by project, or collective project
basis.  I maintain that one of the consequences of this practice can be to
foster the perception that the institution does not need these indirect costs
to administer the sponsored projects in question, and is willing to convert them
to direct costs which then generate even larger indirect cost burdens.

Having said that, at our institution, the practice has for several years been
to return a fixed percentage of indirect cost generation to chairs (9%) and to
deans (4%) of the generating units to use "in general support of the research
enterprise".  This is described as an "incentive" for faculty to seek external
support, although I have never quite understood why incentives are necessary
for faculty to do research at a research university.

A conceivable rationale for the formula return of funds to the generating units
is as a reimbursement of the part of the general administration component of the
recovered indirect costs.  The capping of the administrative component in
indirect costs reinforces such a practice but suggests that the returned funds
be used for administrative support rather than direct project costs.

It might be useful to note that in a system like SUNY, recovered indirect costs
from sponsors are administered by a separate organization (a Research
Foundation).  The recovered funds, therefore, permanently retain their identity
as recovered indirect costs.  In institutions where such recovery is integrated
into the operating budget, the return of indirect costs can more easily be
described as institutional commitment to externally supported units.

A somewhat long and sometimes humorous description of this problem and others
related to indirect costs is found at:
http://www.research.sunysb.edu/research/idcsem.doc
in Word for Windows 2.0 format

 Bob Schneider
 Director, Informatics and Compliance
 State University of New York at Stony Brook
 xxxxxx@bob.rfs.sunysb.edu

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