Howard,

I'll try to give you my thoughts on your question (at least as I
understood it).  I think you were asking if the universities/colleges
waived their portion of indirect cost recovered, could you keep the
total reimbursement, and would it effect the o/h rate
development/negotiation.

The answer from my standpoint is that you could keep the full overhead
recovered and it would have no effect on the negotiated rate.  The
reason I say this is because the government reimburses you for general
and administrative expenses related to sponsored research.  This is
accomplished through a formula set by the government (per A-21, A-122).
Once the rate is negotiated with the government, that is the maximum
rate you can charge the government.  Once you receive grants and
contracts, your reimbursment of G & A costs has no restrictions on its
use (one clarification - if your institution is listed in Exhibit A in
A-21, you do have a requirement on your reimbursement for facilities
costs).  What I mean by that is that the overhead recovered is
considered an unrestricted revenue to the institution.  If the
univeristies/colleges elect to fund your Research Foundation's
operations (through waiving their share of the recovery), then that's
fine.  The use of your IC revenue is up to the institution.  Any sort of
revenue distribution, will not effect your rate development/negotiation.

I hope I understood your question correctly, and more importantly you
could understand my answer!  One clarification, my advice comes with the
understanding - I have never worked at a research foundation, only a
private research institution and a public research institute.

Any questions, please feel free to contact me.

John Case
Assistant vice President and Controller
Desert Research Institue
Reno, NV
702 673-7396

Howard M. Kaplan wrote:
>
> I have a question about the impact of an institution's decision to allow
> its Research Foundation to retain all recovered Indirect Costs.  Here's the
> context.  My institution's recently incorporated, nonprofit Research
> Foundation is about to become operational and the intention is to have the
> Foundation be the applicant/recipient for all awards.  The university is a
> unit of a state-wide system of public colleges and universities.  The
> System has established a formula for determining each institution's share
> of the Indirect Costs recovered by its Research Foundation.  My question:
> what are the implications for the institution's federally authorized
> Indirect Cost Rate if the university chooses to waive its share of the
> Indirect Costs - i.e., to let the Foundation keep all of the Indirect Costs
> it recovers from external sponsors?  (There are three points of information
> that might affect the implications.  First, the university's authorized
> rate was negotiated using the "short form"; second, the rate is applied to
> a Salaries-and-Wages base; and, third, there is a single rate for all
> sponsored programs - including research, instruction, and service awards;
> both on campus and off.)
>
> Thanks for your insights.
>
> Howard M. Kaplan, Director
> Research Services & Sponsored Programs
> Georgia Southern University
> P.O. Box 8005, Highway 301 So. Building
> Statesboro, GA 30460-8005
> Tel. 912-681-5465; FAX. 912-681-0719; e-mail. xxxxxx@gasou.edu