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Trust fund overheads

In general, trust funds established after 1995 will pay an overhead of 20% (or 30% for some funds established after 2007) of the gross pay costs charged to the fund. This is normally indicated by the inclusion of the phrase "and associated indirect costs" within the regulations. Pay costs are those using transaction codes in the range AAAA-DZZZ. Any applicable overhead charge should be built into relevant budget calculations.

The overhead rate when applied to professorial salary is calculated on the gross cost of spine point 68 irrespective of the actual spine point of the professor.


Finance Working Party (FWP) overheads

In general FWP overheads are charged on salary costs paid from donations accounts, special funds, external trading accounts and research overhead accounts. This overhead, charged at 30% of salary costs only (UFS transaction codes A - D), is to cover the infrastructure cost of the individuals employed. By infrastructure costs we mean a share of the cost of the building in which an individual works, the cost of equipment that they use and the costs of employment such as payroll and health and safety.

Where a department considers that a particular item of expenditure should constitute an exception to this policy, they should raise the issue with their Finance Manager. Please note that we should not routinely exempt services provided to charities or other educational establishments from FWP Overheads on the grounds they are not for profit. These costs are real and do not constitute a 'profit'. By not charging these overheads we are using our limited Chest funds to subsidise other organisations.


Research grant overheads

Research grant sponsors may allow overhead or non-direct cost recovery to be included when costing the budget for a research project. This is in recognition of the costs incurred in the department and centrally as a result of the research activity being carried out. As an incentive for Departments to apply for grant funding, a share of the cost recovered is credited to departments' accounts. Consequently some departments may have access to substantial sums that can be used to finance capital projects or to fund staff long- or short-term.

FWP overheads will be levied at 30% on all staff costs charged against these funds unless exemptions have been granted. As Financial Regulations do not permit these sources of funds to be in deficit, careful planning is necessary to ensure that overheads accounts are not over committed.

 

Pre fEC grants

Grants costed prior to September 2005 are referred to as pre-full economic costing, or pre-fEC or non-fEC grants. Prior to September 2005, no attempt was made to establish the full cost of carrying out a research project when costing it and overheads were generally calculated as a percentage of staff costs. EU funded grants were an exception; overhead recovery was calculated as a percentage of the total cost.

The table below shows how the overhead is calculated and apportioned between the Chest and departments for pre-fEC grants. No overhead was permitted on fellowships or studentships.

Sponsor Category Target recovery Chest share Dept share
Research Councils 46% 59% 41%
EU 20% all costs 66% 34%
Industry 70% 50% 50%
Overseas and others 70% 50% 50%

Target Recovery rates are % of staff costs unless otherwise stated.

For pre-fEC grants, department overhead income used to be posted to two sources of funds, namely

  • ECAA (Research Council funding)
  • EDAA (All other sponsors)

However, from 1 August 2009 all departmental overhead income will be posted to just EDAA.

All overhead income posted to EDAA is available for departments to spend, subject to established School policy.

Pooled labour income may also be used in addition to overheads to meet the Dual Funding Support Target (DFST). Pooled labour can be included as a budget item where technical support is required. However, it would not be practical to specify what is required in terms of individual full time equivalents (FTE) as the individuals concerned may be providing support to a number of research projects.

 

FEC grants

Grants costed from September 2005 have to be costed on a full economic cost basis using now the X5 tool. The full economic costing methodology allocates non-direct costs to a project on the basis of research staff FTE (excluding support staff) .There are separate cost allocation rates for:

  • Estate costs,
  • Infrastructure technicians and
  • Other indirect costs

These rates are set by the University and updated annually. In addition the cost of the time of the Principal Investigator (PI) and co-investigators may also be charged to the grant.

Few sponsors pay the full economic cost of a project, e.g. Research Councils pay 80% and Charities continue to pay direct costs only, so a discount is calculated which equals the unfunded amount.

Non-direct cost recovery funded = PI (and co-investigators') costs
+ Indirect costs
+ Infrastructure technician costs
- University discount

 

In some instances, e.g. where large equipment purchases or studentships form part of the grant costing calculation, sponsors will pay differing proportions of the full economic cost of a project. Calculation of the expected non direct cost recovery is therefore not straightforward.

If the amount the sponsor is prepared to pay is insufficient to cover 100% direct costs, the department will have to make up the shortfall and the Head of Department will need to decide whether the grant application should go ahead.

Again non-direct cost recovery is split between the Chest and departments. The table below shows the Chest and department shares of the non-direct cost recovery in fEC grants. Nb. Fellowship grants do now attract non-direct costs for Research Council sponsors.

Sponsor Category Chest share Dept share
Research Councils 6/7 1/7
Government 5/6 1/6
EU 66/100 34/100
Industry and others 11/14 3/14

The departmental share has been reduced compared with the pre-fEC position as the intention was that the Chest should benefit from the improved cost recovery and that the abolition of the Dual Funding Support Target (DFST) should be funded by reducing the department share of non direct cost recovery. Overall departments should continue to receive the same level of department overhead funding as in the past for a similar volume of research.

The department share of non-direct costs recovery is posted to a range of sources of funds (EZE0 to EZZB) as non direct cost recovery needs to be reported by sponsor type. To facilitate budgeting for use of these funds some Schools post transfers of all non-direct cost recovery to a single source of funds monthly, EZE0.

Much Charity funding is eligible for Partnership Funding so that the University receives additional Quality Research (QA) funding based on the volume of eligible Charity funding. A proportion of this income (currently 6%) will be credited to ECBA and is available for department use in the same way as funds from overhead and non-direct cost recovery.

However, FWP overheads will be levied on the use of the funds for staff costs.

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