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F&A Rates

Northwestern applies different Facilities and Administrative (F&A) rates – sometimes called “indirect cost rates” – to sponsored projects, depending on the nature of the individual sponsored projects. Northwestern negotiates its F&A rates with the federal government, specifically the Department of Health and Human Services (“DHHS”), every few years.

Application of Facilities and Administrative Rates

F&A rates through FY2023 should be applied according to “Application of Facilities and Administrative Rates”.  If you have any questions as you are preparing the budget for a proposal, contact your Sponsored Research Officer.

DHHS Rate Agreement

The current F&A and Fringe Rate Agreement is available from the Office of Cost Studies.

Modified Total Direct Costs (MTDC)

Unless otherwise indicated, use the indirect costing methodology of Modified Total Direct Costs (MTDC). MTDC is defined as the sum of all proposed direct costs, minus the following expenditure accounts/exclusions:

  • 77535: Fabricated Equipment (fabrication cost of $5,000 or more and a useful life of at least one year)
  • 75490: Space Rental
  • 75720: Hospital Medical Expenses (Research Patient Care Costs)
  • 76910-76960: Internal Telecommunication Expenses
  • 77510-77599: Capital Equipment (acquisition cost of $5,000 or more and a useful life of at least one year)
  • 78010-78080: Tuition and Stipends
  • 78510: Amortization
  • 78650, 78652: Subcontracts in Excess of the First $25,000

Total Direct Costs (TDC) is an alternative approach to the application of F&A. TDC applies F&A to the sum of all proposed direct costs.

For sponsors that publish and reimburse F&A rates lower than Northwestern’s established rates (typically voluntary health organizations, or charitable foundations), a TDC approach should be used, unless an MTDC approach, or specific individual cost exclusions, is specifically identified in the sponsor’s published rate.

Budget Justification Statement for Federal Proposal Budgets

Add the following statement to new, competitive renewal and supplement proposal budget justifications on federal projects (except NIH modular grants, which justifications do not require this language):

F&A has been calculated based on the following DHHS approved rates:

  • 60.0% MTDC 09/01/21 – 08/31/23 – Predetermined
  • 60.0% MTDC 09/01/23 – 08/31/24 and thereafter – Provisional

Determining Applicable F&A Rates

In order to determine the applicable F&A rate for a sponsored project, consider the following: the funding source (federal or non-federal; grant or contract); the project type (research, instruction/training, other sponsored activity); whether the project is on-campus or off-campus; and the start date of the project. Note that solicitations occasionally include capped F&A rates.

Other Sponsored Activity Projects

“Other sponsored activities” means programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research. Examples of “Other Sponsored Activity” include: 1) public service projects, such as sponsored health and/or community service projects, legal clinics and public information services; 2) contract-for-service activities, such as material testing agreements; 3) curriculum development projects; and 4) sponsored symposia, workshops, seminars and conferences.

Investigators should consult with Sponsored Research to determine a project’s appropriate F&A rate, given the sponsor, solicitation, nature and location of the proposed activity.