7.5% Overhead Recovery Fee
Why is this fee being charged?
This was a measure originally taken in 2009/2010 (FY2010) to help the University meet its budget obligations, and to create a fund for special priority and performance driven projects. The overhead recovery fee, which continues to assist with the funding of University priorities and supports general operations, is set at 7.5% for FY2024. This is unchanged from FY2023.
How is the fee calculated?
In the month following the end of a fiscal quarter, revenues earned in non-1A unrestricted, non research-related funds (i.e. fund types 1B, 1C, 1D and 1E) during that respective fiscal quarter will be subject to a charge of 7.5%. The resulting amount will be posted to account code, 700694 (Central OH Unrestricted Funds), with the offset being recorded in the University's Central fund, to assist with the funding of University priorities and to support general operations. The President's priorities and the priorities of the Strategic Academic Plan guide decisions through the Budget Planning Process. Separate Faculty and Administration Priority Pools have been established for special priority and performance driven projects.
For example, here’s the revenue and overhead calculation for ‘Special Purpose Fund XYZ’ (fund type 1C):
| Fiscal Quarter | New revenue recorded | overhead charge | month of charge |
|---|---|---|---|
| Q1: May 1 - July 31, 2023 | $10,000 | $750 | Aug 2023 |
| Q2: Aug 1- Oct 31, 2023 | $5,000 | $375 | Nov 2023 |
| Q3: Nov 1, 2023 - Jan 31, 2024 | $15,000 | $1,125 | Feb 2024 |
| Q4: Feb 1 - April 30, 2024 | $1,000 | $75 | Apr 30, 2024 |
If you are charging 7.5% on revenue each quarter, does that mean the total charge amounts to 30% annually?
No. This is not a compounding calculation. Every revenue dollar is only subject to the 7.5% once, in the quarter that it is recorded. We are simply performing the calculation four times per year so that your costs are known on a more timely basis.
My fund collects monies from other McGill funds, to recover certain costs. Are these amounts subject to the 7.5% overhead fee?
Only revenue from external sources (typically posted to account codes starting with ‘5’) will be charged the overhead fee. Internal recoveries from other McGill funds are exempt.
Which of my funds will be charged this fee?
All unrestricted funds categorized into the following fund types:
- 1B ‐ Operating/Self‐Financing
- 1C ‐ Special Purpose/Self‐Financing
- 1D ‐ Clearing Funds
- 1E ‐ Unrestricted Grant‐Coded (e.g. multi‐year conferences and events)
Any government grants, research‐related grants, contracts and start‐ups are exempt, as are all funds with restricted donations or income from endowments.
1A operating funds are also exempt as they were previously subject to a budget cut via the compact process. James McGill, William Dawson, TALIFs, etc. are exempt as they are 1A funds.
The Fund Financial Manager will be responsible for ensuring accurate recording of revenue generating activities in the appropriate fund type.
I have funds deriving revenue directly from Student groups, Endowment Income and Government Grant. Will there be any special provisions for these?
Yes, based on discussions with Financial Services and Analysis, Planning and Budget, it was decided that this overhead recovery fee will be reimbursed for revenue account types 5A (Government Grants), 5G (Sales to Students) and 5I (Gifts and Bequests Revenue), 5N (Investment Revenue) and 5J (Special Contribution from Endowment) for the current fiscal year, on a quarterly basis.
Will the overhead charge apply to ‘operating’ funds from CIHR, NCIC, NSERC, CRS, etc.?
No. Any funding received from granting agencies or donors for restricted purposes (including research) will not be charged this overhead recovery fee.
How do I know the fund type associated to my funds, so that I may know which are subject to the overhead recovery fee?
The fund type (e.g. 1C or 2F) is indicated on the New Fund Notice received when your fund is first opened, as well as your monthly Fund or Grant Detail financial statements in Minerva.
For departmental administrators who use the Report templates on the Financial Services website, you can use the template entitled ‘Funds within Department ORG Jurisdiction’ located in the Miscellaneous Reports section. From the results, you would derive the list of funds subject to the 7.5% overhead fee by looking at active funds within funds types 1B, 1C, 1D, 1E.
Should you have any questions concerning this overhead recovery fee, please contact Lara Pereira, Controller, Financial Services at lara.pereira [at] mcgill.ca or Serge Bergeron, Senior Director Budget and Finance, Analysis, Planning and Budget at Serge.Bergeron [at] mcgill.ca
Related Announcements
- April 21, 2023 - Announcement from Serge Bergeron, Senior Director Budget and Finance, Analysis, Planning and Budget, and Tonia Sciannamblo, Interim Controller, Financial Services about Overhead Recovery Fee FY2024 - channel news
- April 12, 2022 - Announcement from Serge Bergeron, Senior Director Budget and Finance, Analysis, Planning and Budget, and Lara Pereira, Controller, Financial Services about Overhead Recovery Fee FY2023 - channel news
- May 17, 2021 - Announcement from Serge Bergeron, Senior Director Budget and Finance, Analysis, Planning and Budget, and Lara Pereira, Controller, Financial Services about Overhead Recovery Fee FY2022 - channel news
- June 17, 2020 - Announcement from Serge Bergeron, Senior Director Budget and Finance, Analysis, Planning and Budget, and Lara Pereira, Controller, Financial Services about Overhead Recovery Fee FY2021 - channel news
- July 16, 2019 - Announcement from Serge Bergeron, Budget Director, and Cristiane Tinmouth, Associate Vice-Principal, Financial Services about Overhead Recovery Fee FY2020 - channel news
- May 11, 2018 - Announcement from Serge Bergeron, Budget Director, and Cristiane Tinmouth, Associate Vice-Principal, Financial Services about Overhead Recovery Fee FY2019 - channel news
- July 05, 2017 - Announcement from Serge Bergeron, Budget Director, and Myriam Bensimon, Controller about Overhead Recovery Fee FY2018 - channel news
- August 2017 - please refer to the University Budget Book 2017-2018, section "7.2.10 Self-financed activities and overhead charges"; page 69.
- April 28, 2015 announcement from Real Del Degan, Interim Director, Office of the Budget and Cristiane Tinmouth, Controller, Financial Services about Overhead Recovery Fee - channel news.
- April 16, 2013 announcement from Jeff Ives, Director, Office of the Budget and Cristiane Tinmouth, Controller, Financial Services about Fiscal 2013/2014 Overhead Recovery Fee - channel news.