Indirect Costs


Indirect costs

All research incurs indirect costs. The indirect costs of research are institutional costs that benefit and support research. These costs must be included in budget requests to external sponsors of research.

Indirect costs are difficult to attribute directly to a project, but they are nevertheless real and necessary for the conduct of research. They can include:

  • Use, maintenance and upgrading of building space, utilities and libraries;
  • central technical support of labs, offices, core and other facilities;
  • management and administration of research, finances, regulatory requirements and research compliance (i.e. research ethics, biohazards certification, animal care etc.);
  • hazardous waste disposal;
  • radiation and occupational safety and security; and
  • liability insurance.

U15 Statement on the Indirect Costs of Research

Déclarations de U15 sur les coûts indirects de la recherche


This is how indirect costs (overhead) are handled at McGill University.

Quebec Government (Provincial)

In 2014/2015, the Quebec government implemented a reform on recovery of the full costs of research which is changing how institutions are compensated for indirect costs of research. The reform applies a simplified model where indirect costs now are allocated via two separate mechanisms: (i) Administration and other services: 27% on direct research support for eligible funding programs of FRQ (Fonds de recherche du Quebec - FRQ); and (ii) Research facilities: based on research space available for research. Indirect costs should not be included in budget requests to the FRQ (FRQNT, FRQSC, FRQS).  The indirect costs for Administration and other services (27%) will be added to the grant in the notice of award by FRQ and paid to the University at the same time as the grant.

Canadian Government (Federal)

The Canadian Government also has an indirect costs (overhead) program based on research funded by NSERC, CIHR, SSHRC and Networks of Centres of Excellence (not all programs). Indirect costs should not be included in budget requests to these sponsors. For further information about the Canadian Government Indirect Costs program, consult the Research Support Fund Website.

The Research Support Fund helps Canadian postsecondary institutions with the hidden costs of research. By alleviating the financial burden of expenses, such as lighting and heating, the program ultimately helps researchers concentrate on cutting-edge discoveries and scholarship excellence. The annual grant covers a portion of the total indirect cost across all McGill Faculties and affiliated hospitals. In 2012/2013 the university allocated the funds to crucial areas such as operation and maintenance of research equipment and facilities, library resources, research administration and financial support, compliance and management of Intellectual Property. For further information, please consult the following documents:

Exceptions:

If your research is not funded by one of the Canadian Government agencies Tri-Agency (NSERC, CIHR, SSHRC), Fonds de recherche du Quebec (FRQ) or NCE,  you must include the following rate in your budget:

The new rates will become effective on March 1, 2017.

The implementation of these rates will not affect grants and/or contracts that are funded or negotiated prior to March 1, 2017.

Funding Category rate of indirect costs

Grants from government and not-for-profit organizations

27% on total direct costs or maximum rate allowed by sponsor

Contracts and agreements  with  government and not-for-profit organizations

27% on total direct costs or maximum rate allowed by sponsor as per written guidelines or as pre-negotiated by McGill University (please contact OSR for specific sponsor rates)

Grants, contracts, and agreements from industry and other for-profit organizations

40% on total direct costs (Industry sponsored grants and contracts that are matched through industry-partnered federal and provincial  programs - e.g. NSERC CRDs, Strategic Networks, Networks of Centres of Excellence, Quebec consortia, etc. carry 27% indirect costs.)

Clinical Trials

30%

Gifts

Indirect costs on gifts in support of research are negotiated by University Advancement

EXAMPLES OF SPONSORS SPECIFIC RATES

Grants and Contracts with U.S. Federal agencies (except NIH grants)

54% on direct salaries and wages, including fringe benefits (in accordance with McGill University’s DHHS Rate Agreement dated June 29, 2017).

National Institutes of Health (NIH)

8% on total direct costs except equipment (in accordance with NIH Grants Policy Statement).

Contracts through Public Works and Government Services Canada (PWGSC)

65% on direct salaries and benefits, including fringe benefits; 2% on travel.

Exceptions: For research grants totaling less than $100,000 per annum inclusive of indirect costs from the same not-for-profit sponsor, where the Principal Investigator (PI) is requesting a rate lower than McGill standard indirect costs rate, the PI submits a written justification to the Office of Sponsored Research (OSR) and does not require any other approval.

All other requests for an exception to the indirect cost rates must be approved by the relevant Dean(s) and Vice-Principal (Research and Innovation). It is the responsibility of the Principal Investigator (PI) to obtain all appropriate approvals/signatures.