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Budget - Indirect Costs - B05.04


Ohio University recovers indirect costs (formerly known as Facilities & Administration costs) through the expenditure of funds in restricted accounts, which support external research and creative activity. Proposals for such funding must budget the appropriate indirect cost rate, when allowed by the sponsor. In limited instances, the Principal Investigator/Project Director (PI/PD) may request an Institutional waiver of indirect costs from the Vice President for Research (VPR); if the request has prior approval from the department chair and college dean.


This procedure applies to all sponsored projects subject to OU Policy 19.045 Administering External Grants and Contracts set up as separate accounts in the OHIO Financial Management System (FMS).


Indirect Cost Rate Agreement

Ohio University negotiated the current Indirect Cost Rate Agreement [PDF] with the Department of Health and Human Services on January 16, 2019. The following provisional rates are effective July 1, 2023.

Indirect Cost Rates

Organized Research: 51% (effective July 1, 2017)
Instruction: 49.0%
Other Sponsored Activity: 39.0%
Off-campus: 26.0%

Determining On-Campus vs Off-Campus Rates

Application of Indirect Cost Rate

All proposals submitted to federal agencies must include the negotiated indirect cost rate established between OHIO and the Federal government. In the event legislation governing any particular federal funds has statutory limitations on indirect cost recovery or the funding agency has special authority to limit indirect cost recovery, the statutory limitation or agency specific rate must be used.

Proposals submitted to state or other funding agencies must include the negotiated indirect cost rate or the approved agency specific rate. In unusual circumstances, the Vice President for Research and Graduate Studies, in conjunction with the department chair and dean, will negotiate indirect cost rates other than the established federal rate.

Indirect Cost Methods

The indirect cost rate is applied to the grant or contract using one of the following methods: 

Modified total direct costs (MTDC), consisting of all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and sub-grants and subcontracts up to the first $25,000 of each sub-grant or subcontract (regardless of the period covered by the sub-grant or subcontract). Modified total direct costs shall exclude equipment, capital expenditures, charges for patient care, student tuition remission, rental costs of off-site facilities, scholarships and fellowships, participant support costs and the portion of each sub-grant and subcontract in excess of $25,000. Rates negotiated between the University and the Department of Health & Human Services for the federal agencies in accordance with OMB Uniform Guide 2 CFR 200.

Total direct costs (TDC), consisting of all direct costs with no exemptions.

Refer to the sponsor guidelines to determine which method is applicable.

Institutional waiver or discount of indirect costs

In situations where a waiver or discount of indirect cost is necessary, the PI/PD will make a request to their Department Chair and Dean with a clearly defined justification.  Once approved by both the Department Chair and Dean, the request is forwarded by the PI/PD to where the ORSP Manager will process the request for final approval by the VPR.

Indirect Costs on Subrecipient Budget

Subawardees on Ohio University grants will use their federally negotiated rate calculated with the same method as the prime.  Subawardees that do not have a federally negotiated rate may elect to use the de minimis rate of 10%.


Questions regarding this procedure can be sent to


Contact your Sponsored Programs Manager for the appropriate budget template

Roles and Responsibilities