Indirect Costs of Research: The Full Story

This session outlines the purpose of Indirect Costs (IDC) of research and how they are generated and distributed back to the Academic Divisions.  The presenters differentiate the ways in which the sponsors who fund our research calculate and award indirect research costs, and how those funds flow back to each Division.   

Learning Outcomes:

1. Learn about the true cost of U of T’s IDC and the impact of the IDC funds recovered from sponsors 
2. Understand the two types of IDCs: (a) IDC on individual research projects and (b) the federal Research Support Fund (RSF) 
3. Understand the flow of IDCs generated by research grants through central administration and to the Academic Divisions, including critical timing (e.g., slip year vs fiscal year)
    

Key Takeaways:

1. The Research Support Fund (RSF) is the federal program that provides annual funding to Canadian research institutions to support their indirect costs of research. The amount awarded is based on the Tri-Agency (CIHR, NSERC, SSHRC) funding received by each institution’s researchers, using the average of the three most recent years for which data are available. For 2021-22, the RSF rate for U of T was 20.5% of eligible Tri-Agency awards.
2. The standard U of T indirect costs rate of 40% applies to all sponsored research unless the sponsor has a rate set out in a formal published policy at the time of the proposal submission. If a Principal Investigator (PI) has a reason for requesting a reduced rate, they need to seek approval from both their department chair (or equivalent) and the Dean of their Division (or in the case of UTM and UTSC, the VP Research). VPRI staff have no authority to approve a reduced rate.
3. Indirect Cost of Research (IDC) is posted to a fund using one of the following two methodologies:
   
   1. Automatically charged to an account on a monthly basis when the calculation can be clearly defined in a mathematical formula
   2. If it cannot be clearly defined in a mathematical formula,  it will be posted by the Research Accountant as they prepare the financial reports and complete the manual calculation.
4. Division’s annual IDC allocation is based on the previous calendar year’s IDC charged to research funds on funds identified by the PI as being the Administrative Unit within MRA.