Calculation of F&A Rate

The process of calculating the F&A Rate is to sum these indirect costs and divide by the base. The base is defined as the major functions of an educational institution. Uniform Guidance Appendix III to 2 CFR Part §200 identifies those functions as:

1. Instruction and Departmental Research
2. Organized Research
3. Other Sponsored Activity
4. Other Institutional Activity

So, simply put, the F&A is calculated as follows:

Indirect Costs Allocable to Organized Research ÷ Direct Costs in Organized Research Base = F&A Rate

The indirect costs include administrative costs and facilities costs.  

The Administrative portion covers costs for offices such as:

• Human Resources
• Accounts Payable
• General Counsel
• Purchasing
• Systems Support (part of Drexel IT)
• Risk Management
• Departmental Administration
• Budget
• Comptroller
• Treasurer
• Research
• IRB
• President
• Bursar

The Facilities portion covers costs such as:

• Building Depreciation
• Equipment Depreciation
• Non-Capitalized
• Public Safety
• Library
• Hardware Support (part of Drexel IT)
• Radiation Safety
• Interest
• Property Insurance
• Utilities
• Safety and Health
• Facilities Department

Major Functions of an Educational Institution

The major function of an educational institution is identified as Instruction and Departmental Research, Organized Research, Other Sponsored Activity, and Other Institutional Activity. The definition of each function is from Uniform Guidance Appendix III to 2 CFR Part §200, and examples are provided of the F&A rate applicable.

Instruction and Departmental Research

Sponsored instruction means specific instructional, or training activity established by grant, contract, or cooperative agreement from Federal or non-Federal sponsors. Sponsored instruction includes agreements which support curriculum development as well as teaching/training activities (other than research training) whether offered for credit toward a degree or certificate, on a non-credit basis, or through regular academic departments or by separate divisions, summer school, or external division.

Departmental research means research, development and scholarly activities that are not organized research and, consequently, are not separately budgeted and accounted for. It is not considered as a major function, but as a part of the instruction function of the institution. There is no F&A charged to departmental research expenditures.

Organized Research

Organized research means all research and development activities of an institution that are separately budgeted and accounted for. Sponsored research means all research and development activities that are sponsored by Federal and non-Federal agencies and organizations and utilizes full on-or off-campus indirect cost rates unless agreement stipulates otherwise. University research means all research and development activities that are separately budgeted and accounted for by the institution under an internal application of institutional funds.  It does not utilize indirect cost rates.  Note that externally funded research training grants are categorized as Sponsored Research (rather than Sponsored Instruction) where the primary activities of the trainees will be research.

Other Sponsored Activities

Other sponsored activities mean programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research.

On-Campus versus Off-Campus Rates

The following are examples of when on-campus rates and off-campus rates would be applicable.  Note that a project will be apportioned between its on- and off-campus components when it can be demonstrated that at least 25% of the total direct costs of the project relate to activity that will occur in space that meets the off-campus criteria. 

If, after consulting the materials provided on this webpage, you have any questions, comments, or concerns, please contact ras@drexel.edu.