Indirect (F&A) Cost Waivers

Establishes policy to apply the University's negotiated indirect (F&A) cost rate to all externally-sponsored projects by categories defined in RPH: Categories of Sponsored Projects. Presents procedures to apply for a waiver of that rate for specific proposals, and criteria on which waiver decisions are made.

1. Applicability

Stanford's policy is to apply the University's negotiated indirect (F&A) cost rate to all externally-sponsored projects.

2. Roles and Responsibilities

The fiscal management of sponsored projects, including the application of appropriate indirect cost rates in proposed project budgets and management of awarded projects within budget and funding limitations, is the responsibility of the Principal Investigator (PI).

3. Waivers

4. Pre-Approved Exceptions

Some programs or sponsors are pre-approved by Stanford for a waiver of a portion or all of our indirect (F&A) cost recovery. In most cases, these are programs or sponsors that require such a waiver as a condition of the award. The Office of the VPDoR maintains a list of such programs and sponsors. The list can be found in the Stanford Electronic Research Administration (SeRA) system.

If the funding institution of interest is not on the pre-approved waiver list, please send the link to the sponsor's policy to dor_research_compliance_group@lists.stanford.edu, and the sponsor’s eligibility for a waiver will be assessed.  In making that assessment, Stanford recognizes that many research funding institutions have their own policies regarding the use of their funds for overhead expenses. In the case where (1) the funding institution has an official written and publicly disclosed policy in this regard that is applied on a consistent basis, or (2) a public solicitation for proposals defines a limit on indirect cost recovery as a condition of the program, Stanford may accept those terms. If the program or sponsor does not meet either of those requirements, a project-specific waiver will need to be requested from VPDoR or the School of Medicine (see below regarding case-by-case exceptions).

The following considerations guide Stanford’s willingness to waive a portion or all of our indirect (F&A) cost recovery: 

• In the case of non-profit sponsors established as an arm of a for-profit organization (e.g, an associated foundation), indirect cost waivers will not be pre-approved; such requests will be considered only on a case-by-case basis (see below). 
• Indirect (F&A) costs will not normally be waived solely because a research funding institution has expressed a desire to limit the use of its funds for a particular award to Stanford. 
• Indirect (F&A) cost waivers or reductions are not granted to remedy incorrect classifications of costs. 
• In cases where Stanford's agreement to accept a lower indirect (F&A) rate is based on our understanding of the sponsor's policy, and where Stanford becomes aware of a higher indirect (F&A) cost rate paid by that sponsor to another recipient, the university reserves the right to apply the higher rate to future projects or renewals from that sponsor.
• Funding that comes directly from a foreign government agency will not be pre-approved, but may be considered on a case-by-case basis.

5. Case-by-Case Exceptions

The VPDoR will consider case-by-case requests for indirect (F&A) cost waivers only in very limited circumstances. [NOTE: This approval authority is assigned to the Dean of the School of Medicine for projects to be administered within the School of Medicine.]

Special requests must be approved by the PI and school dean's office before being routed for approval as a case-by-case exception. The decision whether to grant or deny an exception request is at the sole discretion of the VPDoR or assignees, or the Medical School Dean for projects in that school. In determining the institutional costs and benefits of such requests, the VPDoR or Medical School Dean may take any or all of the following into consideration:

• equity of granting the waiver when the projects of other faculty carry full overhead
• total cost to Stanford
• likelihood that an award would be seriously jeopardized without a waiver, and the potential effect of the loss on the faculty member's overall research program
• benefit of the waiver to new or junior faculty members or in support of research efforts in new directions which otherwise might not be sufficiently developed to attract typical peer-reviewed awards
• effect of a waiver to increase direct costs available for student support
• evidence of sponsor’s capacity to pay Stanford’s full overhead rate

Outside of the School of Medicine, indirect (F&A) cost waiver requests can be launched from the budget page of the PDRF (Proposal and Development Routing Form) in SeRA.

6. Infrastructure Charge Policy

A waiver of indirect (F&A) cost recovery under the terms of this policy does not waive the University's infrastructure charge collected on the expenditure of restricted dollars on non-federal sponsored projects.

The application of the infrastructure charge and specific exemptions are discussed in Administrative Guide Memo 3.3.1.