What is F&A (Indirect Costs)?

F&A is short for Facilities and Administrative costs. These costs are expenses incurred by ECU to support projects that are not directly allocable to a specific project. Some costs can be directly allocated to a project. If we buy supplies and only use those supplies on a specific project, the cost of those supplies can be directly allocated to the project. It is called, therefore, a direct cost. Costs of resources which clearly support the project, but cannot be directly allocated to it (indirect costs) are referred to as F&A.

It is clear that an experiment in a lab uses electricity, but ECU is not able to account for exactly how much electricity is used since we do not install meters outside every lab and check them before and after every experiment. It is also clear that such experiments (and other types of projects and programs funded externally) are supported by Human Resources, Facilities Services, ITCS, Grants Administration, and numerous other resources paid for by ECU. It is not feasible, however, to determine and track the precise portion of an accountants time or network server's cycles should be allocated to each specific funded project being conducted at the University. Instead, these costs are all pooled together and then charged as a percentage to each project as F&A.

“Facilities” is defined as depreciation and use of East Carolina University buildings, equipment and capital improvements that are used by students, faculty, staff, and general public. Also, interest on debt associated with certain buildings, equipment and capital improvements; and operations and maintenance expenses (i,e. air conditioning, lights, paper, printers).

“Administration” is defined as general administration and general expenses such as the accounting, personnel, library expenses, and all other types of expenditures not listed specifically under one of the subcategories of “Facilities”. The federal government caps the Administrative portion of F&A at 26%. Thus, off-campus research (which does not use University facilities) are charged an F&A rate of 26%. On-campus projects are charged the facilities rate as well. This is true at other universities as well, so the differences between the F&A rates at different universities is driven entirely by the relative extent of their research facilities.

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F&A Rates

One of the rates below should be applied to each sponsored project. Only one rate may be applied to a project and it should be rate that best fits the project. A project may involve many types of activity and may take place both on- and off-campus. The most appropriate rate is the one that characterizes the predominance of the project. An off-campus project is considered to be adjacent to campus if it is within 25 miles (essentially within Pitt County).

Rate Category

Other Activity





          *On 1 July 2014, the Research On-Campus Rate becomes 47.5%

ECU's F&A rates are determined in negotiation with the federal government. Simply put, total University expenditures for facilities and administration are allocated broadly among the various activities of the university - instruction, research, student services, athletics, ect. - in order to determine what proportion of these expenses are associated with each. The government then assigns a rate (via a rate agreement) which it deems to be justified by the accounting.

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F&A Base (or MTDC)

F&A is calculated as a percentage of Modified Total Direct Costs (MTDC). ECU's F&A rate agreement does not permit F&A on certain expense items. Instead, Total Direct Costs (TDC) are modified to remove those items (listed below) - resulting in a number called MTDC (also F&A Base).

  • equipment cost over $5,000
  • alterations & renovations
  • patient care
  • tuition
  • off-campus rental costs
  • scholarships & fellowship
  • subawards in excess of $25,000

The OSP Budget Template automatically calculates F&A on MTDC when appropriate.

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F&A Rates Limited by Sponsor

ECU's policy is to request F&A on proposals at our full federal negotiated rate whenever possible. F&A collections offset real costs incurred by the University in support of sponsored projects; not collecting full F&A necessarily means the University is subsidizing (paying part of the cost of) the project.

Not-For-Profit Organizations

For non-profit organizations, the University has adopted a policy of accepting the published F&A rate of the funding organization. These sorts of organizations have missions similar to the University – serving the public good. It is widely considered appropriate for the University to share in the costs of the project by accepting a lower F&A rate when required.

A copy of the sponsors published policy should be attached to RAMSeS proposals to non-profit organizations requesting reduced or waived F&A.

Commercial (for-profit) Firms

Commercial entities, however, do not share this public service mission. Rather, they are generally organized to return profits to their investors. It is generally inappropriate, therefore, for the University to subsidize (via cost-sharing or reduced F&A rates) projects funded by commercial organizations. To do so is to use public funds to increase the profits of a private commercial firm.

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Voluntary F&A Waivers

ECU's policy is to request F&A on proposals at our full federal negotiated rate whenever possible. F&A collections offset real costs incurred by the University in support of sponsored projects; not collecting full F&A necessarily means the University is subsidizing (paying part of the cost of) the project.

From time to time, opportunities arise in which a reduction or waiver of F&A may compellingly serve the mission of the University. These circumstances are evaluated on a case by case basis by the Vice Chancellor for Research – PRIOR to the submission of a proposal. 


  1. Create a proposal in RAMSeS as part of the normal approval process.
  2. Upload, as an additional attachment, a justification entitled F&A WAIVER REQUEST. This justification should address the relationship of the proposed project to the mission of the University. It is not sufficient to simply demonstrate the project's need for the reduced F&A rate.
  3. Add RGS-Vice Chancellor on the APPROVING DEPTS screen.
  4. Inform your Chair and Dean (or Associate Dean for Research) of this request so that it may be duly noted during their review.

Only the Vice Chancellor for Research and Graduate Studies or designee can authorize waiver/cost share of F&A. The University may withdraw a proposal or require a revised budget orrequire the PI’s unit to provide the waived amount if the waiver is not pre-approved.

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ECU F&A Rate Agreement

ECU negotiates our F&A rates with the U.S. Department of Health and Human Services every few years. The resulting document is referred to as our F&A Rate Agreement and is occasionally requested by sponsors. The best approach is probably to simply provide them the link below.

F&A Rate Agreement -

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Budgeting F&A - Indirect Costs

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