Indirect Costs

Indirect Costs for Industry-sponsored Projects

What are Indirect Costs?

Indirect costs (IDC) are expenses not directly associated with any one research project, but incurred for the benefit of all campus research and activities. These expenses, also known as facilities and administrative costs (F&A), include libraries, electricity, general administrative support, facility maintenance, and building and equipment depreciation, among other things.

UC Policy on Indirect Costs

UC Policy mandates that research sponsors cover the total direct costs (TDC) and indirect costs (IDC) of a project in order to receive full access to the data and results of the research and an opportunity to license any inventions that might result.

It is the policy of UC Berkeley to recover the full cost of sponsored research. For-profit industry sponsors must be charged total direct costs plus the full federally-negotiated IDC rate applicable to the type of research to be performed. Approved rates are listed on UC Berkeley's Indirect Cost Rates page.

Preparing Budgets

When preparing and presenting budgets to industry sponsors, Principal Investigators must ensure the proposed budget includes the total direct costs required to perform the work, as well as indirect costs based on the applicable federally-negotiated indirect cost rate approved by the U.S. Department of Health and Human Services. Draft and preliminary budgets that exclude applicable IDC rates lead sponsors to expect a lower overall cost for our research. Efforts to resolve an under-funded budget may lead to reductions in direct costs, revisions to the scope of work for the anticipated research project, and/or long delays in the execution of the research agreement.

Why Indirect Costs Matter

UC Berkeley's Negotiated Indirect Cost Rates keep the lights on for UC Berkeley research. These are actual and very real costs incurred by the University to build and maintain buildings, facilities, and equipment, and to provide operational support. Indirect costs pay for services including maintenance and operations (electric, internet, and water utilities, as well as janitorial services), library operations, and administrative and financial team support. All of these costs are real, and without them, the university could not conduct research, teach students, or run and manage its programs. If UC Berkeley absorbs the indirect costs associated with industry sponsored projects, the university essentially subsidizes commercial entities and their bottom line, which is not in line with UC's public mission.

Distinguishing between Gifts, Grants, and Contracts

Gifts, grants, and contracts are audited independently and regularly to ensure the right determination is reached. For guidance on defining and distinguishing the differences between a gift and a grant or contract, see the Vice Chancellor of Research Office guidance.

To inquire about gifts, consult with University Development and Alumni Relations or the relevant college or department development officer.

Additional Information