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Universities charge the government for use of their facilities. It is an overhead rate often of 60+% on top of the costs of paying researchers, buying lab suppl

Universities charge the government for use of their facilities. It is an overhead rate often of 60+% on top of the costs of paying researchers, buying lab supplies, etc. Frequently there is triple dipping, where a university gets a grant for a piece of equipment, charges the grants directly for use of that equipment, then also claims they need to be paid in the overhead for making the equipment available. Anyone familiar with the finances sees it as ridiculous.

Loughla 13y ago
From my (albeit limited) experience in two large state universities, one of which with a direct focus on research, and two much smaller local colleges, your statement is a bit inflammatory, and isn't 100% accurate. All grants are allowed to charge indirect costs to the grant fund. These indirect costs are used to cover the cost of facilities, maintenance and all the little bits that no one ever thinks about. No one buys a piece of equipment expecting there to be no maintenance whatsoever. These indirect costs are always governed by an agreed-upon rate set between the host institution and the funding entity. The federal government in particular has very clearly spelled out rules regarding this. For example - the grant that funds my work right now has a very clearly legislated indirect cost rate of 8%. If our indirect costs exceed that 8% monthly, we can lose our funding. Now where we get into the part where you're not 100% accurate, and I believe being a bit inflammatory is the triple dipping. Institutions can get a grant to purchase equipment, and then charge the same grant for the use of the equipment. The institution can charge for the personnel hours that run the equipment on related projects, they can charge that indirect cost that we discussed earlier, but that's about it. It's not as if they can just make up a number and charge the government that much to use the equipment for related projects. There are circulars from the Office of Management and Budget that dictate what you can and can't do with your money - for example, colleges and universities have to adhere to the cost principles outlined in OMB A-21, available here: http://www.whitehouse.gov/omb/circulars_a021_2004 http://www.whitehouse.gov/omb/circulars_a021_2004 if you want some light reading. On top of the basic OMB circulars, all federal grants have additional legislation that add further stipulations to how money can be spent, but come from any number of 1000 sources, so I'm not going to cite them. Anyway, the institution cannot just charge the government for use of the equipment. Secondly - they are not paid 'overhead' for making the equipment available. They are paid an indirect cost rate to maintain, store and generally keep the facility running for grants. This rate is very clearly spelled out in any grant documents. I've not seen 60+% in any grant I've ever worked with. In smaller institutions they tend to be around 10-20%. On the larger campuses, the average indirect rate was 32%. Anyone familiar with the finances know that there are legislation and regulation in place to dictate all of this, and while it may be convoluted, it's really not as predatory as you make it out to be.
- cowsandmilk 13y ago
  > I've not seen 60+% in any grant I've ever worked with. In smaller institutions they tend to be around 10-20%. On the larger campuses, the average indirect rate was 32%. I run a company that has won many Federal grants and subcontracted a lot of work to universities in the Boston and Cambridge area. Let's look at the current indirect rates for universities I've worked with: 1) Harvard: up to 69.5% for Federally funded research [1] 2) MIT: currently 56%, but in 2010, it was 68% [2] 3) Boston University: 63.7% [3] 4) Northeastern University: 54.5% [4] 60% as an average is much closer to what I see than 32%. The Boston Globe says the national average is 52% [5]. P.S. On a tip from a friend, I'll add that MGH's indirect rate is 74% [6] [1] http://osp.fad.harvard.edu/content/fa-cost-rates-federal-sponsors http://osp.fad.harvard.edu/content/fa-cost-rates-federal-spo... [2] http://osp.mit.edu/rates/facilities-and-administrative-fa-rates http://osp.mit.edu/rates/facilities-and-administrative-fa-ra... [3] http://www.bu.edu/osp/files/2012/03/RateAgreement22Feb2013.pdf http://www.bu.edu/osp/files/2012/03/RateAgreement22Feb2013.p... [4] http://www.northeastern.edu/research/raf/files/Indirect-Cost-Rate-2013.pdf http://www.northeastern.edu/research/raf/files/Indirect-Cost... [5] http://www.boston.com/news/nation/2013/03/17/harvard-mit-thwart-effort-cap-overhead-payments/Ridc4YwDfkGlmWfUUJ0snI/story.html http://www.boston.com/news/nation/2013/03/17/harvard-mit-thw... [6] http://resadmin.partners.org/RM_Home/Documents/2011%2005%2006%20MGH%20DHHS-Rate%20Agrmt-IDC.pdf http://resadmin.partners.org/RM_Home/Documents/2011%2005%200...

Loughla 13y ago

From my (albeit limited) experience in two large state universities, one of which with a direct focus on research, and two much smaller local colleges, your statement is a bit inflammatory, and isn't 100% accurate. All grants are allowed to charge indirect costs to the grant fund. These indirect costs are used to cover the cost of facilities, maintenance and all the little bits that no one ever thinks about. No one buys a piece of equipment expecting there to be no maintenance whatsoever. These indirect costs are always governed by an agreed-upon rate set between the host institution and the funding entity. The federal government in particular has very clearly spelled out rules regarding this. For example - the grant that funds my work right now has a very clearly legislated indirect cost rate of 8%. If our indirect costs exceed that 8% monthly, we can lose our funding. Now where we get into the part where you're not 100% accurate, and I believe being a bit inflammatory is the triple dipping. Institutions can get a grant to purchase equipment, and then charge the same grant for the use of the equipment. The institution can charge for the personnel hours that run the equipment on related projects, they can charge that indirect cost that we discussed earlier, but that's about it. It's not as if they can just make up a number and charge the government that much to use the equipment for related projects. There are circulars from the Office of Management and Budget that dictate what you can and can't do with your money - for example, colleges and universities have to adhere to the cost principles outlined in OMB A-21, available here: http://www.whitehouse.gov/omb/circulars_a021_2004 http://www.whitehouse.gov/omb/circulars_a021_2004 if you want some light reading. On top of the basic OMB circulars, all federal grants have additional legislation that add further stipulations to how money can be spent, but come from any number of 1000 sources, so I'm not going to cite them. Anyway, the institution cannot just charge the government for use of the equipment. Secondly - they are not paid 'overhead' for making the equipment available. They are paid an indirect cost rate to maintain, store and generally keep the facility running for grants. This rate is very clearly spelled out in any grant documents. I've not seen 60+% in any grant I've ever worked with. In smaller institutions they tend to be around 10-20%. On the larger campuses, the average indirect rate was 32%. Anyone familiar with the finances know that there are legislation and regulation in place to dictate all of this, and while it may be convoluted, it's really not as predatory as you make it out to be.

cowsandmilk 13y ago
> I've not seen 60+% in any grant I've ever worked with. In smaller institutions they tend to be around 10-20%. On the larger campuses, the average indirect rate was 32%. I run a company that has won many Federal grants and subcontracted a lot of work to universities in the Boston and Cambridge area. Let's look at the current indirect rates for universities I've worked with: 1) Harvard: up to 69.5% for Federally funded research [1] 2) MIT: currently 56%, but in 2010, it was 68% [2] 3) Boston University: 63.7% [3] 4) Northeastern University: 54.5% [4] 60% as an average is much closer to what I see than 32%. The Boston Globe says the national average is 52% [5]. P.S. On a tip from a friend, I'll add that MGH's indirect rate is 74% [6] [1] http://osp.fad.harvard.edu/content/fa-cost-rates-federal-sponsors http://osp.fad.harvard.edu/content/fa-cost-rates-federal-spo... [2] http://osp.mit.edu/rates/facilities-and-administrative-fa-rates http://osp.mit.edu/rates/facilities-and-administrative-fa-ra... [3] http://www.bu.edu/osp/files/2012/03/RateAgreement22Feb2013.pdf http://www.bu.edu/osp/files/2012/03/RateAgreement22Feb2013.p... [4] http://www.northeastern.edu/research/raf/files/Indirect-Cost-Rate-2013.pdf http://www.northeastern.edu/research/raf/files/Indirect-Cost... [5] http://www.boston.com/news/nation/2013/03/17/harvard-mit-thwart-effort-cap-overhead-payments/Ridc4YwDfkGlmWfUUJ0snI/story.html http://www.boston.com/news/nation/2013/03/17/harvard-mit-thw... [6] http://resadmin.partners.org/RM_Home/Documents/2011%2005%2006%20MGH%20DHHS-Rate%20Agrmt-IDC.pdf http://resadmin.partners.org/RM_Home/Documents/2011%2005%200...