Facilities and Administrative (F&A) Rates

What Are F&A Costs?

When universities like VCU conduct research projects, they incur not only direct costs but also indirect costs. These indirect costs, known as Facilities and Administrative (F&A) costs, support research and academic infrastructure.

F&A costs ensure that the university can maintain the necessary environment and support systems for research activities. To recover these costs, VCU applies an F&A rate to the direct costs of research projects. This rate is negotiated with the federal government every 4 years, and reflects the proportion of indirect costs relative to direct research expenses (see DHHS Rate Agreements).

How Is the F&A Rate Determined?

The F&A rate is calculated by dividing the university's total indirect costs by its total direct research costs. This rate is then applied to eligible direct costs in research grants to determine the amount that can be recovered for indirect expenses. 

As specified in the Commonwealth Accounting Policies and Procedures Manual, VCU is required to apply the full federally negotiated rate to all grants, contracts and other agreements proposed and/or accepted unless an exemption has been granted (see OVPRI's Guidelines for facilities and administrative cost recovery for cost recovery exceptions and more information on using rates).

Indirect Cost Recovery

Indirect cost recovery, or Facilities and Administrative (F&A) Cost Recovery, also known as FACR, is revenue generated from externally funded grants and contracts. These funds are intended to support the infrastructure and administrative expenses associated with sponsored research. Departments receiving F&A funds must adhere to the following guidelines to ensure responsible and strategic use of these resources.

For more in depth information about indirect cost recovery, see the VCU FACR Policy. For more information including how such funds are utilized by the university, see the Fiscal Handbook topic Facilities and Administrative (F&A) Cost Recovery Revenue.

Components of the F&A Rate

The F&A rate comprises several components:

• Facilities:

  • Building and equipment depreciation

  • Operations and maintenance

  • Library expenses

  • Utility costs

• Administrative:

  • General administration

  • Departmental administration

  • Sponsored project administration

Each component contributes a percentage to the overall F&A rate. For detailed breakdowns of F&A rates for specific fiscal years, you may refer to the following documents:

• Components of the Published F&A Rate FY 21-23
• Components of the Published F&A Rate FY 16-20
• Components of the Published F&A Rate FY 12-15
• Components of the Published F&A Rate FY 08-11

Administrative Components Detail

Comparison of organized research facilities and administrative cost rates (by category):

Administrative Component	FY12	FY13	FY14-15	FY18-20	FY21-23
General Administration	7.30%	7.30%	5.68%	5.68%	5.68%
Departmental Administration	20.80%	20.80%	20.80%	15.42%	15.42%
Sponsored Project Administration Administration	0.30%	0.30%	0.30%	4.90%	4.90%
Total Administration	28.40%	28.40%	28.40%	26.00%	26.00%