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Calculating “indirect costs” (IDC) on federal grants for humanities projects

Brian Leiter

A philosopher elsewhere writes:

I've been wrestling with my office of sponsored research on the issue of IDC rates for federal grants, in my own case for a translation proposal for the NEH.

My university has a newly negotiated rate with the federal government of 39%. In previous years, they were willing to reduce the existing rate (I think it was closer to 30%) to 10%, on the reasonable assumption that research in the humanities costs the institution considerably less than research in the hard sciences. But they are no insisting that the rate should be fixed across disciplines and projects. I've tried to make the case that a scholarly project in the humanities is in no way comparable to a scientific investigation of, say, the role of platelet-derived growth factor in carcinogenesis. The latter requires maintenance of lab equipment, payment of post-doctoral researchers, etc. that have no real equivalent in humanistic inquiry. But the current administration appears to be operating under the assumption that the value of grants is not to make scholarship possible but to put money in the university's purse.

I wonder if other philosophers have encountered similar issues, or if my own institution is comparatively unique in asking the NEH (in this case) to give the university a sizeable cut of the money that won't contribute in any meaningful way to the scholarly project at hand. And in a way that (in my own case) will make the grant application itself less competitive.

Curious to hear how other universities handle this.  If you do not want to post your name, at least say something about your school (public/private, R1, SLAC) and the project (e.g., translation project, humanities research, interdisciplinary research [with psychology, law etc.]).

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6 responses to “Calculating “indirect costs” (IDC) on federal grants for humanities projects”

  1. J

    I'm a philosopher. Currently I'm at an R1 where I've received a large external grant from a private foundation to support a number of activities in my department, including teaching releases for course development. The university is taking no cut of this — the grant agreement was written so that all of the money goes to the department. There was no pushback from the admin on this arrangement.

    At the R1 where I taught previously I received a large grant from the John Templeton Foundation that bought out some of my teaching so I could pursue interdisciplinary study. There, the university took 10% of the money for overhead costs, just as you describe.

    39% is outrageous and I would hope the NEH will not accept it. Indeed, I would consider going to them to ask what is typical, and to have them approach the university with that number.

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  2. Robert

    I'm at one of the University of California campuses. There is a UC-wide policy in place that allows for exceptions to federally negotiated IDC recovery rates that are evaluated by each campus on a case-by-case basis. For humanities projects, but not only humanities projects, the low cost to the university of supporting the project is taken to be one reason to allow the IDC exception, but so, too, is submitting a grant that is not as competitive as others elsewhere might submit who have an IDC exception in place for their applications. Any administrator will prefer using a 39% IDC rate over a 10% IDC rate, most (I think) recognize that the 39% IDC rate application is less competitive than the 10% IDC rate application, and that the real comparison is not between 39% and 10%, but rather between 39% and 0% (because their faculty member did not get the grant). A recognition of the actual comparison should, one hopes, push the administration to accept the lower IDC rate. But one needs to be persuasive on this point. As J notes, getting something from the funding agency about how a higher IDC rate application will be received would be very helpful.

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  3. Jason Aleksander

    It is not uncommon for universities to have more than one federally negotiated indirect cost rate depending on the sort of project–e.g., instructional vs research. And they may have a de minimus rate that they use for projects that are intended to fulfill a charitable mission in public engagement rather than clear research purpose. In any case, these rates tend to apply only or mainly to public funding. Research offices often have separate base rates for private funding — e.g. Templeton Foundation funding. Or they may use indirect cost rates only for public funding and work with faculty to include indirect costs as a reasonable part of their budget for private funding as allowed by the funder (usually a foundation). Usually there are also ways to petition for an exception to the indirect cost rate, especially if a private funder is making a small grant available as a public charity rather than for some distinct research purpose.

    On the other side of things, grantors can always specify whether they allow portions of a grant to be used for indirect costs–or sometimes even what the cap on those indirect costs might be. I am not sure which specific programs the NEH currently lists as ineligible for indirect costs. NEH Fellowships and Awards to Faculty do *not* include indirect costs since they are to individuals rather than the institution. But the scholarly editions and translations grant is definitely *not* one that is exempt from federally negotiated indirect costs, and I would not expect a university's research office to make an exception to this, especially given the clear instructions from the NEH itself about preparing a budget that utilizes any relevant federally negotiated indirect cost agreement (https://www.neh.gov/sites/default/files/inline-files/Scholarly%20Editions%20and%20Translations%20NOFO%202024%20and%202025.pdf). In other words, if your university has a federally negotiated indirect cost rate of 39% it is not at all outrageous for the university to insist that one use that rate. In fact this is *exactly* what the NEH itself expects the researcher to account for in their budget.

    It may also be worth noting that the negotiated indirect cost rate isn't just about STEM lab infrastructure — it accounts for *all* of the university's research infrastructure, often including salaries and benefits of employees who manage the university's sponsored programs. A Humanities dean may even have a line item in their budget for revenue coming back into their college's own research budget from the university's office of sponsored programs–especially if the dean's office has its own research infrastructure (e.g., a salaried associate dean of research or office staff that help manage grants). Meanwhile lab costs, post-doc salaries, etc. are often part of the *direct* costs on the funding request in STEM grants, not the indirect costs. So it just isn't true that indirect costs apply only to STEM research and not to Humanities. The 39% IDC rate and the practices at the OPs university are not at all unusual.

    NEH guidance on indirect costs is here: https://www.neh.gov/grants/manage/indirect-cost-guidance

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  4. James D. Reid

    It would be helpful to know from Jason Aleksander how many federal grants in the humanities his university was able to win under his leadership as Associate Dean of Research and Faculty Success. I think the original question is not whether the NEH, e.g., allows for a 39% IDC rate (I disagree with J above; I think that the NEH would be willing to accept such a rate), but whether this is consistent with the submission of successful applications. What's really at issue here is whether the rate itself is reasonable and consistent with a competitive proposal. There surely must be institutional differences that ought to carry some weight (how much course by-out, e.g., is called for). And I hear a lot of admin-speak that doesn't quite justify, at least not in any concrete detail, a university's taking, say, $120,000 dollars out of a 3-year, $300,000 award to support, in the example noted above, a translation project. How much does it actually cost a university, say, to allocate funds from the NEH for salary? Or to submit a proposal in the first place? Or to write and submit assessments of work in progress, which falls (uncompensated) to the PI? And what does it mean to say that a dean may have "a line item in their budget for revenue coming back into their college's own research budget from the university's office of sponsored programs"? And even if there is a salaried dean of research, it is surely relevant to the continued existence of such a position that projects in the humanities stand some real chance of being funded.

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  5. SLAC professor

    My SLAC has the same rate for NEH as for NSF. The rate for federal grants is negotiated and in our case it is negotiated as such "for all programs." My SLAC does not reduce the negotiated rate for humanities (or social science or any other) programs and that rate is higher than the one listed by the person in the original post. I am not necessarily defending the practice but just reporting what it is at my university. I have reviewed proposals for NEH as well and the negotiated rates varied but I don't remember seeing any instances of universities asking for less than the negotiated rate.

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  6. Jason Aleksander

    James Reid insists that what is at issue is whether a 39% indirect cost rate is consistent with a competitive proposal. The original poster did ask about that, but I took the main question to be about what sort of practices are in place at other universities around indirect costs, so that is what I responded to.

    But I suppose it may also help clarify that higher indirect cost rates do not make proposals less competitive in applications for grants at NEH, NSF, NIH, NEA, etc. The indirect cost rate has no real bearing on the competitiveness of a proposal, and if it did it might not have the bearing that some of the other respondents think that it does or that it should. Here is how to think of this. Let’s take three cases of actual indirect cost rates for “on campus organized research.”

    Stanford’s rate is 54%
    San Jose State University is 46.5%
    MSU Denver is 39.7%

    Is there any reason at all to think that, ceteris paribus, the proposal for a $300K grant from Stanford is going to be less competitive than from the other two universities? Or that the most competitive proposal is going to come from a faculty member at a small college that does not even have a federally negotiated indirect cost rate and so uses the 10% de minimus rate?

    The answer to that question is NO. It is a bit silly to try to evaluate proposals without even looking at their actual content, but there are some good reasons to think that a faculty member at Stanford who is applying for a $300K grant, where $138K go to the direct costs on the project nevertheless has at least as compelling of a platform for their application from the get-go than a faculty member at SJSU whose application would direct more than $160K to direct costs. In the first place the faculty member at Stanford, even in the Humanities, is going to be able to point to a lot of other institutional support that likely makes their project more feasible or more likely to have impact than the SJSU prof. I could go on, but it shouldn’t be difficult to see this. The Stanford faculty member starts from a position of strength because the institution’s overall research support is greater. And, in fact, that’s part of why the indirect costs are higher at Stanford – because their research expenditures are quite a bit higher. Their revenue is also quite a bit higher, of course, not only in grant supported research, but also research-related endowment revenue, etc. But the high indirect costs reflect the fact that the cost of research really is higher there, which is a strength, not a weakness, of the institution.

    But, of course, proposals are actually evaluated on their individual merits, and the NEH does a good job of training its evaluators in the criteria that are important in evaluating proposals. The program directors make the final call, since there are always a higher number of compelling proposals in the stack than the NEH can afford to fund. But indirect costs are not part of what’s fundamentally important in a grant application. The SJSU prof is going to be successful when they explain in a compelling way how their project will make good use of $160K to offer an impactful contribution to the field, that they have the tools and training to complete the project, that they have the experience and ability to complete it, etc. That’s it. If one is at a place that lets you them use a de minimus rate of 10%, then they get to try to explain how $270K is going to help be successful. But in reality, that person is likely starting from a different platform for research support to begin with, and that context will be relevant to how they articulate their ability to do all the things that everyone else is also trying to say they will do. The NEH is going to give $300K to the project whose PI makes the best case for using the grant to do something important – they aren’t going to base that on the dollar amount going to the individual vs. the institution. But you don’t need to take my word for it! Reach out to an NEH program officer. Read their instructions and FAQs. Or volunteer to serve as a grant evaluator – NEH loves that, and it is one of the very best things you can do to learn about what successful proposals look like.

    There are a lot of assumptions built into some of the other questions and assertions above that muddy the water around these sorts of issues. I don’t see much point in trying to respond to all of Prof. Reid’s questions, and I worry that it would be petty and/or encourage pettiness in return. But I would like to stress a couple points. The original question called for us to share our experience with research offices insisting on using their federally negotiated F&A rates in their grants. The first response said that 39% is outrageous and that the NEH should reject a grant application that includes it. That is not a helpful response. And comparing how institutions might handle Templeton grants vs. NEH isn’t helpful either. Different institutions may or may not use the same basic F&A rate for private foundations. They don’t have to use the federally negotiated rate for grants from private foundations, and that is where there may be opportunities to discuss reasonable indirect costs or cost sharing elements in a grant with your university’s research staff. It is definitely a good idea to try to speak with a foundation about its RFP if the RFP doesn’t make clear what expectations the foundation may have around cost-sharing, indirect costs, etc. Often that information is hard to find, but your research staff *should* be able to help you do this. But it probably isn't a good idea to go to the senior research administrator on your campus starting from the assumption that he or she simply doesn't understand how grant funding works or what Humanities faculty need to be able to do to be competitive with Humanities faculty at other institutions. There is a lot of STEM-oriented myopia in research administrators, but I have never seen it defeated by Humanities faculty who haven't done their homework and enlisted support from others who also have credible experience writing research grants. Anyway, if you are working on a private foundation grant, then the second reply above (Robert’s) concerning how one might be persuasive in making a case for using a lower rate could be relevant. But in grants for NEH, NSF, NIH, etc., unless the granting agency itself specifies a cap on the indirect cost rate, your university will almost always use your federally negotiated indirect cost rate. That’s just how this works. That is what the federally negotiated rate is there to do!

    I know there is a Prof. James D. Reid in Philosophy-land who has been successful with NEH grants/fellowships in the past, and I genuinely congratulate him on that success. NEH grants are very, very competitive (and fellowships are outrageously competitive), and so being successful with a grant application is something to be proud of. But I will say that in my time as an associate dean for research I often heard very similar sorts of complaints from my faculty colleagues about indirect cost rates. In almost every case the faculty member simply did not understand how these work and made assumptions not too different from the sort that Prof. Reid and others seem to have made in their responses. In my own experience, there were a few occasions where one of my faculty colleagues leapt straight into a fight with a VP of research or a provost or whatever muckity muck in administration they thought needed to be straightened out about how the humanities work without first having a conversation with their friendly neighborhood dean, ass dean (me) or even their department chair, and that occasionally created a counterproductive and embarrassing situation all around.

    So… if I were advising a friend (or anyone else who is reading this) about how to handle indirect cost rates on an NEH grant or other federally funded research grant where the granting agency itself says in its instructions on the grant to use the university’s federally negotiated indirect cost rate (which is what the NEH RFP says in this case), then what I would say to my friend is this – at SJSU you can apply for just over $160K in direct costs on this $300K grant, so think hard about what those might be – do you want to try to fund course buy-outs for yourself? Do you want to try to fund a full research leave? You know that you need to include your actual benefits as well as your salary, right? What about indexing fees? What other things could your department free up to support *you* in this project if the NEH were funding something the grant can fund — your department may be more flexible in some ways even if its budget is tiny. What about graduate students? How about I introduce you to our grant support staff so they can help you with the budget items? Oh… also, if you need more than $160K to get this project done, where else are you thinking you might find that money? And, by the way, if you win the grant, that’s great, and I am going to be *so stoked* on your behalf, but please don’t complain about the fact that the institution took $140K from your project. It didn’t. The NEH caps the amount it funds for this RFP at $300K for an institutional grant, and because you are an employee at SJSU, you can’t get more than about $160K. But just imagine… if you were at Stanford you wouldn’t even get that much! Now aren’t you glad you’re a Spartan instead of a Cardinal?!

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