Definitions
Organized Research
Activities funded by external sponsors or separately budgeted internal programs that are formally organized to produce research outcomes. These are clearly structured and often require detailed budget proposals, deliverables, and formal reporting.
Departmental Research
Research and scholarly activities that are not separately budgeted or accounted for and are generally funded by the department and/or institutional funds. This includes work done as part of faculty assignments not externally supported. Departmental Research is funded from budgets that are not restricted to a specific project.
Impact on Indirect (F&A) Rate Calculation
The indirect or facilities & administrative (F&A) rate is calculated based on the proportion of indirect costs (facilities and administration) relative to modified total direct costs (MTDC) incurred in specific activity categories.
Organized Research
- Included in the Organized Research Base: Costs related to organized research are included in the research base for the indirect (F&A) rate calculation.
- Increases the Research Portion of the Indirect (F&A) Rate: The more organized research activities (with direct and indirect costs), the higher the research base, helping to justify higher indirect (F&A) recovery due to the intensive use of facilities and administrative support.
Departmental Research
- Treated as Instruction in the Base: Since departmental research is not separately budgeted, it is often classified under the instruction function for indirect (F&A) purposes.
- Dilutes the Research Base: If departmental research is incorrectly coded as organized research, it inflates the research base without corresponding indirect costs, potentially leading to a lower negotiated indirect (F&A) rate.
Financial and Compliance Implications
- Accurate Classification is Critical: Misclassifying departmental research as organized research (or vice versa) can distort the indirect (F&A) rate, leading to potential over- or under-recovery of indirect costs.
- Internal Monitoring and Policy: Institutions should have clear policies and training for faculty and administrators to distinguish and report research activities correctly.