What is Indirect Cost Recovery (ICR)?


FM:Systems is a trusted partner in higher education for indirect cost recovery and reporting compliance. For over 30 years, we have helped universities streamline and automate annual space and NSF surveys and increase their indirect cost recovery. Today, let’s examine Indirect Cost Recovery in greater detail to see how technology plays a role in driving ICR.

What is Indirect Cost Recovery?

Universities incur indirect costs when they provide grant funded research. These are expenses necessary in order to perform federally-funded research, yet are not directly related to the research itself. The US government supplies funding to qualifying universities (federally-funded institutions) for their infrastructure costs, based on these different allocations and the productivity of those activities, in the form of an indirect cost recovery (ICR).

Depreciation, interest paid on a facility, operating and maintenance costs and administrative functions are all indirect costs universities incur when the provide grant funded research.

Indirect costs include depreciation, interest paid on a facility, operating and maintenance costs (such as utilities, custodian expenses, or security fees), and administrative functions such as payroll or purchasing. To recover part of these expenses, universities charge indirect costs to federal awards at an agreed upon rate. Universities must negotiate their Indirect Cost Recovery (ICR) rate with the Federal government every 5 years.

Why is ICR important?

For qualifying universities, improving ICR means more money remains in the budget. Recovered costs free up money that can be reallocated to other critical needs or new projects. However, if a university lacks historical, defensible data to support them in ICR negotiations, the institution is likely to leave money on the table. How many additional projects could be undertaken if ICR was higher?

How FMS:Workplace drives ICR

FM:Systems has a specific focus on understanding the unique needs of universities and offer turn-key solutions with higher ed requirements built right into the system. More than 350 universities count on our solutions to help them create and update accurate space surveys and drive ICR.

To improve ICR, universities need accurate, defensible data about how they use infrastructure and what it costs. Universities leverage FMS:Workplace as a single source of truth for this information. The Higher Education Survey module allows institutions to track grant moneys, principal investigators and spaces. FM Survey supports many important types of information essential for Integrated Postsecondary Education Data System (IPEDS) reporting, internal auditing and Indirect Cost-Recovery (ICR).

“The value of having the FMS:Workplace system throughout this whole process—I just can’t stress enough how valuable that resource was, for us to be able to pull up to start with the list of rooms and the capacities; then, as we went forward, to identify what we call extra spaces and the capacities we could have there as well. I’m not sure we could have even gotten it done without FMS:Workplace.”

– Cheryl Benningfield, Space Planning Manager

Using standard Web browsers, facilities and space management teams can enter data on usage codes and the responsible departments for their respective office, research and teaching facilities. The forms have several checks and balances to ensure accurate and complete information at each step of the process, including percentage usage by category for each room. Universities using FM Survey have found the effort of collecting information is dramatically reduced, the accuracy of the information is improved and the amount of data that they can collect is increased.

Real-world results: University of North Texas

As a public university, University of North Texas complies with rigorous reporting requirements to the state and federal government. The reports and the associated space data are used in the determination of Educational and General funding for the institution, and for negotiation of the Facilities & Administrative Rates (F&A) for federal grants.

One of the ongoing challenges for the university is keeping their space information updated. To ensure the accuracy of their space data the university issues a formal survey to all departments annually and on an ongoing basis throughout the year.

With the state of Texas having one of the most stringent reporting requirements in the country, FMS:Workplace has proven to be an indispensable tool for the university. UNT is now able to generate files instantly which are then transmitted to the state for required annual reporting. Prior to implementing FMS:Workplace, this process took months and consisted of long hours and numerous submissions.

As a Carnegie tier-one research university, UNT carefully tracks the utilization and productivity of research spaces, using the FMS:Workplace Higher Education Survey module. The space planning team tracks research activity, the principal investigators, and grants associated with each research space.

UNT continues to add items to their survey based on departmental or administrative requests and as the need to track these items grows, the Higher Education Survey module takes on an even greater significance by giving them ready access to accurate information.

Free Planning Resource: How to Optimize Space Surveys and Drive ICR ebook download.