A Consumer's Guide to Indirect Costs at Temple "Do you get your money's worth?"

What are Indirect Costs? Scholarly activity incurs two types of costs. Direct costs can be unambiguously linked to a particular project: the costs of hiring a technician, purchasing supplies, traveling to field sites, and so on. Scholars also make use of the libraries, their labs are heated, facilities are depreciated, secretarial assistance may be available in the departmental office, paychecks are issued and accounting reports are filed. The costs of such services are not easy to assign to particular projects, and come under the category of Indirect Costs.

Indirect costs are typically calculated as a fraction of Modified Total Direct Costs. MTDC includes nearly all research expenditures except equipment over $5,000 and large subcontracts over $25,000. That is, suppose your research grant has a budget of $150,000 of which $50,000 was for equipment. Your MTDC would be $100,000 ($150,000 - $50,000) and your indirect cost would be $55,000 ($100,000 x 55%).

Temple's current rate for externally-funded, organized research, on campus is 55% for FY 13 and FY14. Where does this number come from? Temple negotiates all its indirect cost rates with the federal Department of Health and Human Services, the agency designated to negotiate indirect cost recovery rates for most federal grants and contracts. In 2011, Temple supplied federal auditors with information on its actual expenditures for research, instruction, and public service. After an intricate negotiation process, for FY 2013 and 2014. Temple and the feds agreed on the 55% figure for on-campus organized research grants and 26% for off-campus organized research grants. In FY 2015 and 2016, the rate will increase to 56% for on-campus organizaed research and remain at 26% for off-campus organized research grants.

There are several other negotiated indirect rates, depending on the type of project. They are: instruction (58% on-campus, 26% off-campus) and other sponsored research (public service and other) (41% on-campus, 26% off-campus). These rates are in effect for fiscal years 2014 through 2016.

Off-campus rates cover projects located in facilities not owned by the University. These rates are lower than on-campus rates because the average off-campus investigator will not use campus lab space, heat, lights, and so on. Off-campus rates also cover those awards where more than 50% of the research is being completed off-campus.

What kinds of expenditures are included in the computations? There are six classes of expenditures that go into the computation of an indirect cost rate. They are:

  • General administrative costs (Provost's Office, Personnel, Payroll, Accounting; etc.)
  • Departmental administrative costs (staff time, Dean's office, faculty time in administration, and fringe benefits on those personnel costs)
  • Sponsored programs administration
  • Operation and maintenance of physical plant (security, custodial care, heat, building depreciation, et al)
  • Library services
  • Student services

The first three comprise the category of "administration." Temple's actual administrative rate has been arbitrarily capped by the government at 26%.

Instruction Research Other Sponsored Activities
Administration 26.0% 26.0% 26.0%
Libraries 9.3% 2.2% 7.4%
Operation & Maintenance of Plant 22.7% 26.8% 7.6%
TOTAL RATE 58.0% 55.0% 41.0%


Research Accounting Services
Temple Administrative Services Building
1852 N. 10th Street (083-11)
Philadelphia, PA 19122


Research Accounting Services
Temple Administrative Services Building
2450 West Hunting Park Avenue
Philadelphia, PA 19129


Phone: (215) 926-2048
Fax: (215) 926-2046
Email: ras@temple.edu


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