Recovery and Distribution of Indirect Costs

Responsible Service: Research Management Services

Date: February 14, 2024
Instance of Approval: Office of the Vice-President, Research and Innovation

1.           PURPOSE

1.1This Procedure is established pursuant to Policy 48 – Administration of Research (“Policy 48”) and provides for the determination of the recovery and distribution of Indirect Costs.

2.            DEFINITIONS

2.1         Capitalized words or expressions used in this Procedure are defined in Policy 48. The following words and expressions have the corresponding meaning for the purpose of interpreting this Procedure:

“Indirect Cost Rate” means the rate the University applies to Research Contracts and Research Grants to cover the Indirect Costs of the project, and which will be reimbursed by the Research Sponsor. This is sometimes referred to as the overhead rate/charge or administrative costs/fees.


3.1 The Indirect Cost Rate will be determined from time to time by the OVPRI based on national and provincial standards and, where possible, will reflect the University’s total Indirect Costs. These rates are published on the OVPRI website. For certain Research Grants and Research Contracts, Indirect Cost Rates shall be in accordance with the Research Sponsor’s Policies and/or Requirements, which are consistently applied by the Research Sponsor to all universities in Canada. Some sponsors permit indirect costs as a percentage of all direct costs, whereas some will permit indirect costs only on certain direct costs (e.g. salary).

3.2 Indirect Cost Rates are estimates and do not reflect the actual Indirect Costs incurred by the University for a Research project.

4. Distribution of Indirect Cost Recoveries

4.1 Indirect Costs must be recovered from Research Grants and Contracts, whenever possible, and included as a budget line item.  

4.2 Funds received by the University from Indirect Cost recoveries from Research Contracts will be allocated by the relevant OVPRI unit as follows:

i. 60% to the University’s central administration

ii. 40% to the Principal Investigator’s faculty:

a. If more than one faculty is involved in a Research project, the faculties shall determine the sharing between them based on where the Direct Costs and Indirect Costs were incurred.

b. If the Research project is administered within a University research centre or institute, the Principal Investigator’s Faculty and the institute shall determine the sharing between them based on where the Direct Costs and Indirect Costs were incurred.

These funds will be transferred to faculties by Financial Resources. In situations where additional sharing is agreed to beyond the faculty level, the faculty is responsible for transferring these funds.                                                                                       

4.3It is the Principal Investigator’s responsibility to include Indirect Costs in the budgets of Research Grant applications and Research Contracts, whenever eligible. If Indirect Costs are omitted in an application, the responsible office of the OVPRI has the authority to add Indirect Costs to the final budget of the Research Agreement before its approval. Further, the Vice-President, Research and Innovation is free to not approve a proposal, or to not accept Research funding, if Indirect Costs cannot be sufficiently funded through the Research project budget.

4.4         Requests for exceptions to Indirect Cost Rates may only be made with regards to the faculty portion of the Indirect Costs. The applicant must make such requests to the Dean of the faculty in which they hold a primary appointment. The request must be made sufficiently before the proposal or application submission deadline to allow for adequate assessment.  The Dean will advise the applicant and the relevant OVPRI unit of the outcome.

4.5           Indirect Cost recoveries from granting programs such as from the Tri-Agency are retained centrally and not distributed. Indirect costs from many Tri-Agency Programs are channelled separately through the Federal Research Support Fund.

4.6         Indirect Cost recoveries shall normally be distributed once they have been earned and received by the University.

4.7         Faculties shall be responsible for administering Indirect Cost recoveries allocated to them.