Overhead Charging Policy


Application


All staff members and researchers at the University dealing with the financial management of research projects

Purpose


To provide direction to the University’s research community regarding the expectation of the overheads which will be charged to research projects. Further guidance and support for implementing this policy is available in the Overhead Charging Guidelines 

Background


Overheads, or indirect costs, include the costs associated with providing central services that cannot be assigned to any one particular project. These include services such as UniServices Business Development, Contract Negotiation and Commercialisation, University Finance, Research Operations Centre, Human Resources, Information Technology, Property Services, Scholarships Office, Library, Offices of the VC and DVC(R), faculty and department research support services, including the Dean’s office, and some specific research-related charges such as depreciation costs of buildings and utilities charges (but not user charges that are directly attributable to a research project).

Through provision of these services, researchers at the University benefit from receiving access to world-class services, facilities and equipment.

If the University did not recover the indirect costs or “overheads” there would be a growing gap each year in funding for support services.  As research is now generating an increasing proportion of the University’s revenue, this gap would dramatically impact the ability of the University to provide researchers with the support services and facilities needed to perform at the highest level.

In the context of research budgets overheads are commonly expressed as a % of academic salaries.

Policy


1.    The overhead recovery rate charged to research and consulting projects are to adhere to the parameters in Table 1:

 

Table 1: Overhead rate recovery

CATEGORY SUB CATEGORY OVERHEAD RATE*1
Non-PBRF eligible Internal income*2 0%
Consulting and service private sector (NZ) 115% on UoA staff time3 component (C1, C2), 30%4 on charge out rate (C3), 40%4 on charge out rate (C4), 30% on direct costs and consumables (C3,C4)
Consulting and service private sector (International) 115% on UoA staff time3 component (C1, C2), 30%4 on charge out rate (C3), 40%4 on charge out rate (C4), 30% on direct costs and consumables (C3,C4)
NZ government contestable funds NZ government research purchase agencies 115% on UoA staff time
NZ non-government income NZ non-government – charities and foundations Usually at the upper cap of the funder guidelines
NZ non-government - endowments, gifts to support research (by corporate donors and individuals) Usually at the upper cap of the funder guidelines
NZ non-government - private sector and industry 115% on UoA staff time
NZ non-government – iwi authorities and related organisations Usually at the upper cap of the funder guidelines
NZ non-government – professional societies/networks Usually at the upper cap of the funder guidelines
NZ public sector contract research NZ public sector contract research - CRIs 115% on UoA staff time
NZ public sector contract research - TEC or Min Edu (CoRE) research funding 115% on UoA staff time
NZ public sector contract research - other central government 115% on UoA staff time
NZ public sector contract research - local government 115% on UoA staff time
NZ public sector contract research - other NZ TEOs 115% on UoA staff time
Overseas research income Overseas Research Income - charities Usually at the upper cap of the funder guidelines
Overseas Research Income - government sources Usually at the upper cap of the funder guidelines
Overseas Research Income - private sector and industry 115% on UoA staff time 
Overseas Research Income - endowments, gifts to support research (by corporate donors and individuals) Usually at the upper cap of the funder guidelines
Overseas Research Income – professional societies/networks Usually at the upper cap of the funder guidelines

 

*1  New Zealand is alone in operating in a fully costed, fully funded research funding environment for publically funded research. This means our overhead structure is significantly higher than in other funding jurisdictions 

*2  Internal funding generally does not have any overheads attached, e.g. FRDF.  Please note though that Foundation funding is treated as external for PBRF purposes 

*3 UoA staff includes permanent and fixed term academic staff, permanent and fixed term professional staff but excludes casual staff  

*4  Overhead recovery is 30% or 40%, equal to the distribution to the University under the Research and Consulting Incentives Policy 

 

 

Full recovery of overheads – 115%             

Note - All New Zealand Universities recover overheads from externally funded research. 

2.    This is to be included in the research contract budget at a rate expressed as a % of UoA staff (excluding casual staff) salary costs 

3.    The current overhead rate for the University is 115% of salaries and is supported by an independent audit 

4.    Where there are no funder guidelines prescribing an overhead rate, the rate is presumed to be 115% on UoA staff (excluding casual staff) time and any deviation from this is subject to the notification requirements discussed in this document 

Circumstances where overheads may not be recovered in full

Note - In some cases funders do not offer to pay the full project costs.  This is particularly common where research funding is donated or provided by a charitable organisation, and for some overseas funding agencies. Often it is the payment for overheads that is restricted, but other types of costs could also be excluded or limited 

Although some overseas funding agencies and other funders will not pay an overhead recovery rate they are often willing to pay for identifiable indirect costs such as project management and coordination, a share of technical time, laboratory operational expenses and other costs that might not be project specific but can be justified on the basis that the project is making use of these University facilities and resources

5.    Cost recoveries for identifiable indirect costs should be sought wherever an overhead rate is not chargeable to the funder

Notification of exceptions to the recovery of overheads 

6.    Where the budgeted overhead rate for a research or consultancy project is less than the 115% overhead rate specified in Table 1, or the upper cap specified in funder guidelines local research support must follow the notification process in Table 2: Notification of Exceptions to Recovery of Overheads 

7.    The notification process must also be followed where the budget includes academic ‘time-only’ contributions as these contributions do not generate any overheads for the University. The overheads foregone in this situation are the overheads that would have been generated if the academic time commitment was fully funded   

8.    The budget template will calculate the overheads foregone, determined by calculating the total overheads to be recovered based on the rates as expressed in Table 1 less the amount proposed to be recovered 

 

Table 2: Notification of exceptions to recovery of overheads

UNIVERSITY OF AUCKLAND MANAGER

AMOUNT FOREGONE DUE TO NON-RECOVERY OF OVERHEADS

Director of Faculty Finance <$10,000
Dean >=$10,000 - $25,000
DVC(R) >=$25,000 - $50,000
VC >= $50,000

9.    Local research support are to notify the relevant University of Auckland manager in Table 2  

10.    The notification is to include the considerations taken to produce your final numbers 

11.    The notification will form part of your supporting documentation to UniServices when submitting a research or consultancy proposal 

12.    Escalation is not required where the overhead is less than 115% due to funder overhead caps or where it is a known exception, as detailed in Exceptions to the Recovery of Overheads below

Note - However in these instances the budget should include an appropriate share of Research Programme Manager / Research Programme Coordinator time, and where relevant, other identifiable indirect support costs 

Exceptions to the recovery of overheads

Below is further guidance on exceptions to the recovery of overheads: 

Overheads - No contribution

13.    There are a limited number of exceptions where overheads are not paid, therefore no recovery of overheads, or notification of exceptions of recovery to overheads, will be required on:

  • donations
  • internally funded grants ( i.e. VCSDF, SRIF and FDRF applications )
  • UoA Foundation and School of Medicine Foundation funded grants
  • University of Auckland Inventors Fund (UoAIF) and Pre Seed Accelerator Fund (PSAF)
  • any grant scheme that specifies (in the funding rules, guidelines or funding agreement) that no indirect costs or overheads may be charged. However, in these circumstances guidance should be sought from the UniServices Funds & Submissions Team to ensure that all allowable costs are recovered as some funders will fund certain categories of costs that we traditionally recover via overheads
  • travel grants (grants awarded solely to cover travel), because these represent little or no overhead cost to the University
  • grants for a specific and competitively awarded Fellowship or University Scholarship 4
  • public good studentships and fellowships (e.g. HRC Career Development Awards)
  • Joint Graduate School studentships and fellowships (e.g. Joint Graduate School in Plant and Food Science)

US Federal Funding Agency rates

Note - US Federal Overheads (Indirect Costs) are charged as a % of ‘total modified direct costs’ or TMDC. TMDC = total direct costs less equipment, fees, buildings rental and any sub-award costs above USD25,000.  The University does not currently have an agreed US federal overhead rate, but an application for an agreed rate is being prepared

14.    Until an agreed rate has been finalised, the following are to be charged:

  • NIH awards: non-US institutions should charge a fixed rate overhead cost of 8% of TMDC
  • Department of Defense: charge 30% TMDC (this is based on advice received from DoD Sub-agencies).
  • Other Federal agencies: Assume 30% but check with the program manager and RfP documentation

Note - Refer to the UniServices Funds & Submissions Team for further guidance 

Overheads – discounted rates

Note - There will be instances where the price negotiated with a client includes a discounted overhead rate.  These contracts may be acceptable where the University is contracted to deliver Government-funded service contracts, industry-sponsored clinical trials, industry-sponsored student research projects or other projects where non-monetary or deferred benefits accrue to the University. However, as a guide if the proposed overhead cost to be recovered is less than 33.33% of the total project cost (i.e. 25% of the price) then the notification process detailed in Table 2 of this document should be followed.

15.    Projects with non-monetary or deferred benefits must have any one or more of the following characteristics:

  • allow for the University to capture a significant share in the IP ownership or benefits arising from the contract
  • provide for the University to derive benefits from the Intellectual Property developed in the research including no restrictions on publishing of the outcomes of the research
  • provide royalties or licensing fees derived from the commercialisation of the Intellectual Property
  • where the pricing is a strategy to establish or strengthen a long-term relationship with the companies involved
  • add directly to the reputation of the University (e.g. related to charitable, public good purposes)
  • have clear, direct and stated educational benefits to students 

16.   No notification is required for Callaghan Innovation R&D Fellowships which include a fixed Host Fee and no additional overheads

 

Definitions


The following definitions apply to this document:

Overheads, or indirect costs, include the costs associated with providing central services that cannot be assigned to any one particular project. These include services such as UniServices Business Development, Contract Negotiation and Commercialisation,  and University Finance, Research Operations Centre, Human Resources, Information Technology, Property Services, Library, Offices of the VC and DVC(R), Faculty and Department research support services, including the Dean’s office, and some specific research-related charges such as depreciation costs of buildings and utilities charges (but not user charges that are directly attributable to a research project)

Staff member refers to an individual employed by the University on a full or part time basis

University means the University of Auckland and includes all subsidiaries

Key relevant documents


Include the following:

Research and Consulting Incentives Policy

Overhead Charging Guidelines 

Templates to assist with budget development – see Research section of University Forms Library

Document management and control


Owner:   Chief Financial Officer

Content manager:   Office of Research Strategy and Integrity

Approved by:   Vice-Chancellor

Date approved:   25 May 2018

Review date:       25 May 2021