New indirect costs rates

To: Principal investigators; Lead administrators in FAS, SEAS, YSE, YSN, YSPH, and YSM departments

[Summary: New F&A rates, negotiated by the university and the Department of Health and Human Services, will be charged on most new federal awards over the next four years. Faculty who have questions or need assistance incorporating these F&A rates into proposals can contact the Office of Sponsored Projects or YSM Research Administration.]

Dear Colleagues,

As you know, Yale University receives substantial federal funding for the conduct of research. In 2023-2024 the university was awarded $1.2 billion to support the direct and indirect costs of research and other scholarly projects across the campus. To remain eligible for federal research funding, the university is required periodically to enter into negotiations with a designated federal agency (in Yale’s case the Department of Health and Human Services, DHHS) to review the indirect costs associated with sponsored projects and determine the appropriate level of contribution by the federal funding agencies to those indirect costs. The last indirect cost negotiations conducted by Yale with the federal government took place in 2017.

We write to share the results of the most recent round of these negotiations and to thank the research community for its assistance. Many of you provided data on the use of space, location of equipment, and other details necessary for preparing the cost study that supports the negotiations. A collaborative team involving central offices and schools developed and negotiated rates based on this study.

Indirect costs (also called “facility and administrative” or “F&A” costs) include the expenses of building and operating facilities to support research, administering federally-mandated compliance programs, and providing administrative support to investigators. The federal F&A recovery rate is calculated by comparing the university’s F&A costs to the total funds it receives in direct support of research.

As you know, the university has invested substantially in research infrastructure over recent years through the extensive renovation of existing laboratory space and the addition of new research buildings such as the Yale Science Building and 100 College Street. The new F&A rates negotiated by the university and DHHS reflect the costs of these and other investments. The rates also incorporate a projection for the growth of direct research funding that is aligned with federal agency forecasts and Yale’s planned investment in new research facilities for the School of Medicine and Central Campus.

Yale’s F&A rate has been 67.5% since 2016-2017 (FY17). It will remain at that level for two years, and then increase by 0.5% in FY27 and in FY28. The current F&A rate and the rates that will be used on most new federal awards over the next four years are below:
 

Federal policy requires that existing awards continue to charge the rate in effect at the beginning of the award, so many grants will continue at the current 67.5% rate until the next competitive review.

The university also negotiated an uncapped research rate that remains at the current rate of 69.9% and then increases in FY27 and in FY28. This rate more closely approximates the true indirect costs of carrying out research and should be used whenever possible for non-federally sponsored projects.
 

An upcoming “Research Administrators News and Updates” email will provide further guidance and details, and the School of Medicine will issue specific guidance on their internal processes for applying these new F&A rates. In the meantime, if you need assistance incorporating these rates into your proposals or if you have other questions about current and pending awards or proposals, please contact Amy Ellis in the Office of Sponsored Projects or Jill Ely in YSM Research Administration.

Sincerely,

Michael Crair
Vice Provost for Research
William Ziegler III Professor of Neuroscience and Professor of Ophthalmology and Visual Science

Cc:    
Scott Strobel, Provost
Stephen C. Murphy, Vice President for Finance and Chief Financial Officer
Pamela Caudill, Senior Associate Provost, Research Administration
James Luther, Research Compliance Officer
Arnim Dontes, Deputy Dean, YSM Finance & Administration
Shannon N. Smith, Assistant Vice President and University Controller