All research incurs indirect costs. The indirect costs of research are institutional costs that benefit and support research. These costs must be included in budget requests to external sponsors of research.
Indirect costs are difficult to attribute directly to a project, but they are nevertheless real and necessary for the conduct of research. They can include:
- Use, maintenance and upgrading of building space, utilities and libraries;
- central technical support of labs, offices, core and other facilities;
- management and administration of research, finances, regulatory requirements and research compliance (i.e. research ethics, biohazards certification, animal care etc.);
- hazardous waste disposal;
- radiation and occupational safety and security; and
- liability insurance.
This is how indirect costs (overhead) are handled at McGill University.
Quebec Government (Provincial)
In 2014/2015, the Quebec government implemented a reform on recovery of the full costs of research which is changing how institutions are compensated for indirect costs of research. The reform applies a simplified model where indirect costs now are allocated via two separate mechanisms: (i) Administration and other services: 27% on direct research support for eligible funding programs of FRQ (Fonds de recherche du Quebec - FRQ); and (ii) Research facilities: based on research space available for research. Indirect costs should not be included in budget requests to the FRQ (FRQNT, FRQSC, FRQS). The indirect costs for Administration and other services (27%) will be added to the grant in the notice of award by FRQ and paid to the University at the same time as the grant.
Canadian Government (Federal)
The Canadian Government also has an indirect costs (overhead) program based on research funded by NSERC, CIHR, SSHRC and Networks of Centres of Excellence (not all programs). Indirect costs should not be included in budget requests to these sponsors. For further information about the Canadian Government Indirect Costs program, consult the Research Support Fund Website.
The Research Support Fund (RSF) helps Canadian post-secondary institutions with the hidden costs of research. By alleviating the financial burden of expenses, such as lighting and heating, the program ultimately helps researchers concentrate on cutting-edge discoveries and scholarship excellence. The annual grant covers a portion of the total indirect cost across all McGill Faculties and affiliated hospitals. The University allocates the funds to crucial areas within the RSF’s five eligible categories of expenses: research facilities for operation and maintenance; research resources including library resources; research administration and management; regulatory requirements and accreditation; and intellectual property and knowledge mobilization.
The Incremental Project Grants (IPG), a stream of the RSF, provides further support to institutions for indirect costs of research, for specific projects in priority areas that cut across the RSF’s five existing categories of eligible expenses. The four IPG priority areas are: innovation and commercialization activities; facilities renewal, including deferred maintenance; information resources, including digital resources, open access and databases; and equity, diversity and faculty renewal (in the context of equity, diversity and inclusion). The IPG stream is aligned with the RSF’s objective to help Canadian postsecondary institutions ensure their federally funded research are conducted in world-class facilities with the best equipment and administrative support available.
A new and fifth priority area of the IPG was introduced in 2022 through new funding to the RSF to further support activities related to the indirect costs of research security and to support the National Security Guidelines for Research Partnerships. The funds with help institutions to invest in personnel resources, training, and tools that will enhance capacity to manage increasing risks to research security including research partnerships, cybersecurity, intellectual property, data privacy, and access to data and infrastructure.
For further information, please consult the following documents:
Research Support Fund + Incremental Project Grant - Statement of Account
Research Support Fund - Grant Applications
Research Support Fund - Institutional Performance Objectives and Outcomes
Incremental Project Grant - Allocation Amounts
Incremental Project Grant - Institutional Performance Objectives and Outcomes
Research Security priority area – Allocation amount and Institutional Performance Objectives and Outcomes
If your research is not funded by one of the Canadian Government agencies Tri-Agency (NSERC, CIHR, SSHRC), Fonds de recherche du Quebec (FRQ) or NCE, you must include the following rate in your budget:
Rates effective as of March 1, 2017:
Funding Category rate of indirect costs
Grants, contracts, and agreements from agencies, government and not-for-profit organizations (except Public Works and Government Services Canada (PWGSC))
27% on total direct costs or maximum rate allowed by sponsor as per written guidelines or as pre-negotiated by McGill University (please contact OSR for specific sponsor rates)
Grants, contracts, and agreements from industry and other for-profit organizations
40% on total direct costs (or 27% when matched by federal and provincial partnered programs - e.g. NSERC Alliance, MEI Programme Innovation, Quebec consortia, etc.)
Indirect costs on gifts in support of research are negotiated by University Advancement
EXAMPLES OF SPONSORS SPECIFIC RATES
Grants and contracts with U.S. Federal agencies (except NIH grants)
43.4% on direct salaries and wages, including fringe benefits (in accordance with McGill University’s DHHS Rate Agreement dated November 6, 2020).
National Institutes of Health (NIH)
8% on total direct costs except equipment (in accordance with NIH Grants Policy Statement).
Contracts through Public Works and Government Services Canada (PWGSC)
65% on direct salaries and benefits, including fringe benefits; 2% on travel.
Exceptions: For research grants totaling less than $100,000 per annum inclusive of indirect costs from the same not-for-profit sponsor, where the Principal Investigator (PI) is requesting a rate lower than McGill standard indirect costs rate, the PI submits a written justification to the Office of Sponsored Research (OSR) for approval.
All other requests for an exception to the indirect cost rates must be approved by the relevant Dean(s) and Vice-President (Research and Innovation). It is the responsibility of the Principal Investigator (PI) to obtain all appropriate approvals/signatures.