F&A Frequently Asked Questions

The document provides an in-depth explanation of Facilities and Administrative (F&A) costs—also known as indirect costs—associated with federally sponsored research at U.S. universities. F&A costs are essential for maintaining the infrastructure and administrative support required to conduct high-quality research, including laboratory facilities, data management, compliance with health and safety regulations, and administrative personnel. Typically, 67-75% of federal research grants are allocated to direct costs such as salaries and equipment, with the remaining 25-33% covering these vital F&A expenses. The federal government, recognizing the national benefits of academic research since World War II, reimburses universities for a portion of these costs, but universities still contribute significantly from their own funds, covering approximately 24% of total academic R&D funding and substantial unreimbursed F&A expenses. Despite misconceptions, universities do not profit from F&A cost recoveries; in fact, federal reimbursements do not fully cover actual infrastructure and compliance costs, and F&A cost rates have remained stable for over 15 years. Compared to other research performers like national laboratories and industry, universities are generally more efficient, with lower F&A cost percentages and no profit margin. Factors such as regional costs, facility type, and compliance requirements lead to variations in F&A rates among institutions, which are determined by negotiated audits with federal agencies. Should federal support for F&A costs decrease, universities may face restrictions in accepting research grants, deteriorating facilities, inability to meet regulatory requirements, and potential tuition increases, all of which could undermine the national research capacity and workforce development. Overall, F&A costs are fundamental to sustaining the university research enterprise, and reductions in federal support would directly limit the nation’s scientific and technological advancement.