Managing Montana University Success

Some measures of university success are clear: SAT scores of students enrolled, passing rates for professional certification, and the win-loss records of sports teams. Others are murky: morale of students and faculty, and ambition toward excellence.

One commonly misunderstood feature involves the overhead rate for sponsored research. Grant writers must incorporate indirect costs — IDCs — into their proposals to cover associated costs of their research to the university. What are the implications?

Overhead becomes increasingly important as state support declines nationwide. In Montana, the state contribution has been essentially flat for a decade. In some states it approaches zero. This means grants, with their associated IDC funds, are essential for quality operations.

Here is how IDCs work. Professors submit grant applications to governmental agencies, foundations, and corporations. The amount requested should cover the direct costs of salaries, benefits, and supplies plus the “indirect” charges for accounting, administration, labs, and other expenses required to keep the university running.

The indirect costs actually incurred vary dramatically by project. Research in vet science, with its elaborate labs and delicate, sophisticated instruments, is inherently more costly than equally demanding work in political science, history, and English.

Montana State University’s stated goal is that 43 percent of grant funds go toward general overhead. For example, a $100,000 grant would ideally yield $43,000 in IDC funds. Most grantors stipulate a much lower rate — often 10 percent or less. Average overhead collections hover around 17 percent.

by John A. Baden, Ph.D.

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