By Brent Gustafson, finance director
Many of the columns in this series to date have focused on the large and flexible sources of funding in the budget for the College of Liberal Arts, such as tuition and state appropriations. This column will examine some of the fiscal aspects of grant funding, a smaller but still important part of the CLA financial picture.
Sponsored vs. Non-Sponsored
An important distinction that's present throughout the University of Minnesota's financial structure is that of sponsored versus non-sponsored expenditures. Much of the focus of financial matters within CLA is on non-sponsored resources, because these comprise the lion's share of the CLA budget, and these are flexible funds that the college can allocate to meet its priorities. Tuition and state appropriations are non-sponsored funds.
Sponsored funds or sponsored expenditures refer to funds where an external funder has given money to the University to carry out a project or function, most typically a research project. Most sponsored projects are awarded through competitive processes, in which a University researcher makes an application for funding for a specific project. The terms "sponsored" and "grants" are often used interchangeably to describe this type of funding. When a sponsor awards a grant to a researcher, the sponsoring organization has specific criteria and interests for the money, and is therefore not discretionary the way non-sponsored funds would be.
Across the University, there is considerable variation among colleges in the portion of the budget that is composed of sponsored funding. For CLA, sponsored funding covered $14.9 million of expenditures in FY 2012, out of a total all funds budget of $249.5 million (6%). By comparison, the College of Science and Engineering had $124.3 million of sponsored activity in FY 2012 out of a total all funds budget of $346.7 million (36%).
Sources of CLA Grant Funding
The federal government plays a large role in funding projects at research universities, and that is the case both for the University as a whole and for CLA. Of the $14.9 million of sponsored expenditures in CLA in FY 2012, grants from federal agencies covered $12.2 million (82%).
Grant Activity Among CLA Departments
Across departments in CLA there is considerable variability in the opportunities available to pursue externally-sponsored research funding. Within CLA, the Department of Psychology has been the largest recipient of grant funding, regularly accounting for over half of the sponsored activity within CLA in any given year. The following table shows FY 2012 sponsored expenditures by department.
Indirect Cost Recovery
Many external funders recognize that the University must maintain infrastructure that is essential to carrying out its research mission, and as a result, grant funds allow the charging of various types of overhead expenses to the grant. This charging is often referred to as indirect cost recovery (ICR), which as its name implies, is a partial recovery for the costs that are not directly related to the sponsored project, but are indirectly associated with it. These types of costs are also commonly referred to as facilities and administration (F&A), which comprise the main types of expenditures that are offset by these charges. The allowable rate charged for ICR varies across types of funding, and this rate is often subject to University agreements with its many funders.
In FY 2012, the college brought in $3.7 million of ICR revenue on its $14.9 million of sponsored expenditures. A portion of these funds are utilized at the collegiate level to cover costs associated with maintaining necessary research infrastructure and a portion of these funds are directed toward the relevant academic units to support the infrastructure needed at the department level.