Indirect Cost Recovery Funds - Financial Policy - 31110

1.1 The purpose of this policy is to establish guidelines for the appropriate use of indirect cost recovery funds derived from grant funding. Indirect costs are necessary expenses that support the overall infrastructure of the organization and ensure the effective management and administration of grant‑funded projects.

2.1 The Director of Finance is responsible for submitting an indirect cost rate proposal to the Department of Health and Human Services as required. Refer to the most recent Colleges and Universities Rate Agreement for the current rates for on‑campus and off‑campus projects. The Colleges and Universities Rate Agreement also contains current definitions for on‑ and off‑campus activity.

2.2 Whenever allowable by a granting agency, Germanna Community College grant proposals should include the full federally negotiated indirect cost rate. Project leads interested in requesting less than the full allowable indirect cost rate in a grant proposal or omitting indirect costs from a proposal must submit a request for approval to Cabinet.

3.1 This policy applies to all grants administered by Germanna Community College or in which Germanna Community College is a subrecipient. It is intended to ensure that indirect cost recovery funds are utilized in a manner that aligns with the institution’s strategic goals and priorities.

3.2 Allocation of Indirect Cost Recovery Funds

Indirect cost recovery obtained through grant funding shall be allocated primarily to support equipment, services, and key staff involved in grant management, administration, and strategic oversight who are not compensated directly by the grant.

These funds may cover:

1. Materials, equipment and software for grant activity: Items and services that support grant activity may be funded through indirect cost recovery.
2. Principal Investigator (PI) compensation: PIs are eligible for a stipend in accordance with PI compensation guidance. In cases where PIs are ineligible for compensation via direct grant funds, indirect cost recovery funds may fulfill part or all of those stipends. PI compensation will be reviewed annually, and funds distributed equally to all eligible PIs at the time of review. Indirect cost recovery shall not be used for PI stipends if PI compensation is allowable through direct grant funds.
3. Salary and fringe for the Coordinator of Grants and External Funding: This role is responsible for overseeing the grant application process, managing compliance and reporting, supporting PIs throughout the grant lifecycle, and liaising with funding agencies.
4. Salary and fringe for the Strategic Initiatives Accountant: This role handles financial management of grant funds, budgeting, reporting, and ensuring compliance with financial regulations.
5. Supplemental support: Any remaining indirect cost recovery funds beyond the amounts needed for the roles above, PI stipends, and supporting materials, may be used to support administrative services and activities tied to grant administration, as deemed necessary by leadership.

If indirect cost recovery funds do not meet or exceed the combined salary and benefits of the two designated roles (Coordinator and Accountant), the funds will be divided evenly between those roles and related fringe.

3.3 The use of indirect cost recovery must comply with all applicable federal, state, and local regulations, as well as the specific terms and conditions specified in each grant agreement.

3.4 The Director of Finance will provide an analysis and reporting to Cabinet to approve the allocation of indirect cost recovery funds in May each year.

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Indirect Costs: Costs that are not directly attributable to a specific project but are necessary for general operation, such as utilities, administrative support, and facility upkeep.

Indirect Cost Recovery (ICR): Reimbursement or recovery of institutional overhead costs from externally funded grants or contracts.

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Vice President of Administrative Services

Approved / Revised: January 30, 2025, February 26, 2026