New ASU-ASUF Charitable Grants Fee Memo, Updates to Guidelines

Update, 4/26/2022 – Additional FAQs have been added below to address questions that were asked during and after the RA Seminar on April 21st. The seminar recording and slides have been posted in Research Academy.

4/11/2022 – A new ASU-ASUF Fee Memo has been finalized and posted to the ASUF Corporate and Foundation Relations (OCFR) website and the F&A Documents page of the ASU Research Administration website.

All charitable grant proposals submitted on or after May 9, 2022 will include: 1) a research administration direct cost line item where possible and appropriate; 2) applicable project cost line items, normally funded as F&A, added as direct costs whenever possible and appropriate; 3) an indirect cost or fee calculated at the maximum rate permitted by the granting organization, per the donor’s *published policy.

  • *Letters signed by donor organizations will no longer be accepted in lieu of a published indirect rate limitation. See INDIRECT COST RATE & DOCUMENTATION section below for details.

Details related to these requirements are outlined in the sections below. The ASU-ASUF Charitable Grant Guidelines have also been updated in accordance with the new ASU-ASUF Fee Memo.

An RA Seminar to discuss these updates has been scheduled for April 21, 2022. Please register in Research Academy. The video recording and presentation slides to be posted in Research Academy after the event.

New Charitable Grant Guidelines

As has long been our practice, charitable grant proposal budgets must include indirect costs calculated at the maximum rate permitted by the sponsor’s published policy.
      • A limited indirect cost rate should be applied to the total direct costs (TDC) of such a project, rather than the modified total direct costs (MTDC) basis used in federal awards, unless prohibited by the sponsor.
  In cases where the charitable organization has no rate specifically stated in a published policy, the rate continues to be 11% Total Direct Costs (TDC).

Letters signed by charitable funders will no longer be accepted as documentation of a lower indirect rate. For assistance with requesting that a sponsor publish their rate policy, please contact the ASUF OCFR Team well in advance of the proposal deadline (~2 weeks notice preferred).
Direct charging of administrative or clerical salaries to a charitable grant is appropriate if the services benefit the sponsored project. Administrative expenses that benefit such awards can and should be charged directly to those awards.

Some charitable sponsors may have specific requirements for direct charging of administrative costs. Such requirements should be complied with and addressed in proposals.

When a charitable sponsor's maximum indirect cost rate as published or allowed by the sponsor’s policy is lower than ASU’s Federal Rate, funds should be budgeted for expenses normally funded as indirect costs (e.g., project-related administrative support, office supplies, etc.). Below are the parameters when these types of costs should be included, if possible:

- For proposal budgets under $1M

        1. No Standard Direct Charge for Central Administrative Costs. Proposals at this tier will typically not require inclusion of central administrative costs as direct costs.
        2. Direct Charge for Unit Administrative Costs, If Possible. Include direct costs for applicable administrative and project costs that would normally be funded by indirect cost recovery. Review Administrative Costs to Consider on Non-federal Awards for examples and guidance.

- For proposal budgets that total $1M or more

        1. Direct Charge for Central Administrative Costs. Unless expressly prohibited by sponsor’s published policies, include a line for “Sponsored Management Solutions and Support” under Other Direct Costs > Other Services (not in Personnel), in accordance with the Tiered Costs Table below. The dollar amounts listed at each tier are the amounts that should be budgeted in each year of the project (use the same FY column that is applicable to your project year in ERA).
            • Click on the table above to enlarge
        2. Direct Charge for Unit Administrative Costs: Include applicable administrative and project costs that would normally be funded by indirect cost recovery. Review Administrative Costs to Consider on Non-federal Awards for examples and guidance.
1. How should I refer to central administrative costs in the budget and budget justification?

When possible, include an Other Direct Cost vendor/services line for “Sponsored Management Solutions & Support” in the budget. The following language has been added to the Budget Justification Best Practices job aid for use when justifying this direct cost:

        • “Sponsored Management Solutions & Support - Funds have been budgeted for Sponsored Management Solutions & Support, to manage legal, financial, administrative, and compliance activities under this award. Sponsored Management Solutions & Support will also provide essential resources to facilitate project success and fulfill sponsor requirements.”

If it is necessary to budget a “TBD Grant + Contract Officer” line in the personnel budget (because the sponsor’s policy prohibits vendor/service costs), use the same language but replace “Sponsored Management Solutions & Support” with “TBD Grant + Contract Officer”:

        • “TBD Grant + Contract Officer - Funds have been budgeted for a Grant + Contract Officer to manage legal, financial, administrative, and compliance activities under this award. The Grant + Contract Officer will provide essential resources to facilitate project success and fulfill sponsor requirements.”
2. The sponsor has indicated that they will only pay a certain percent for indirect costs, but they don’t have the limitation published anywhere. If we cannot use their email as documentation, what should we do?

Immediately reach out to ASUF Corporate and Foundation Relations ([email protected]) to request assistance. OCFR will work with the donor organization to have their indirect cost policy published.

3. Has the sponsored research office been approved as a service center?

Yes, Sponsored Management Solutions and Support (SMSS) has been approved by Financial Services as an external sales unit. Fiscal Oversight has approved rates to be charged to charitable/industry sponsors. SMSS has been added to the Recharge Center list:

4. How will Knowledge Enterprise (KE) charge SMSS costs to the grant?

KE will charge the Grant directly via the Internal Service Delivery (ISD) functionality in Workday. Rates will be coded to Services.

5. What should I do if the SMSS cost is unallowable under the sponsor's policies?

If/when Sponsored Management Solutions and Support (SMSS) costs are expressly prohibited as an Other Direct Cost services/vendor line by the sponsor’s published policies, instead include a “TBD Grant + Contract Officer” line in the Personnel section of the budget (if allowable), with effort budgeted in accordance with the TBD GCO Tiered Costs Table below.

  • Click on the table above to enlarge
  • 6. What level of oversight is needed for unit-level administrative expenses on a charitable grant?

    ASU treats charitable grants as “different purpose and circumstance”; therefore, barring any sponsor or grant restrictions, the grant expenditures fall under general University policies. Therefore, proper stewardship of charitable grants requires adherence to these three key principles:

    A benefit exists to the sponsored project

          • Administrative expenses that benefit charitable grant projects should be charged directly to those awards, if allowable.

    Allowable under ASU policies

          • Any potentially problematic expenses should be reviewed by the Lead Financial Unit prior to expending funds.
          • Unit guidance and policies may be more restrictive on specific expenses than those of the University, and it is important that investigators and ASUF Development Officers (DODs) involve their unit research advancement (RA) contact when determining the allowability of an expense.

    Compliant with the terms and conditions of the award

          • Charges on charitable grants require the careful review of terms and conditions and any other supporting documentation (e.g., approved budget, sponsor guidance) in order to determine appropriateness of charges.
          • Specific sponsor approval may also be required in some cases.

    General Questions

    7. Are all grants that go through ASUF considered "charitable"? Is there any case where ASUF would receive funds and distribute to ASU that aren't "charitable"?

    As a 501c3, ASUF can only accept funds that meet the IRS definition of charitable.

    8. Do these changes impact current grants or only new grants as of May 9th?

    All new charitable grant proposals submitted on or after May 9, 2022 will be subject to the updated Charitable Grant Guidelines.
    • Previously submitted charitable grant proposals that already underwent PNT Review are not impacted.
    • Similarly, pre-existing awards are not impacted (although, some had already included administrative costs, and those will continue to be expensed as budgeted).
    • Renewals and additional funding on sponsored projects will be subject to the Charitable Grant Guidelines in effect at the time that the Funding Proposal (FP) is processed in ERA.
    • Similarly, any After-the-Fact (ATF) proposals processed in ERA after May 9th will also be subject to current guidelines in place at the time of processing.

    9. Do charitable ASUF sponsored grants still receive the 5% ASUF Overhead Cost in addition to this new IDC line that will be required to be included?

    Yes. Charitable grant proposals should continue to include the maximum allowable indirect cost rate, AND should also (separately) include administrative costs as direct costs. When indirect costs are recovered on a charitable grant, the 5% ASUF fee will continue to be distributed to ASUF.

    10. Who do I contact if I need support with challenging conversations?

    The first step in managing challenging conversations is preparation. Resources available include this news post and FAQs as well as the video recording of an RA Seminar presented on April 21st. If additional questions arise, please reach out to [email protected] or the assigned Proposal GCO at proposal time. Thorough understanding of the guidelines and practices will allow unit staff to navigate the process and educate PIs and stakeholders. ADRs (Associate Directors for Research)  have been supportive of updates to processes and should also be leveraged as an ally in implementing change management strategies at the unit level.

      Documentation of Sponsor IDC Limits

    11. Would acceptable documentation include a funding announcement for a charitable grant?

    Yes. While letters and emails from sponsors will no longer be accepted as documentation of a sponsor-limited indirect cost rate on charitable grant proposals, the funding announcement (and any other document that is widely available to all prospective applicants) will continue to be accepted as documentation for the sponsor’s IDC rate limitation.

    12. Are all charitable sponsors required to publish an indirect cost policy?

    No. If a sponsor does not have a published policy, the default rate for charitable grants can be used. There is no need to request that the sponsor publish an indirect cost policy unless they have communicated a limitation verbally or by email/letter (in which case, presumably we will already be engaged in communication outside of the application).

    Central Administrative Costs (SMSS, GCO)

    13. Is it accurate to refer to SMSS as an “administrative fee”?

    No. SMSS is a professional service that is integral to implementing charitably funded projects. The costs should be discussed in the same terms that any other vendor or service would be referred to. Budget justification language has been provided, and when discussing with PIs, project teams, and donors, it is important to note that this service line will cover a portion of costs for services to be provided in direct support of the proposed project.

    14. What if there is a large charitable grant ($1M+) that does not have many needs from ORSPA, for example the agreement has no reporting requirements, will the SMSS cost still apply?

    Yes. The SMSS charge covers a portion of the costs that Research Operations incurs in standard professional support of sponsored projects.

    15. For the SMSS services is there a description of what services are provided to the faculty?

    Yes. The Pre-Award tab of the Working with ASUF sitelet and the Budget Justification Best Practices job aid have been updated to include boilerplate language to justify the SMSS cost in proposal budgets. For additional information about Research Operations’ services, please visit the About Us page on the researchadmin website.

    16. Is there standard ASU language for the SMSS recharge for RAs to include in BUJs?

    Yes. See questions #1 and #15.

    17. Will I be asked to budget both SMSS and a personnel line for dedicated GCO effort?

    Typically, No. This solution may be needed in unique circumstances where significant extra services are required from Research Operations. Standard charitable grant proposals need not include both, only one or the other – preferably SMSS as the default, when allowable.

    18. If a sponsor won't allow the SMSS charge, does the unit have to pay it?

    No. ASU will comply with the terms and conditions of the award. If SMSS charges are unallowable, then KE will not charge the Grant (nor the unit) for SMSS.

    19. Are there are now 2 types of expenses, this direct cost and the 11%?

    Yes. Please see question #9.

    20. Are SMSS costs applied to all ASUF grants from charitable corporate sponsors AND individual sponsors as well?

    The ASU-ASUF Fee Memo applies to any funding that is managed through the charitable grants process, with ASUF serving as the grantee institution, and ASU-ORSPA to administer on the back end. Currently, SMSS costs need only be included (when allowable) on charitable grant proposals for $1 million or more.

    21. What would a GCO salary be if we include it as a direct charge?

    Please see question #5.

    22. Why are SMSS costs escalated in out years?

    Approved SMSS rates have been calculated based on current salaries for Grant + Contract professionals in Research Operations. As with most direct costs, it is anticipated that salaries will increase over time as cost of living increases, market adjustments, and equity corrections take place. It is anticipated that SMSS rates will be renewed on an annual basis and charges to Grants will be congruent with approved rates for the fiscal year in which the expense is posted.

      Unit Administrative Costs

    23. Please give specific examples of what should now be included as direct costs.

    An Administrative Costs to Consider on Non-federal Awards job aid has been posted with a list of examples.

    24. Our unit includes RA time for post-award grant management when allowable. Does ASU/F have a standard amount of effort that should be included for this type of line item?

    No. For unit and project administrative costs, three key principles apply when determining allowability  - 1) a benefit exists to the project, 2) allowable under ASU policies, and 3) compliant with sponsor policies. With these principles in mind, and looking at the list of examples, pre- and post-award staff in each unit are encouraged to discuss the types of admin costs that your unit encounters. Costs that units encounter when supporting charitable grants, especially ones that are challenging to cover with low RID return, should be considered. Unit staff are also encouraged to have conversations with unit leadership to identify a unit-specific approach to including administrative costs, and to see which types the unit will prioritize (when appropriate and allowable).