Page 1 CRAD F&A Waiver Process Change November 15, 2007

Page 2 Issues  Large amounts of foregone F&A limit institutional capabilities  Institutional risk exists due to inconsistent treatment  F&A Waiver process needs to be streamlined UMN is more generous with F&A waivers than other top research universities UMN is more generous with F&A waivers than other top research universities

Page 3 Minnesota Waiver Volume  July 2007 – October 2007 (4 month)  Total amount waived: $1,875,382  Total # of waiver requests: 76 Dollar value (direct costs)# of waivers$ waived <50K 40$ 346,899 50K - $100K 12$ 166,222 >$100K 16$1,362,262 Federal Projects 26$ 808,190 Non-Federal 19$ 393,680 State 6$ 305,183 Business & Industry 18$ 194,443 Foreign 2$ 26,527 Other 2 $ 148,079

Page 4 Peer Positions  F&A Waivers not granted to for-profits (UC all campuses, Stanford, Michigan, Washington, MIT, Michigan State, Purdue)  F&A Waivers not granted to foreign entities (UC all campuses, Stanford, Penn State, MIT, Michigan State, Purdue)

Page 5 Minnesota F&A Rates are Competitive  U of Washington56.0%  UC San Diego54.5%  UC San Francisco54.0%  UC Los Angeles54.0%  UC Berkeley53.5%  U of Illinois53.0% (UIC at 57%)  U of Michigan52.0%  U of Minnesota51.0%  Ohio State50.0%  Wisconsin47.0% (FY08 under negotiation)  North Carolina46.0% (FY08 under negotiation)

Page 6 SPA PI Transfers Non-profits with published policy Special governmental programs Projects which move from off-campus to on-campus. New Strategy (Part 1) F&A Waiver Requests Administrative Waivers Strategic Waivers Regular Waivers Deans Small Project Waiver (<$50K year) Other Reductions above minimums VPR Waivers or reductions below minimums Tracked

Page 7 Proposed F&A Rate Minimums (awards over $50K direct costs/year)  Federal ……………………………… Federally negotiated rate*  Foreign government ………………... Federally negotiated rate*  For-profit …………………………… 34%  State of Minnesota ………………….. 0% (for now)  Non-profit/foundations ……...…….. Lower of 10% TDC or published policy  Corporate affiliate programs ……….. 10% TDC  Industry-funded clinical trials** …… 26% TDC * or as approved by SPA ** sponsor-initiated protocols only

Page 8 New Strategy (Part 2) Waivers No Longer Available for:  Projects that did not receive institutional endorsement prior to submission to Sponsor  F&A waivers or reductions of rates negotiated by PIs with Sponsors If reduced F&A is needed in these instances, the Unit must set up a cost-sharing account to pay the difference between the Sponsor-approved rate and the federally negotiated rate or approved minimum for this type of project.

Page 9 Potential Reasons to Approve Waivers  Seed grants which may attract larger awards  Hardship for new PI  Awards which include equipment or building funds  Community relations or library projects  Student services projects (or increase funding to pay for students)  Capped awards  Department committed to undertake the research regardless of external funding (e.g, any dollar gained is better than nothing)  Small cost  Junior faculty or incoming faculty member  Enhance cultural/artistic activities (small projects only)  Only available source of funds in an area  Strategic partnerships

Page 10 Potential Reasons to Disapprove Waivers  Precedent setting  Grounds on which the waiver might be justified to other faculty whose projects carry full overhead  Consistency with similar sponsors or programs  Large total cost to the University  Any IP rights granted to the sponsor  Past history of PI requesting waivers  Profit-making entities  Foreign entities

Page 11 New Strategy: Part 3 F&A Waiver Process Improvements 1.Administrative waivers and waivers for small projects (less than $50K) will no longer require use of the formal waiver process 2.SPA has created a list of agencies with pre-approved rates (based on policy); proof of agency policy is no longer required to accompany PRFs when submitting to these entities 3.SPA has new “Foregone F&A calculator” to help Deans and SPA better understand and track foregone amountsForegone F&A calculator 4.Waiver requests must be submitted in advance (4 business days for regular waivers, 7 business days for strategic waivers) 5.CRAD will be updated twice yearly on the amount of F&A waived for regular and strategic waivers  Waived amounts will not be tracked for small & administrative waivers

Page 12 Proposal for New Waiver Strategy Rollout Proposed for January 1, 2008  Streamlined waiver approval process implemented  Dean’s approval for small waivers implemented  SPA endorsement for administrative waivers implemented  No waivers granted for proposals submitted without endorsement  Reductions for for-profits and foreign governments beyond pre-set minimum level requires VPR approval  Other F&A minimums considered “targets”  PIs informed that they may not negotiate F&A rates Proposed for January 1, 2009  F&A minimum levels for all categories implemented

Page 13 Questions?