Budgeting for Industry
Projects sponsored by industry are important to Colorado State University’s research community as a source of funding for research and testing that helps fulfill CSU’s Land Grant mission. Industry-sponsored projects allow for relationship-building with industry partners that benefit the university and the partnering companies, training the next generation of researchers, building a pipeline of future employees for our partners, and driving innovations from university laboratories into the marketplace.
Working with for-profit partners is a bit different than working with federal government research funding agencies. As a state institution, CSU has an obligation to not use university resources for private benefit. Thus, budgets for projects sponsored by industry (without federal flow-through) must have the industry sponsor paying the full cost of the project. That means budgets to industry sponsors should:
- Use CSU’s applicable Indirect Cost Rate (F&A) for the activity and calculate it based on Total Direct Costs (TDC);
- Present budgets to industry sponsors as fully burdened (and no indication of the Indirect Costs applied should be provided in other documentation, e.g., budget narrative);
- Not include cost share of any sort (this includes cost share of the PIs salary).
OSP has many resources supporting the requirement for fully burdened budgeting and the use of TDC for the Indirect Cost base. On the Sponsored Programs Guidance webpage, you can utilize the Industry Sponsored Agreement FAQs document from 2019 and the new Preparing Budgets on Sponsored Projects guidance from December 2022. Finally, our most popular RAM Symposium Session, Working with Industry – Preparing Proposals & Talking with Industry Sponsors, from October 13, 2022 has received over 140 views! Check it out!
However, it has come to OSP’s attention that the budgeting based on TDC and including all costs for the project in the budget has been inconsistently applied since the Industry Sponsored Agreement FAQs document was posted to the OSP Guidance website. As a result, the issue has recently been discussed with the Research Associate Deans at their February 2023 meeting and with the CSU Research Administration community at the February 2023 RAMAround meeting. Effective April 1st, 2023, please ensure that proposals for industry-funded projects are budgeted based on TDC and include all costs, including PI effort. Budgeting per the Industry Sponsored Agreement FAQs is strongly encouraged before the above effective date.
Federal flow-through proposals, where an industry sponsor is the recipient and CSU is the proposed subrecipient, should develop budgets using CSU’s federally negotiated indirect cost rate. Assess the appropriate activity rate (Organized Research, Other Sponsored Activity, or Instruction) and use an MTDC base for calculation. An exception to this is if the prime (federal) solicitation requires use of a reduced Indirect Cost Rate, which would generally mean CSU would apply the reduced rate calculated on TDC. For proposals to industry sponsors where they are flowing through non-federal funding (e.g., state, or local government funds), CSU will abide by the limitation in the prime sponsor’s solicitation; if the prime sponsor does not address indirect costs or no original solicitation exists, CSU applies Indirect Costs based on TDC.
To improve the experience of creating a TDC budget, KR PD has been configured with Institute Rates for the TDC F&A Type. To use the TDC rates for an industry sponsor budget, please change Budget Settings for a detailed budget version as follows:
- Change Unrecovered F&A Rate Type to TDC
- Change F&A Rate Type to TDC
When you click ‘Apply Changes’ to save and close Budget Settings, the system will generate a prompt about the impact of changing the rate type. Choose ‘Yes’.
NOTE: It is suggested best practice to change Budget Settings before entering detailed line items, but you can change at any time prior to marking the budget ‘complete’.
The budget PDF print report “Industrial Cumulative Budget” will show fully burdened amounts for each line item in the budget.
Blog post by Bill Moseley, Pre-Award Manager