This post was inspired by BiochemBelle, who started a discussion on the Twitterz the other day about indirects. One of the things that you get to do (a lot) as a new PI is
fucking with accounting deal with your lab budgets. This means that you will learn all sorts of uninteresting things about how the money gets spent. Here is (to the best of my knowledge) how indirects work.
Indirects are the money that your institution uses to "support" your grant. I don't really know what this money is supposed to do, but I assume that it helps pay the rent, keep the AC running and the lights on, and other shit like that. Indirect rates are negotiated by each institution with the granting agencies. But, since every grant given to a specific MRU I really don't know who is negotiating with who. But whatever, I digress.
Indirects are charged to your grant based on what you use the money for. For most NIH grants, you are awarded a sum of money, the direct costs, and the university gets their indirects on top of that amount. The direct costs are the money that your lab actually gets to spend on salaries, supplies and equipment. If your indirect rate is 50% and you get a grant for $100,000 (direct), the institute will actually get $150K (yes, the numbers were chosen for easy math). Your lab spends 100K, MRU takes $50K. Win-win. But, SOME agencies (and even some NIH grants-like the K99/R00) award TOTAL costs. This means that if you get a $100K grant, MRU takes 50K and you get 50K direct. See, that is a lot different! So, make sure you know if you have been awarded TOTAL costs or DIRECT costs.
Indirect rates can vary a lot. The lowest I've heard is around 50%, the highest can be over 100%. YOU READ THAT RIGHT. There are institutions in which if you get awarded a 100K total costs grant that you will have to pay the institute indirects from another source. How cool is that?
There are some other
awesome subtleties. For instance, you do not pay indirect costs for equipment. At least at my MRU, equipment is anything that is not a consumable, is expected to last the duration of the grant and costs more than 5K. Most everything else is supplies or salaries, and is charged overhead. There are also crazy rules about office supplies, computers and software that I don't understand yet. So I'm not going to try to explain it. It is an advanced accounting maneuver.
Another interesting tidbit: if you buy equipment off an NIH grant and then you leave to go somewhere else you may be able to take your equipment with you. HOWEVER, if you use your startup funds then it is the property of the MRU and you could be forced to leave it behind. I know that none of us n00bs on the TT want to think we will have to go on the job market again soon, but still. Now you know.
There you go, a primer for indirects. Please not that this is based on my experience at my MRU. YMMV. I hope you took notes. This WILL be on the exam.
Leave your answers in the comments. Don't bother showing your work. Nothing matters except the correct answer.
Practice Question 1: you want to buy a box of pipet tips for your lab, which costs $10. Your indirect rate is 70%. How much do you pay in indirects?
Practice Question 2: you also wanted to buy a pipeting robot (those exist, right? please tell me those exist) that costs $10K. Your indirect rate is 70%. How much do you pay in indirects?