| I have had several conversations with clients recently about the bottom line results of conducting sponsored research. Savvy administrators know that restricted revenues come with costs. Some costs are spelled out in the agreement with the sponsor, other costs are less obvious. Some costs are paid for by the sponsor, some costs are shared and some costs are picked up by the university.
This issue of In the Know offers a framework to consider true costs and benefits that accompany sponsored research revenue.
As always, I welcome your feedback on the topics covered by In the Know and encourage you to forward this newsletter to your colleagues who can benefit from and enrich our dialogue.
Sincerely,
Tracy
Filosa
| Sponsored Research Revenue (and Costs) |
Cost Sharing
Many sponsored awards provide funding for direct costs related to research
activity, as well as a portion of the indirect costs of these activities, such
as overhead of maintaining facilities and grant administration. Indirect cost
arrangements expect that the institution will cover a portion of the overhead
and administrative costs associated with research activity. Some agreements
require that the university pay for a portion of the direct costs of the
research as well. In addition to the direct and indirect costs identified in a
sponsored agreement, an institution must be aware of costs that may not be
identified by the sponsor, such as investments in staff, facilities and
equipment that may be required before a research program is underway.
A full analysis of revenues and expenses may find that the university is paying more for the research than the sponsor, and that the program is a net financial loss. When an institution enters this type of arrangement, it means that the research investment is yielding non- financial benefits that make it worthwhile.
Type of Research
There are several factors to consider when an institution determines the kinds of research that will be conducted by faculty and researchers. School leaders need to invest strategically in research that fulfills institutional mission and commitments to faculty, students and other constituents. Research should complement academic programs and institutional goals.
Leaders also need to consider fiscal and space constraints. Capital and initial investment requirements may vary significantly, depending on the type of research. For example, psychology research is less expensive than biomedical research, which requires significant investments in high tech laboratories, expensive equipment and significant staffing.
What Happens When Funding Concludes?
In addition to the size of an award, managers must also take into account the timeframe of a sponsored arrangement. If certain research requires upfront capital investments and significant staff, the institution must consider other uses of those capital assets and whether or not there is a long-term justification for the investment. It should also weigh whether or not staff will be kept on via funding from unrestricted or "hard dollars", another sponsored agreement, or let go when award funding concludes.
Thanks to Terry Calhoun, the Director of Communications and Publications for the Society for College and University Planning (SCUP), for bringing an excellent article in the Pittsburgh Tribune-Review to my attention: Billionaire colleges don't sweat the small stuff.
Follow this link to read about how schools with endowments of $1 billion or more are investing their resources.
Billionaire colleges don't sweat the small stuff »
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