PI Resources

External funding in support of research and other projects can come into the University in three ways: gift, sponsored project, or external sale. UMN does not have the ability to cash a check or receive a wire transfer outside of these mechanisms.

It’s important to select the right mechanism in order to stay in compliance with tax laws and federal granting regulations. Please talk with your department administrator or finance professional about any sort of funding coming in to the university, and check with your grant coordinator if you aren’t 100% certain how something should be classified.

CEHD Resource: Types of External Funding 

UMN Resource: Gifts, Sponsored Projects, and External Sales 

Effort refers to the time and work an individual puts in on any given activity. We consider an individual’s total work on their University of Minnesota responsibilities to be 100% effort, regardless of whether that is 40 hours a week or a different number.  In order to be funded by a sponsored project, we write a percentage of an individual’s effort into the budget.  

Including a percentage of effort in a grant proposal means that we are committing that effort to the proposal.  That effort is typically paid by the sponsor.  If, however, the effort is not paid by the sponsor but still included in the proposal, it is still committed and must be paid by UMN, and must be reported to the sponsor as cost sharing.

All individuals working on a sponsored project must certify their effort twice annually.  This is an institutional step that allows UMN to represent to sponsors that they are actually getting what they are paying for - the committed amount of effort.  In CEHD, the effort certification process is managed by FSO. 

UMN Policy: Effort Certification

A course buyout is an incentive offered by departments in order to encourage applications for external funding.  "Buyout" refers to the amount of individual effort that must be paid by a grant in order for the individual to “buy out” of one of courses they are typically required to teach (typically 10%-15%). Course buyouts are arrangements between an investigator and their department. There are no university- or college-level policies surrounding buyouts, and different departments have different practices. There is no expectation that departments must offer buyouts.

The amount of effort committed to a sponsored project should be driven by the proposed work, not the amount needed for a course buyout. 

Any project costs that are contributed to the work of a sponsored project over and above what is funded by the sponsor are considered cost sharing. These costs could be through personnel effort or other non-personnel costs. The terms "cost sharing" and "matching" are often used interchangeably.

If costs over what the sponsor will pay are quantified and included in the proposal, UMN is legally committed to paying those costs for the benefit of the project and nothing else, and must track and report that spending.  This can tie up personnel effort that could be spent on other activities and limit flexibility with other funds.  For this reason, UMN discourages any cost sharing that is not required by the sponsor. 

Types of cost sharing:

• Mandatory committed: The sponsor requires that recipients cost share a certain amount in order to receive an award. UMN will consider requests for mandatory committed cost sharing.

• Voluntary committed: The applicant voluntarily makes a quantifiable commitment of funds in the grant proposal (e.g. 10% PI effort), creating a commitment to isolate, track, and report on those funds. UMN strongly discourages voluntary committed cost sharing, and some agencies prohibit it.

• Voluntary uncommitted: The applicant voluntarily mentions personnel time or other resources that may or may not be made available to the project, but does not quantify them. This is preferable to committed cost sharing, but can lead to issues if the sponsor interprets it as a commitment.

UMN Policy: Offering Cost Sharing on Sponsored Projects

Often, sponsored projects grow out of the relationship between investigators and their external partners, and don’t follow the same proposal>review>award process as competitive grants. This is a fantastic testament to CEHD’s involvement in the community. 

These projects are, however, subject to the same rules and regulations as any other grant, gift, or external sale. PIs can help smooth the process by bringing their grant coordinator into their conversations as soon as possible and asking the following questions of their partners:

• Do you have an established indirect cost rate?

• Are any federal funds involved in the project?

• Will you need detailed financial reports of how UMN spends the awarded funds?

• Will you use your own contract, or are you open to a UMN external sales contract?

CEHD Resource: No-Proposal Contracts

Indirect costs (officially called facilities and administrative (F&A) costs) are the costs of doing research that are not directly allocable to individual research projects.  These include the cost of research facilities, utilities, research resources such as libraries and central service units, and administrative functions that support compliance  and management.  In CEHD, indirect costs are used to pay cost pools (costs of central units charged to colleges), cover collegiate research administration and support costs like the grant coordinators, and 20% is sent to the department or center that generated the sponsored project. 

Indirect costs are calculated using set percentages negotiated with the federal government. These vary based on the type of project being proposed, and are re-negotiated every few years.  Current F&A rates.  These rates must be used for all federal sponsors.  Some non-federal sponsors set their own rates, and the University may consider waivers of F&A in exceptional circumstances. Your grant coordinator is the best source if you have questions about indirect costs.

CEHD Resource: What Indirect Cost Rate Should I Use?

UMN Resource: Understanding F&A Costs