Disclaimer: This guidance was drafted based on current (as of February 2026) F&A rates and ICR policies. As the federal landscape shifts, this guidance will be updated.
Indirect Cost Recovery (ICR) funds, which are generated from Facilities and Administrative (F&A) costs, are generally generated by most sponsored projects awarded to the university.
These typically include:
Federal Awards: Grants, cooperative agreements, and contracts from U.S. federal agencies (e.g., NSF, NIH, DOE, DoD).
State and Local Government Awards: Projects funded by non-federal public entities.
Non-Profit/Foundation Awards: Grants from private foundations and other non-profit organizations.
Industry/Commercial Awards: Contracts from private companies.
For the most accurate and current information on applicable rates, always consult the specific Notice of Award and the Sponsored Programs Administration (SPA) website resources concerning F&A rates.
While most sponsored projects generate ICR, the rate and the applicability can vary:
Federal Awards:These typically use the University's federally negotiated F&A rate, which is often the highest rate applied.
Non-Federal Awards:These often have lower, sponsor-specific F&A rates (e.g., state or foundation limits) or may even exclude F&A costs entirely if the sponsor has a documented policy against paying them.
Provisional and Final Rate Schedules are available in the Accounting and Budgeting section of the Office of Business & Finance website.
If you believe your contributions necessitate a budget for your portion of the grant (and thus ICR flowing to you), tell the other investigators that you would like to have a conversation about the budget. You can also share that you would like to involve your finance/budget office (e.g., “I want to involve my budget office–let me loop them into the conversation”).
Consider your scope of work for the proposed grant and the role you will have if the grant is funded (e.g., co-PI). Other factors include the amount of the budget that would be allocated to your portion of the grant (i.e., is it significant?) and the timing of when you are brought into the grant writing process (i.e., is there enough time to develop a separate budget?).
Consider the factors discussed above. Timing is an important factor; however, you have options even if there is not time to develop a separate budget before the grant is submitted, such as changing the budget after the grant has been awarded (see below).
If the grant is awarded and you feel strongly about having your own budget (and thus ICR), the finance office can assist you in making changes post-award to the grant budget. You would talk with the PI to arrange how to split the budget, and the changes would go through SPA.
The key to setting up multiple budgets and sharing ICR is knowing the culture and current practices within all participating units. You need to be willing to ask questions early in the process to find out what is possible and what needs to happen. You must be willing to ask questions and not make assumptions about the current practices in any of the units involved.
You should consider many different factors before having this conversation. Consider what would be equitable for all of the co-PIs involved in the project, regardless of rank or location. Some key factors include:
The scope of work (i.e., perhaps one co-PI is only working on a small aspect of the project for a limited time and probably does not warrant the same amount of ICR as other co-PIs).
Whether this is someone’s first grant (and therefore they currently have no ICR) or they haven’t had a grant in a while (and therefore have very little or no ICR available).
The salary of the co-PIs (perhaps one co-PI is very senior and has a much higher salary than the other co-PIs and should therefore have a smaller percentage of the ICR so that the ICR amount is not disproportionate to effort on the project).
When having the conversation, it’s important to be open and honest with your colleagues about what your financial needs are (for your ICR account) and which of the above factors you are considering. It is important to stay open because there may be information you did not have about your colleagues or relevant factors that you did not consider. By talking openly about the decision-making process, you can help create a shared sense of trust that the most equitable decision is being made (with the available information).
If you desire to share the generated ICR from the sponsored project with your Co-PIs on the project, multiple budgets should be created at the proposal stage for each Co-PI in their respective units. Your pre-award contact will flag the proposal as “multiple CFOPs needed” when the proposal is submitted to SPA.
If awarded, the CFOPs will be created with populated Banner budgets based on the individual budgets created at the proposal stage. This ensures that generated ICR will flow to your Co-PI’s home unit for the expenditures on their respective portions of the grant budget, and the ICR will be distributed based on their unit’s ICR distribution/sharing policy.
If the PI and Co-PI are in the same academic unit and they would like to create two separate CFOPs for each person’s portion of the awarded budget so that ICR flows based on each person’s expenditures related to their separate budgets, SPA will allow the creation of two unique CFOPs under the same organization code.
*Note: As of March 2026, Sponsored Programs Administration (SPA) is creating a universal budget building app to assist the research community in creating and sharing sponsored research budgets that are compliant with university and sponsor guidelines. This tool will enter its testing phase the week of Spring Break 2026. There is no definitive timeline for the roll-out of this new tool.
See University guidance and discuss with the budget office in the center or institute.
To be determined.
To be determined.
While the system of setting ICR rates for specific agencies/funders and types of programs (see #2) has existed for a long time, there are starting to be nationwide discussions around alternative models for calculating ICR and directing funds toward the costs associated with sponsored research. The primary alternative currently being considered is the Financial Accountability in Research or FAIR model.
The intent of the FAIR model is to encourage a more complete accounting of the costs associated with a specific research project, rather than to assume that critical supports (space and facilities, specialized financial and other support services) are covered by general overhead funds. The goal is to create more transparency and trust with the public and the sponsors who are providing the funds to support the research. Another goal is to eliminate the institution-by-institution negotiation of ICR rates that have historically led to frustrations and concerns about equity.
If FAIR or something like it is eventually implemented, the actual ICR rates would drop dramatically (e.g., from near 60% at Illinois to something closer to 15%), but PIs would be permitted to charge more to their grants as direct costs (e.g., a Center or a support unit). It is not clear at this time when, or even if, FAIR will be implemented, but various University consortia (which includes Illinois) are advocating for this model. If adopted, there would likely be a transition period during which institutions like Illinois would undergo education and start moving in stages toward adopting the new model.