The Joint Associations Group (JAG) on Indirect Costs is a national committee of diverse stakeholder organizations formed to develop a new model for funding indirect costs – also known as Facilities & Administrative (F&A) costs – on research grants. This effort is a community response to the NIH guidance that capped the maximum F&A rate at 15 percent (see FABBS article here). The group plans to present its alternative model to the federal government later this year.
The group established a subject matter experts (SME) team – which includes nearly thirty individuals from grant administration, university operations and finances, and government relations – to develop several alternative reimbursement models. Kelvin Droegemeier, PhD – the former Director of the White House Office of Science and Technology Policy (OSTP) during the first Trump administration – chairs the team.
On June 27, JAG announced its final model after four public town halls/webinars to review recommendations and consider two proposed models. The committee also addressed over 400 questions and comments from stakeholders before selecting the final model.
A summary of the final model, known as the Fiscal Accountability in Research (FAIR) Model, can be found here. The FAIR model emphasizes transparency and accountability for all indirect research costs and aims to streamline the funding so that it directly supports research activities. This alternative is designed for use across all federal agencies and research institutions, and directs research funding to project-specific needs.
The FAIR Model
The FAIR model consists of three main cost categories: (1) the principal investigator (PI)-managed project costs, (2) Essential Research Support (ERS), and (3) General Research Operations (GRO). PI-managed costs are analogous to today’s direct costs and are a fixed percentage of the total budget. ERS costs, by contrast, represent funds that are necessary for carrying out research and that can be linked explicitly to a given project. In the current system, these would be classified as indirect costs, but are considered direct costs in the FAIR Model. Finally, GRO costs refer to the cost of institution-wide infrastructure and services that are necessary to conduct research but are impractical to allocate to a given project (including human resources, onboarding, payroll, etc.); they are indirect costs in the new model.
All of these costs are fixed percentages based on national data, eliminating the need for F&A proposal preparations and rate negotiations. The FAIR Model resembles private foundation grants in that the funding structure reflects actual resources utilized, leaving smaller residuals as GRO costs. Reimbursements are tracked directly to ERS costs and accounts, addressing a major criticism by Members of Congress that reimbursements are not sufficiently tracked and reported. The FAIR Model also offers two accounting options for funding Essential Research Performance Support – previously considered indirect costs – depending on the resources of the research institution.
Conclusion
By eliminating F&A negotiations, the FAIR model reduces administrative burdens and offers increased predictability, transparency, and efficiency. There are potential limitations, however, including significant resources and time needed on the front end for the implementation.
Overall, FAIR allows institutions to classify and recover costs for each specific project based on the actual type of research being conducted. The fixed percentage rates allow research institutions to map specific research requirements to the facilities and services for each project, and offers more flexibility for each institution to define its own categories and cost structures using internal data. [More information on JAG, including webinar recordings, can be found here. Stakeholders can provide feedback on the FAIR Model using this form.]
