Distribution of indirect cost recovery (ICR) and salary savings

Distribution of indirect cost recovery (ICR) and salary savings

About This Policy

Effective Dates: 07-01-2022
Last Updated: 07-01-2022
Responsible Administrator:
Associate Dean for Research
Policy Contact:
Edith Millikan
School of Liberal Arts Grants Analyst

Reason for Policy

  1. Transparency and consistency across units in the School of Liberal Arts
  2. Support for existing school-level research infrastructure and development
  3. Fund replacement teaching and start-up and retention support
  4. Incentivize the submission of external grant proposals and support funded PIs and their departments


This policy applies to ICR and salary savings from external awards to School of Liberal Arts faculty, staff, centers, and institutes. ICR and salary savings are used to support the research infrastructure of the school including the compensation for pre- and post-award administrative staff, Associate Dean for Research, assessments the school is charged for research-related staff and space (Center/Institute/Lab infrastructure), NIH salary cap cost-sharing, NEH and other grantor cost-sharing requirements, and other research support and development. ICR return is also used to incentivize faculty towards grant or contract writing and to reward those who are successful in bringing external dollars into the school.

Policy Statement

ICR Distribution - The cost of conducting research and creative activity includes the direct cost of the proposed project/creative activity as well as the physical and administrative infrastructure required to support those activities. In the context of external funding, most grants include indirect costs (also referred to as facilities and administrative costs [F&A] or indirect cost recovery [ICR]) in order to offset the full costs of conducting research and creative activity. See the following website for additional information and guidance about indirect costs: IU F&A Rates.

For each contract or grant that includes indirect costs, 10% of the ICR funds returned to the school will be distributed to a sub-account for use by the principal investigator. Research centers or institutes that support their staff and operating expenses and some independent infrastructure such as financial or grant administration will receive 45% of the ICR returned to the school from campus.

Salary Savings – Salary savings occur when a portion of a faculty member's general fund (12 account) budgeted salary and benefits are charged to a sponsored program account. This occurs often, but not exclusively, in the context of buyout of teaching time during the ten-month appointment.

For external grants where faculty buy out 10% or more of their salary and benefits, the School of Liberal Arts will distribute 20% of the salary savings to the principal investigator’s sub-account to support their research and creative activity and 30% to the PI’s home department/unit to support the research or creative activity of their faculty. Salary savings will be returned as outlined above based on the salary savings portion only (not benefits) minus instructional replacement costs.


  • The school will retain salary savings on external awards where ICR is waived.
  • The cost of any cost share, course releases or supplemental salary for research administration, and summer portion of 12-month appointments will be covered by ICR before any ICR or salary savings is returned to the PI or department.
  • Separate accounting lines will be created for centers, departments, and faculty to help track ICR and salary savings funds.
  • ICR will be transferred to cash accounts twice per year. The total dollars transferred will be calculated based on grant and salary expenditures during the fiscal year in which they occurred.
  • Salary savings will be calculated based on the prior fiscal year and put in cash accounts (for the PI and for the department).
  • The school will notify departments and PIs with the amounts, dates, and account numbers of ICR and salary savings transfers when these occur.
  • Individual faculty account balances revert to the School of Liberal Arts upon the resignation or retirement of faculty members or if accounts have been stale (no transactions) for 2 years.
  • Salary savings distributions to PIs and departments may be halted during periods of financial difficulty at the discretion of the dean.