External Funds Levy Framework

Transcription

1 External Funds Levy Framework This document seeks to clarify grey areas concerning the levy on external funds. The reason for the levy is to provide adequate support for externally funded and entrepreneurially orientated activities within the university, and to serve as a sustainable mechanism for scaling up this sort of activity. The levy is not intended to be a disincentive to entrepreneurially minded staff members and students. Its primary purpose is to scale support services and discretionary research funds as external income increases. It is acknowledged that the individual overhead in attracting and managing external funds is significant, and that the funds from these activities support academically sound activities that the university is unable to fund directly. 26 November 2010 is the implementation date for this version of the levy. A. Levy general principles A.1 10% * All external income will normally be subject to a 10% fee based on the total contract value. A.2 Simplicity The approach aims to effect cost recovery across the system of externally funded projects as a whole. It is not practical to reflect the exact cost recovery of each individual activity within the university. Consequently, the levy is expected to under recover in some instances, and over recover in others. A.3 Few exceptions The number of exceptions must be kept as low as * Please refer to clause D.5 which makes explicit that the levy is calculated on total income received, and not as an add on cost. Version 2.10, 26 November

2 possible, to avoid having to spend a lot of time in arbitration or necessitate the employment of a negotiator of contracts to deal with levy determination for each individual income opportunity. A.4 Reach The intention is to cast the reach of the levy as wide as is reasonable across all external income at the 10% level rather than consider raising the levy on narrower range of activities. A.5 Efficiencies within Departments/Schools Where a specific department brings in a high volume of external income, consideration may be given to placing finance administrators within the department. This will only be considered if the external funding volume is able to sustain such an appointment, and it is judged to be more efficient for the department concerned. Arrangements and motivation for such an appointment should be made between the Head of the entity concerned and the Director of Finance. A.6 Reputational risk As a reputational risk safeguard for the University, funds may not be raised and projects run in the name of the University using banking accounts or other finance mechanisms external to the University finance system. A.7 Short courses All income from Rhodes certified courses (whether organised centrally, or by departments, institutes, and other entities within the university), attract a 10% levy. A.8 Conferences All income from conferences (whether organised centrally, or by departments, institutes, and other entities within the university), attracts a 10% levy. Except for certain staff development and community engagement courses which for strategic purposes are not levied. In cases where certified courses are funded from already levied external income, a rebate is effected in the Research Finance Office so that the funds are not levied more than once. Except for Highway Africa, which for strategic purposes is levied at 5%. Version 2.10, 26 November

3 B. Exceptions B.1 Major capital projects Income for major capital projects raised in conjunction with the Communications and Development Division. B.2 Bursaries and scholarships B.3 Research Grants from Statutory Bodies and other funding organisations where levies are specifically prohibited. Bursaries and Scholarships for registered students of the university associated with tuition and living expenses. This does not include running funds associated with student work. Some grants from statutory funding bodies such as the NRF ** which relate to the core research and postgraduate funding mission of the university prohibit administrative levies. Where the university has established research funding relationships with such an organisation, exemption from the levy will be automatic. Where a new funding source is introduced which explicitly prohibits an administration levy, a determination will be made about the extent to which the acceptance of such funds is in the strategic interest of the university. Where funders are reluctant to include a general administration overhead into the project budget, Rhodes collaborators are encouraged to enquire about the possibility of including explicit budget items for finance and administration costs, or of using interest earned to cover these costs, which are acceptable alternatives to funding agencies in most cases. B.4 Large capital equipment purchases Individual capital equipment budget items exceeding R per item. B.5 Community Engagement Funds for minor Community Engagement projects of strategic value to the University, which are not a component of another levy-able category of activity, which are small scale and would not be viable if levied, and which do not place a significant load on the support structures of the university. B.6 Self funding institutes and similar bodies. Contracts undertaken by Rhodes University institutes, centres, units or groups, whose staff salaries and ** It should be noted that not all NRF grants exclude administration levies. Notably the SARChI chairs attract the full levy and consequently contribute generously to the administration costs of research at the university. Version 2.10, 26 November

4 running costs are met entirely outside of core university funds, will be subject to a 5% fee. This exception clause is intended to apply to contract and externally funded research and development work, and not to short courses certified by the University or to conferences. B.7 New initiatives Contracts funding new initiatives of long term strategic value to the University, and where a 10% levy would make the startup phase financially unviable, may be subject to an initial 5% fee. The financial plan should make provision to ramp the levy to 10% within the first two years of project activity. B.8 Publishing projects Sponsorship or advertising revenue for publishing projects, where the total budget is small, no profit is made, no Rhodes salaried staff member is remunerated from the project, the project would not be viable if levied, and the operation does not place a significant load on the support structures of the university. B.9 Staff development grants Staff development grants which are not a component of another levy-able category of activity, and are normally managed at an institutional level. C. Principles to be applied to any exception categories where internal agreement has resulted in a rebate on the 10% levy: C.1 Audited statements Where audited statements are required by a funder, the full cost of providing them at a rate determined by the finance division must be built into the project budget. C.2 Load on university support structures Where project activities place significant unforeseen load on the support structures of the university, any rebate will be reviewed. The load could be in the form of the number of financial transactions, the use of university property in a way that impacts on other activities, relationship or project management problems that require the intervention of senior staff, or any other significant human, financial, or physical resource usage. C.3 Salary subventions Where project income is used to remunerate Rhodes salaried staff members, no levy rebate will normally be Examples are the Mellon and Kresge Scholars Programmes. Version 2.10, 26 November

5 entertained. D. Procedures D.1 Agreement and contract signing Agreements and contracts must be submitted to the Research Office for signing and record keeping. They are checked by the Research Office for content (including intellectual property issues, liability, and reputation risk), by the Finance Division for budget, levy, tax and auditing purposes, and are forwarded to the Registrar for signing. To comply with a University Council resolution, all agreements and contracts must be signed by the Registrar. D.2 Appeals The Budget Executive Committee considers appeals with respect to the levy percentage. Concessions other than those outlined in this framework are seldom granted. Where a levy concession falls into a principle already agreed to by the Budget Executive Committee, the DVC: Research & Development is empowered to make a ruling on it, consulting with the Registrar: Finance & Operations or Faculty Dean as appropriate. D.3 Point of Levy The levy is applied by the Finance Division at the point of receipt of income by Rhodes. The levy is thus applied to the actual funds received, not to the contractual amount. D.4 Levy adjustment for load The Registrar: Finance & Operations reviews rebates in terms of C.2. D.5 Levy calculation The basis of the calculation is: Project Income = Total Income less 10% Levy In other words, 10% is deducted from total income received in respect of leviable activities. For example, if R100,000 is required for project expenses, the grant or contract amount should be R100,000 divided by 9 x 10 = R111,111. R111,111 is received, 10% levy is calculated [R111,111 x 10% = R11,111] giving the net required project income of R100,000. Version 2.10, 26 November

6 What the 10% External Funds Levy supports : Additional human resources in the research-finance office, the research-admin office, and the salaries office. Space for the project in some instances and maintenance of space are substantial cost considerations. Insurance of equipment, basic maintenance of computer equipment, access to university acquired software site licenses. General services: internet basic infrastructure, bank charges, electricity, water, printing services unit. Dedicated administrators in some areas of the university where very high levels of external income are generated. Less quantifiable infrastructural and personnel support, such as the time of senior management in some cases, library resources in others, the time of the buying officer, personnel involved in university asset management and insurance, contract management, and the time of academic staff on the University payroll who engage in income generating activities. Note that the University does not account for levy income specifically against these expenses the levy is reflected as general University income. This list is supplied only to draw attention to the types of implicit costs associated with supporting externally funded activities. The levy income is also used to support general research discretionary funds within the university. Version 2.10, 26 November