POLICY IN RESPECT OF THE INDIRECT COST RECOVERY RATE (ICRR) WITH REGARD TO THIRD-STREAM INCOME AT STELLENBOSCH UNIVERSITY (SU) Statement f plicy Purpse Indirect Cst Recvery n Third-stream Incme Type f dcument Plicy Cmmencement date 01/10/2013 Date f next review 01/01/2015 Revisin histry Replaces the 12% Plicy relating t the Surcharge n Grss Third-stream Incme (currently pint 2.23 f the Financial Plicy) Ownership f plicy Owner f plicy 1 Prtectr f plicy Chief Operating Officer Chief Directr: Finance Date f apprval 30 September 2013 Apprved by Stellenbsch University Cuncil Key wrds Indirect Cst Recvery Rate (ICRR), Thirdstream incme 1 The Chief Operating Officer will initially accept respnsibilty as plicy wner at the institutinal level.
CONTENT PAGE 1. Cntext f the indirect cst recvery rate (ICRR) 1 2. Prvisins f the ICRR Plicy 2 (A) Gvernment subsidies and ther gvernment funding 2 (B) Secnded psts in the cntext f research cntract management 3 (C) Merit-bases prizes 3 (D) Repayment f travel and accmmdatin csts 3 (E) Dnatins 3 (F) Bursary incme 3 (G) Sprt 3 (H) Students printing fees (cmputer-user areas) and textbk sales via the 3 Student Fees Divisin (I) Thrugh-flw funds 4 (J) Equipment 4 (K) Limiting f the ICRR in terms f the plicy f funding institutins 4 3. Institutinal divisin f the ICRR n Grss Third-stream incme 4 4. Full cst 5 5. SU Plicy in respect f the Cmmercial Explitatin f Intellectual Prperty 5 Addenda: A: Institutinal apprtinment f the ICRR n grss third-stream incme 6 B: Apprval prcess fr reductin f r exemptin frm the ICRR 8 C: Funding agencies fr which the ICRR currently is fixed at a reduced level 9 (is adjusted n the basis f these funders prvisins in this regard)
1. CONTEXT OF THE INDIRECT COST RECOVERY RATE (ICRR) On 19 January 2004, Stellenbsch University (SU) put a system int peratin t recver verheads in relatin t third-stream incme by way f a surcharge. Since SU is largely dependent n utside funds t undertake cmpetitive teaching, research and cmmunity interactin, academics are encuraged t btain utside funds and thereby t prmte the cre activities f SU. Hwever, teaching, research and cmmunity interactin prjects that are funded frm utside funds are assciated with certain indirect csts, and the mtivatin fr the ICRR therefre is t recver these indirect csts and thereby t manage the University as a financially sustainable enterprise. Indirect csts include the csts f the fllwing services, amng thers: legal services, financial services, human resurces services, research management services, infrmatin technlgy services, access t library material, supprt in matters regarding intellectual prperty, etcetera. A further aspect cntributing t the need fr indirect cst recvery is the natinal legislatin with regard t intellectual prperty, that is t say the Intellectual Prperty Rights frm Publicly Financed Research and Develpment Act, N. 51 f 2008 (hereinafter the IPR Act ), which requires that, under certain circumstances, institutins that receive public funding have t recver the full cst with regard t cntract research. The requirements with regard t full cst are explained in full in the SU Plicy fr Csting and Pricing f Research and Research-related Cntracts (hereinafter the Full-cst Plicy ), which shuld be read in cnjunctin with this dcument and in terms f which the ICRR is recvered as a cmpnent f full cst. With reference t the abvementined legislatin, a new natinal apprach has been apprved with regard t the calculatin f the ICRR fr all public higher educatin institutins in Suth Africa. This apprach was apprved by the Natinal Intellectual Prperty Management Office (NIPMO), an ffice that was established in terms f the IPR Act specifically t implement this Act. In future, SU therefre will calculate the ICRR in a mre accurate and nuanced manner than in the past, n the basis f actual infrmatin frm its financial statements. The ICRR therefre can als be adjusted mre ften t reflect the actual indirect cst in relatin t third-stream incme. A specific rate therefre will be valid fr at mst tw years after its date f cming int frce fr all new cntracts that are entered int r ther third-stream incme received (but it als can be revised mre ften). The ICRR will in future als include the spatial and facility management csts in relatin t third-stream incme, which was nt the case previusly. 1
The calculatin f the full cst related t research prjects will be cmpulsry, as already determined by the SU Full Cst Plicy. The afrementined plicy als makes prvisin fr an alternative price t be set, hwever (ther than the calculated full cst), except where the IPR Act requires that the full cst f a research cntract be recvered. The recvery f full cst cntributes t a mre sustainable apprach in relatin t the executin f prjects that are funded by external entities. 2. PROVISIONS OF THE ICRR POLICY An ICRR will be applied t all grss third-stream incme. In this cntext, grss third-stream incme includes the fllwing: Research and research-related cntracts Diverse research, that is research fr which n cntract exists Cnsulting services Spnsrships All ther prduct and service sales (including shrt curses and cnferences) The ICRR is applicable t all envirnments within SU, bth academic and nn-academic. This als includes envirnments with which the University is assciated and that make use f SU s services. Envirnments retain the right t place additinal levies n third-stream funding fr activities that d nt make a sufficient direct cntributin t the cre activities f SU. In additin t the recvery f indirect csts, a faculty culd fr example place an additinal levy n research cntracts that d nt prduce sufficient academic utputs. Hwever, there are specific exceptins with regard t the applicatin f the ICRR n certain funding surces and/r applicatins, which are discussed belw: (A) GOVERNMENT SUBSIDIES AND OTHER GOVERNMENT FUNDING Gvernment funding in the frm f a gvernment subsidy r earmarked allcatin by the gvernment is first-stream incme, and therefre is nt subject t ICRR. All ther gvernment funding, just like any ther third-stream incme, is subject t the ICRR. 2
(B) SECONDED POSTS IN THE CONTEXT OF RESEARCH CONTRACT MANAGEMENT Funds that are earmarked fr secnded psts are exempt frm the ICRR. A secnded pst is when a persn is appinted by an utside institutin and is then secnded t SU. In such a case, the utside institutin pays the remuneratin cmpnent t the member f staff via SU. (C) MERIT-BASED PRIZES N ICRR will be levied n any merit-based prizes, such as the Oppenheimer Prize. (D) REPAYMENT OF TRAVEL AND ACCOMMODATION COSTS If anther institutin is respnsible fr a member f staff s travel and accmmdatin csts, but the csts are cvered prvisinally by the University until a repayment is made, this repayment is exempt frm the ICRR. Hwever, if the travel and accmmdatin csts frm part f a research agreement, thse travel and accmmdatin csts will nt be exempt frm the ICRR. (E) DONATIONS Bna fide dnatins that are made via the University s dnatins ffice are exempt frm the ICRR. (F) BURSARY INCOME If the research allcatin includes a bursary amunt, this bursary amunt is exempt frm the ICRR, and has t be indicated separately n the invice t the funder (accunt 5387). All ther bursary funding that is nt related t a research cntract is als exempt frm the ICRR. (G) SPORT The membership fees received by sprt clubs are exempt frm the ICRR. (H) STUDENTS PRINTING FEES (COMPUTER-USER AREAS) AND TEXTBOOK SALES VIA THE STUDENT FEES DIVISION Printing fees f students and textbk sales via the Student Fees Divisin are exempt frm the ICRR. 3
(I) THROUGH-FLOW FUNDS In cases in which the University receives funds as part f a cnsrtium and a prtin f thse funds flw ut directly t ther institutins, such prtin is regarded as thrugh-flw funds. The incme therefre des nt accrue t the University, and SU acts nly as an agent. Hwever, the payment f funds t a subcntractr that des nt belng t a cnsrtium is nt thrugh-flw funds. Thrugh-flw funds are nt exempt frm the ICRR, but it is pssible t apply fr a reductin f r exemptin frm the ICRR by means f the prcess set ut in Addendum B. Apprval fr the exemptin r reductin must be btained befre the cntract is finally signed. The amunt that is nt paid ver t ther institutins, hwever, but is managed within an SU cst pint, will be subject t the full ICRR. (J) EQUIPMENT The ICRR is als applicable t funds fr equipment that frms part f the direct csts f the budget fr a third-stream incme prject (fr example a research cntract r shrt curse). In exceptinal cases, where equipment frms an intrinsic part f the budget, an applicatin fr exemptin frm r reductin f the ICRR n the equipment cmpnent can be dne. This applicatin is dne by way f the prcess set ut in Addendum B. (K) LIMITING OF THE ICRR IN TERMS OF THE POLICY OF FUNDING INSTITUTIONS Sme funding agencies place limits n indirect cst recvery. Where such funding agencies appear n the institutinal list (Addendum C), such a prvisin is currently acknwledged by SU. In highly exceptinal cases, where ther funding institutins place a limit n the recvery f indirect csts with regard t prjects that are funded by them in terms f their fficial plicy, a frmal applicatin fr the reductin f the ICRR needs t be made in terms f the prcess in Addendum B. 3. INSTITUTIONAL DIVISION OF THE ICRR ON GROSS THIRD-STREAM INCOME The ICRR is apprtined t the envirnments in which the csts were incurred. Addendum A cntains an explanatin f the apprtinment applicable t all third-stream incme. 4
4. FULL COST The ICRR is a standard line item that needs t be brught int calculatin in a full cst budget. N exemptin will be granted when a prject has t be calculated at full cst as a result f a specific intellectual prperty transactin. Fr mre infrmatin n the Full-cst Plicy, cnsult http://www0.sun.ac.za/research/research-cntracts/financial-infrmatin/preparing-a-budget-fullcst.html. 5. SU POLICY IN RESPECT OF THE COMMERCIAL EXPLOITATION OF INTELLECTUAL PROPERTY The ICRR Plicy must be read in cnjunctin with the SU Plicy in respect f the Cmmercial Explitatin f Intellectual Prperty. 5
ADDENDUM A: INSTITUTIONAL APPORTIONMENT OF THE ICRR ON GROSS THIRD- STREAM INCOME The ICRR amunts t 17% f turnver (21% f direct csts). It refers t the fllwing csts and is divided as fllws: 1. The supprt and institutinal expenditure funded by the first- and secnd-stream incme amunts t 12,2%. Cnsequently, 12,2/17 (12,2 percentage pints, r 72% f the ICRR) must be apprtined t the main budget, where it will appear as an incme line in the main budget and will be divided accrding t the apprpriate budget apprtinment mdel. The expenditure referred t abve includes the fllwing csts, amng thers: Human resurces services Overarching financial services Infrmatin technlgy and cmmunicatin services and supprt Legal services Cmmunicatin and liaisn services Library services Pstgraduate and Internatinal Office Overarching research supprt services Research allcatins t subcmmittees A, B and C Bank csts, audit fees All insurance (amng thers accuntability, assets, transit), excluding building insurance Campus health services Maties Sprt and sprt fields InnvUS (supprt-related perating csts) 2. The csts that frm part f the ICRR, but that are already cvered by the faculties/centres f respnsibility and have t be recvered frm the client/funder amunt t 4,6%. Cnsequently, 4,6/17 (4,6 percentage pints, r 27% f the surcharge) must be apprtined directly t the envirnment (bth academic and nn-academic) where the third-stream incme is earned. This prtin is apprtined directly t the envirnments that generate the incme (cst pint linked t the dean r the head f the centre f respnsibility in the Rectr s Management Team (RMT) under whm the department/divisin falls in which the incme is generated) befre the rest f the ICRR is divided. The csts that are already cvered by the envirnments cmprise the fllwing: 6
Facility management and planning services Maintenance f buildings Security services Insurance f buildings Cst f municipal services, such as water, electricity, prperty tax, etcetera 3. The supprt csts f the Vice-Rectr (Research and Innvatin) that cmprise part f the ICRR and are funded directly frm the ICRR apprtinment amunt t 0,2%. Cnsequently, 0,2/17 (0,2 percentage pints, r 1% f the ICRR) must be apprtined directly t a central research fund, which may be used in supprt f research and research-related activities at the discretin f the Vice-Rectr (Research and Innvatin). 7
ADDENDUM B: APPROVAL PROCESS FOR REDUCTION OF OR EXEMPTION FROM THE ICRR The prcess fr the apprval f any deviatins frm the ICRR will nly be valid if such deviatin falls in ne f the categries in the plicy fr which applicatin may be made expressly fr a reductin f r exemptin frm the ICRR. In such apprpriate cases, the prcess is as fllws: A cmplete applicatin must be sent t the Senir Accuntant: Financial Services, wh will refer it t the Senir Directr: Research and Innvatin and the Directr: Financial Services. If all the measures belw are cmplied with in full, the applicatin will be submitted fr cnsideratin t the Vice-Rectr (Research and Innvatin) and the Chief Operating Officer. The chief researcher r crdinatr f the prject must prvide the fllwing infrmatin and include it in the applicatin: - A brief summary f the (research) cntract, the strategic imprtance therefre fr the envirnment cncerned and fr the University, as well as the cntract amunt cncerned. This summary shuld als indicate clearly what academic utputs (research publicatins, pstgraduate students) r ther apprpriate utputs wuld arise frm the cntract. - A cpy f the cmplete csting fr the prject - Prf f the fficial plicy (if available) f the funder cncerned that includes a descriptin f the prvisins f that funder with regard t indirect cst levies - A full mtivatin by the dean r line manager cncerned in which the fllwing are cnfirmed: that the funder cncerned is pursuing a lng-term relatinship with SU what will prduce exceptinal academic utputs; that the cntract is in the strategic interests f SU; that prf has been prvided f statutry prvisins that limit the levies; and that the envirnment is prepared t frfeit the incme share f the levy. The Vice-Rectr (Research and Innvatin) and the Chief Operating Officer will nly cnsider such a reductin f r exemptin frm the ICRR in apprpriate cases. 8
ADDENDUM C: FUNDING AGENCIES FOR WHICH THE ICRR CURRENTLY IS FIXED AT A REDUCED LEVEL The fllwing table will nly be adjusted n the apprval f the Vice-Rectr (Research and Innvatin) and the Chief Operating Officer. INSTITUTION REQUIREMENTS OF INSTITUTION VIEW OF SU Funding frm Suth African gvernment institutins Technlgy and Human The ICRR is in fact recvered frm the 10% f ttal budget (hence industry Resurces fr Industry industry prtin f the incme, but nt amunt + THRIP amunt) Prgramme (THRIP) frm the NRF prtin. All prgrammes f the Natinal Research Fundatin (NRF) 0% 0% (excluding THRIP) NRF/Natinal Laser Centre 0% 0% Research fundatins and trusts Wellcme Trust 0% 0% Research institutes Natinal Institutes f 8% f ttal direct csts, excluding 8% f ttal direct csts, excluding Health (NIH) equipment equipment Large natinal and internatinal cmpanies ESKOM TESP 2% 2% ESKOM BRAD 2% 2% 9