Chart IV shows a variety of activities and costs which are allowable components for calculating the University's overall F&A cost rate. While central administrative expenses may be the component of F&A costs that come most readily to mind, many institutional resources are used in support of research. A given project will require some of the resources on the list more than others, but most projects draw on a substantial fraction of them. Moreover, a proposal seeking funds for a fairly small project, and the subsequent award, may require as much administrative work to process as a grant with a million dollar budget. Since a number of F&A cost elements that support a grant represent fixed costs, it is sometimes argued that smaller projects should pay higher rates.
Such a variable rate structure would be quite cumbersome to apply, and inconsistent with the government's Circular A-21 guidelines. Researchers in the humanities typically receive smaller grants. They sometimes wonder what the F&A costs are paying for. Anyone receiving an NEH summer research salary of $5,000 in FY 2000 would generate an additional 52% in federal funds, or $2,600 for F&A costs. They may feel that they don't need laboratory space and expensive equipment and should instead be assessed at a different rate. A more comprehensive look reveals that more of the institution's resources are used than seems apparent on casual reflection (for example, costs for maintaining the library and its collection, support of graduate student assistants, and the cost of grant accounting and administration).
The library is a good example of a major resource necessary for research but often taken for granted and not recognized as a component of F&A costs. The library is used by virtually everyone engaged in scholarly activity, and the availability of this asset depends to a significant degree on the flow of F&A cost reimbursements to cover a portion of the costs of the University's library system.
The increasing number and complexity of requirements imposed by the federal government to ensure compliance with various regulations also contribute to F&A costs. Chart V lists new or revised federal regulations that have come into effect just since 1988. They require the University to institute new or expanded monitoring activities, to submit certifications, and, in general, to handle a great deal more paperwork than ever before.
