Causal modeling for indirect cost management at universities and colleges

Faculty applications for nonuniversity project funding, relative support requested for research, and the indirect cost rate negotiated for federal research projects are used to forecast overhead one year in advance. They are also used to project the ratio of awarded indirect cost to awarded direct cost. The role of the latter variable in mediating changes in subsequent indirect cost reimbursement is described, as well. By using multiple regression and path analysis, the study demonstrates one way of bridging the gap between theories on indirect cost recovery and statistical methodology. It should be of particular interest to the administrator who seeks to integrate variables which precede overhead reimbursement in time with the university budget process.