Position on full economic costs in UK universities
The Wellcome Trust funds research in UK universities in partnership with Government. We fund the full directly incurred costs of research on all awards. However, as a charity, we expect the general running costs (e.g. indirect costs, estate costs, support services) to be provided by Government, through funding to universities. We will therefore not fund on a proportion of full economic costs (fEC) basis. We fund many other costs, including infrastructure, buildings and equipment, in a manner that best furthers the Trust's charitable mission.
Full economic costs
UK universities need to have an understanding of the full economic costs (fEC) of their research activity, and to be transparent in the way that they account for these costs, in order to ensure the sustainability of the sector. Since September 2005, UK universities have been calculating the fEC of individual research projects.
Under the fEC model, traditional definitions of direct and indirect costs no longer apply.Instead, costs are to be classified as:
- Directly Incurred Costs – actual costs that are explicitly identifiable as arising from the conduct of a project (e.g. staff salaries, equipment, materials, travel).
- Directly Allocated Costs – costs of resources used by a project that are shared by other activities and based on estimates (e.g. principal and co-investigator costs, estates costs).
- Indirect Costs – non-specific costs charged across all projects that are based on estimates (e.g. HR and finance services, library costs).
Charity Research Support Fund
In England, recognising the contribution of charities to the excellence of the research base, the Government has established a specific revenue stream, the Charity Support Fund, to contribute towards the fEC of research funded by charities at universities in England.These funds will be distributed through the quality-related research (QR) block grant to Higher Education Institutions by the Higher Education Funding Council for England (HEFCE) and will be used to meet the general running costs (e.g. indirect costs, estates costs, investigator costs) incurred by the university in conducting charity-funded research.
In Scotland, the Scottish Funding Council has also announced that it will allocate a charity stream of funding within its main QR grant, to support charitable-funded research in Scottish universities. The level of investment is equivalent to the amount HEFCE is contributing in England to the Charity Support Fund, in proportion to the level of charity income received in Scotland.
In Wales, the National Assembly has agreed an additional £3 million per year to support charitable-funded research, to be delivered by the Higher Education Funding Council for Wales.
Northern Ireland has also introduced a Charities Support Element, within the block grant for research administered by the Department for Employment and Learning, to supplement university research income received from charities.This is intended to bring Northern Ireland universities broadly into line with universities in England.
Changes to Wellcome Trust policy
Recognising the changes taking place under fEC, and the new way that costs are being defined and classified, the Wellcome Trust has refined its policy position on allowable costs, for all grant applicants from the UK and elsewhere.
Our position is now that we will fund the full directly incurred costs of a research project and fund other costs where it helps us further our charitable mission.
As a consequence, we are now willing to provide explicit funding for certain costs that have in the past been covered by our flexible funding allowances. Such costs include recruitment and advertising, personal and project licences, access charges for basic equipment, and non-salary inflationary costs.
We are not willing to fund Directly Allocated or Indirect Costs unless specifically agreed.
These changes apply to grants awarded from 1 April 2006.
The Trust will be closely monitoring the impact of fEC on the UK university research sector and on the applications we receive.As part of this monitoring process, grant applicants from the UK will now be required to detail the fEC of their research project when applying for funding.