National Science Foundation Large Facilities Manual

NSF Large Facilities Manual Policy
4.2.2.2 Management Fee
Management fee is an amount of money paid to a recipient in excess of a cooperative agreement’s or
cooperative support agreement’s allowable costs. Generally, NSF does not permit the payment of fee
(profit) to organizations under financial assistance. However, a management fee may be authorized for
awards in the limited circumstances of construction or operations of a large facility as the responsible
organization is likely to incur certain legitimate business expenses that may not be reimbursable under
the governing cost principles. NSF provides for a management fee in these limited circumstances, as
appropriate, recognizing that the awardee would only incur such expenses as a result of its support of
the NSF-funded activity.
The following categories will be used in the negotiation and award of a management fee:
•

Working capital necessary to fund operations under an award - An amount for working capital
may be necessary to ensure a level of retained earnings available to the organization in order to
secure credit and borrowing to assure the financial health of the organization.

•

Facilities capital necessary to acquire assets for performance - An amount for facilities capital
may be necessary to allow the organization to acquire major assets and to address expenses
that require immediate substantive financial outlays but that are only reimbursed through
depreciation or amortization over a period of years.

•

Other expenses that are ordinary and necessary for business operations but that are not
otherwise reimbursable under the governing cost principles – An amount for other expenses
that are ordinary and necessary but not otherwise reimbursable may be necessary to provide a
reasonable allowance for management initiative and investments that will directly or indirectly
benefit the NSF-funded activity. Inclusion of amounts under this category warrants careful
consideration of the benefits that may be obtained when providing management fee. Examples
of potential appropriate needs include contract terminations and losses, certain appropriate
educational and public outreach activities, and providing financial incentives to obtain and
retain high caliber staff. Although not an exhaustive list, the following are examples of expenses
that are not appropriate uses of a management fee:
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o
o
o
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Alcoholic beverages
Tickets to concerts, sporting and other events
Vacation or other travel for non-business purposes
Social or sporting club memberships
Meals or social activities for non-business purposes
Meals or social activities for business purposes that are so extravagant as to constitute
entertainment

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NSF Large Facilities Manual Policy
o
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Luxury or personal items
Lobbying as set forth at 2 CFR § 200.450 and FAR 31.205-22, as appropriate to the
recipient type

Costs incurred under the award that are otherwise allowable under the governing cost principles must
be classified as direct or indirect charges to the award and shall not be included as proposed fee
elements.
A management fee proposal must be submitted to NSF that provides sufficient visibility into each
category to identify its intended purpose. Agreement on management fee amounts shall be completed
and an amount established prior to the initiation of work under an award, or any subsequent period not
authorized as part of the initial award. Any amount negotiated shall be expressly set forth in the terms
and conditions of the award. Awardees may draw down the management fee in proportion to the
amount incurred during the performance period. Fee established for a period longer than one year shall
be subject to adjustment in the event of a significant change to the budget or work scope.
Even though the management fee represents an amount in excess of cost and is therefore not subject to
the governing cost principles, NSF, as a matter of policy, has determined that review of appropriate use
of such funds is necessary. Information available on actual uses of management fee previously awarded
by NSF in the preceding five-year period under any award shall be included in the proposing
organization’s fee proposal. As a term and condition of the award, the awardee will be required to
provide information (typically annually) on the actual use(s) of the management fee. NSF will conduct
reviews of this information regarding the extent to which the awardee fee proposals have proven
reliable when compared with actual uses of management fee (both as to the fee amount as well as the
planned uses of the fee). Unexplained failure to reasonably adhere to planned uses of fee will result in
reduction of future management fee amounts under the award.

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