Making more out of the full cost model through cooperation

A working group set up by the Academy of Finland has been examining the performance and weaknesses of the full cost model. The model’s popularity and the way in which it is used vary from one research organisation to the next, and harmonising the procedures between universities, for example, could make the model more effective as a research funding tool. The Academy of Finland could also help by making the associated financial and other reporting procedures more researcher-friendly.

The working group was tasked with conducting a preliminary study into the effectiveness of the full cost model, which involved examining the objectives, structure and applications of the model as well as any significant changes in the external environment since the year 2015. The working group also compiled information on challenges relating to the application of the model in practice. The working group’s members were Counsellor of Science Soili Vasikainen and Counsellor of Education Mirja Vihma from the Finnish Ministry of Education, Science and Culture as well as the Academy of Finland’s Director, Financial Services Satu-Anniina Pakarinen and Director, Research Funding Development Jussi Vauhkonen, who also chaired the working group. The working group based its study on information collected from research organisations.

The Academy of Finland adopted the full cost model in 2009. The full cost model takes into account not just direct research costs but also indirect expenses such as employee costs and overheads. An external funding agency only contributes a portion of the full cost, and the rest is covered either by other external sources of funding or the research organisation itself. The Academy of Finland’s share of the full cost is usually no more than 70 per cent.

More consistency and transparency needed in overheads

One of the key findings of the working group’s survey in respect of the application of the full cost model was that beneficiaries tend to calculate revenue flows based on their overhead percentage differently for the purposes of their internal budgets and accounts on the one hand and research funding applications on the other. There are also some discrepancies between the practices of different research organisations. The same conclusion was cited in the final report of a 2015 effectiveness and impact assessment of the full cost model.

The working group is of the opinion that research organisations should strive towards a more consistent approach to overheads and ensuring that their internal procedures are transparent and geared at promoting a high standard of research. Building a better dialogue between financial administration professionals and research project coordinators would also be useful.

Based on the results of the survey, most universities still do not approach self-financing in a transparent manner. The most straightforward option would be for each faculty (or other relevant unit) to enter the amount of self-financing into the project accounts and charge the full amount of overheads to itself (gross).

According to the working group, the Academy of Finland could help to lighten the administrative burden of researchers and research organisations by improving and simplifying its financial and other reporting procedures in close interaction with the other parties involved in the research, development and innovation system.