Academic Departments should understand the gross surplus generated by the research projects that they wish to pursue, as part of a wider financial management strategy. The ‘gross margin’ and the ‘gross margin as a percentage of income’ are calculated as follows:

• Gross Margin = Price - Full Economic Cost + fEC Overheads
• Gross Margin as a % of income = Gross Margin/Income

HEFCE provide additional support (QR) for research that universities carry out on behalf of charities (such as Leverhulme, Wellcome Trust and AMRC registered members) in recognition that charities sponsor high-value research in universities that brings benefits to scientific discovery and society, but that they cannot always meet the full costs of that research. R&IS can advise on qualifying charities and the level of additional QR funding that a proposal may attract.

A number of Academic Departments (including WMS and WMG) have their own ‘gross margin’ costing tool to aid their decision making on individual projects. A gross margin calculator will be added to IDEATE to allow Departments the ability to factor gross surplus calculations into their decision making on research grants and contracts. The University understands that funder rules often drives gross surplus. However, Departments should make every effort to achieve a gross surplus wherever possible on a grant by grant basis. A 20% gross surplus is regarded by the University as healthy financial position and, where funder rules allow, this should be pursued by the Department. Departments should seek the maximum permitted recovery on research projects. Below is some guidance on eligible % gross margin/income targets for specified funders is presented below:

Type of Funder	Target % Gross Margin/Income
80% FEC recoverable e.g. RCUK, Innovate	20%
European Commission	20%
Charities e.g. Wellcome, AMRC charities	Minimum 0% (with QR)
100% FEC recoverable e.g. industry	>30%