Research receives additional boost with new project fee at SDU

SDU’s Executive Board has decided on a new model for external projects’ payment of the University’s overhead costs. For all new external projects that receive grant letters from 1 January 2026 onwards, the department will be charged a 20% project fee. The 20% project fee is calculated on the total cost of the project, less overhead or project supplements.

Improved coverage of SDU’s overhead costs will allow SDU to disburse additional Finance Act funding which can be allocated to the faculties. In line with SDU’s strategy, the faculties will be able to use Finance Act funding to strengthen the development of research talent – for example, by increasing the number of permanent appointments of assistant, associate and full professors.

Improved financial balance

SDU’s new model for project fees is the Executive Board’s implementation of the agreement between Universities Denmark and the private foundations that was entered into in November 2023 (Read more here) and implemented from the summer of 2024. (Read more here) The agreement aims to improve the financial balance between individual research projects and the broader research-funded system. With the agreement, the foundations will grant a project supplement of DKK 250,000/DKK 200,000 per project-employed full-time equivalent (wet/dry).

For the universities, the agreement does not fully cover all the project-related costs, but the agreement creates a better and more transparent funding basis than before.

The agreement thus also provides an opportunity to correct a number of existing financial imbalances at SDU.

For every krone SDU receives in external research grants, SDU contributes an additional approximately 50–60 øre to cover overhead costs (buildings, IT, library, financial services, HR, etc.). At present, these overhead costs are covered by SDU’s Finance Act appropriations, the bulk of which consists of basic funding and education-related income. A part of SDU’s appropriations from the Finance Act will therefore be tied to financing projects’ follow-on costs because the funds’ coverage of follow-on costs has traditionally been very limited.

With the new project fee, SDU can achieve a more appropriate coverage of the University’s overhead costs, allowing a larger portion of its Finance Act appropriations to be disbursed and allocated to the faculties. 

Figure 1. SDU’s budget model with a 10% and 20% project fee, respectively

Continued strong incentive

SDU’s new model with a 20% project fee applies to all grantors – public grantors, private grantors, the EU and other international sources. The model applies to all types of external activities, i.e. both appropriations-funded services (sub-accounts 95 and 97) and commercial services (sub-accounts 90).

The Executive Board has emphasised the importance of a straightforward and transparent model that applies uniformly to all external research projects, regardless of the grantor.

The department/faculty will retain all overhead or project supplements that are granted for a project. This maintains a strong incentive for the department to maximise its recovery of overhead and project supplements.

Under the new model, the project fee is calculated on the costs of the project (minus overhead or project supplements), thereby reinforcing the incentive to secure funding overhead or project supplements from the grantors.

If a grant is for DKK 5M (without overhead or project supplements), the project fee amounts to DKK 1M (20% of DKK 5M). If a grant is for DKK 5M, of which DKK 1M is overhead or project supplement, the project fee amounts to DKK 0.8M (20% of DKK 4M (DKK 5 million minus DKK 1M)). This means the department retains DKK 1M and is charged DKK 0.8M, allowing it to effectively retain DKK 0.2M.

Implementation over a number of years

The new model with a 20% project fee will come into force for all received grant letters, regardless of the grantor, from 1 January 2026. Grant letters received before 1 January 2026 will remain subject to the current model with a 10% project fee. The effective date is defined as the date on which SDU receives the grant letter.

This means that the full effect of the new model with a 20% project fee, including the allocation of the disbursed Finance Act funding, will not become apparent until 4–5 years from now – once SDU’s entire project portfolio has been renewed, with projects granted before 1 January 2026 having been concluded and new projects funded under grant letters issued after 1 January 2026.

Figure 2. Summary of model with a 10% and 20% project fee, respectively

Additional information

• Project supplements and project fees are calculated and posted once a month in connection with the closing of the accounting period.
• Financial Services will prepare additional guidance material and inform about this as soon as possible on sdunet.dk
• If you have any questions, please contact Financial Services, FSØ, at forskerservice@sdu.dk