Lost Grant Revenue Business Interruption

Why should Universities consider Lost Grants Revenue in their BI claim? 

  • Grants are a stream of revenue for universities that can add up to significant funding for specialized schools and/or professors. 
  • Grant funding can be used by the schools to help pay for salaries, grad students, tuition, research costs, equipment costs etc. A vast majority of a college’s education, outreach and service activities is funded through grants. If your university can no longer receive, use, or apply for these funds they should be considered as an aspect of a potential loss. 

How can Universities calculate Lost Grants Revenue? 

  • This unique revenue stream can be analyzed and calculated like any other; the calculation may just be more complex. 
  • Look at historical grant applications, acceptance rates, revenue granted, revenue budgeted. Analyze the data and use the data to formulate a projection.  
  • Consider saved expenses and how these expenses are captured in other portions of the claim.
  • Compare projected grant revenue to the actual grant revenue obtained during the loss period. 
  • Continue to track the status of grant applications, regularly communicate with researchers to understand their grants, how they are used, and when they may be able to utilize grant funding or apply for grant funding again. It is important to understand the nature of the research to be able to project when grant funding can begin again while considering the impact of the loss. 
  • The University should track specific lost opportunities for grants tied directly to the loss. In other words, if not having a facility caused the University to not apply for a specific, large grant, this should be noted in addition to an overall projection/calculation.

Variables to Consider When Calculating Lost Grants Revenue Impacts:

  • Timeline and process of submitting a proposal 
  • Seasonality / cyclical nature of submitting proposals 
  • Impact to the reputation of the University for future funding 
  • Period of restoration and Extended Period Of Indemnity 
  • Non-continuing expenses associated with grant research: 
    • Reduction in staff / personnel 
    • Travel, equipment, supplies etc. 
  • Other Variables / Business Income Categories to Consider:
    • The inability to work on grants and the inability to propose grants due to a loss event can also impact the following:  
      • Professors’ Salaries – For research facilities, a University may use grants to fund a portion of professors’ salaries for any grant-related work. If there is a deficiency in funding, the University may be responsible for paying the remainder of the employee’s salary. This could be considered an extra expense incurred by the University.  
      • Student Salary and Tuition – In some instances, graduate students are crucial to the successful completion of certain grants. A University may use grants to fund a portion of graduate and master students’ salary and tuition for research performed. If a student is unable to perform research covered by the grant, the University may cover additional semesters of salary and tuition of these students to allow them to complete their thesis. This could be considered an extra expense incurred by the University.  
    • A loss event can also impact additional revenue streams outside of grants, such as but not limited to: 
      • Enrollment Revenue 
      • Auxiliary Revenue 
      • Analytical / Research Facility Revenue 
      • Non-Operating Revenues