The details vary a lot, but it's usually calculated as percentage of the direct costs (like a sales tax). If your grant involves spending $100k on salaries, reagents, services (etc), the total outlay from the sponsor is closer to $170k (at 70% F&A). Here's an example from UW: http://f2.washington.edu/fm/maa/fa/facosts

In practice, the rate varies a bit. Capital equipment, like a really expensive microscope, is often exempt from F&A, but salaries sometimes have an extra charge (for benefits) attached.

Okay, i stand corrected! I was being intellectually lazy and assumed that what you were saying was that 70% of the raised funds were taken by the faculty, but thanks for the detailed example!