What is an Indirect Cost?<\/p>\n
When determining your project\u2019s budget for the grant proposal, you will likely see the term \u201cIndirect Costs\u201d in the Notice of Funding Opportunity.\u00a0<\/p>\n
In most grants, indirect costs are allowable costs.\u00a0 This is often negotiated through an indirect cost rate agreement that factors in a reasonable portion of operating costs.\u00a0 Different grants and agencies have varied policies when it comes to indirect costs covered by grant funding, but in general this definition by the National Science Foundation applies:<\/p>\n
\u201cIndirect costs are those costs which are not readily identifiable with a particular cost objective, but nevertheless are necessary for the general operation of an organization.\u00a0 Examples of indirect costs include the salary and related expenses of individuals working in accounting, personnel, purchasing functions, rent, depreciation, and utilities.\u201d<\/p>\n
These are costs not directly applicable to the grant project, and not directly spelled out in eligible costs.\u00a0 For example, if personnel are hired specifically for the purposes of working on the grant, their salary and benefits would be a direct cost in the project budget.\u00a0 However, if an administrator who works for the organization regardless of whether or not the project is funded, but if the project is funded a portion of their work will support the grant project, their salary is an indirect cost.\u00a0<\/p>\n
A common way to account for indirect costs is using an indirect cost rate.\u00a0 Each NOFO will have information on how to calculate the indirect cost rate, and how to negotiate the indirect cost rate agreement.\u00a0 The gist of this rate is that it is a mechanism to determine the ratio between the total indirect costs and direct costs and can be calculated by first identifying all activities carried out by the organization or department applying for the grant.\u00a0 Next, take that list and classify all activities as either direct or indirect.\u00a0 Eliminate all major costs that distort expenditures (major capital expenditures, abnormal large expenditures, etc.) and eliminate all costs unallowable under the requirements of the grant.\u00a0 Then, add up the remaining direct costs, add up the remaining indirect costs, and divide the indirect cost total by the direct cost total.\u00a0<\/p>\n
Be sure to check the NOFO and check in with the grantor to ensure that indirect costs are appropriately listed and accounted for.\u00a0<\/p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ theme_builder_area=”post_content” _builder_version=”4.20.2″ _module_preset=”default”][et_pb_row _builder_version=”4.20.2″ _module_preset=”default” theme_builder_area=”post_content”][et_pb_column _builder_version=”4.20.2″ _module_preset=”default” type=”4_4″ theme_builder_area=”post_content”][\/et_pb_column][\/et_pb_row][\/et_pb_section]\n","protected":false},"excerpt":{"rendered":"
What is an Indirect Cost? When determining your project\u2019s budget for the grant proposal, you will likely see the term \u201cIndirect Costs\u201d in the Notice of Funding Opportunity.\u00a0 In most grants, indirect costs are allowable costs.\u00a0 This is often negotiated through an indirect cost rate agreement that factors in a reasonable portion of operating costs.\u00a0 […]<\/p>\n","protected":false},"author":20,"featured_media":6657,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-6653","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/posts\/6653","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/comments?post=6653"}],"version-history":[{"count":4,"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/posts\/6653\/revisions"}],"predecessor-version":[{"id":6659,"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/posts\/6653\/revisions\/6659"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/media\/6657"}],"wp:attachment":[{"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/media?parent=6653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/categories?post=6653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.boydgrants.com\/wordpress\/wp-json\/wp\/v2\/tags?post=6653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}