Setting Up Indirect Cost Rates

Indirect costs (also called overhead or F&A costs) are expenses that benefit multiple programs but can't be directly assigned. This guide covers how to set them up in GrantLink.

Understanding Indirect Costs

What Are Indirect Costs?

Costs that support your entire organization:

• Rent and utilities
• Administrative salaries
• Accounting and HR
• Insurance
• General supplies

Indirect Cost Rates

An indirect cost rate expresses overhead as a percentage of a cost base:

Rate = (Indirect Costs ÷ Direct Cost Base) × 100

Common rates range from 10% to over 50% depending on your organization.

Types of Indirect Cost Rates

De Minimis Rate

• 15% of Modified Total Direct Costs (MTDC)
• Available to any organization without a negotiated rate
• No documentation of actual costs required

Negotiated Rate

Established with a federal cognizant agency:

• Based on your actual indirect costs
• Must be documented and defended
• Typically higher than de minimis

Funder-Imposed Caps

Some funders limit indirect recovery:

• "No more than 15% indirect"
• "Indirect costs not allowed"
• "Use your negotiated rate up to 20%"

Configuring Indirect Costs in GrantLink

Organization-Level Settings

1. Go to Settings > Indirect Costs
2. Enter your default indirect cost rate
3. Select your cost base:
   • Total Direct Costs
   • Modified Total Direct Costs (MTDC)
   • Salaries and Wages
   • Direct Labor
4. Save

Grant-Level Overrides

Each grant can have its own rate:

1. Open the grant
2. Go to Settings
3. Enable indirect cost tracking
4. Set the rate (or use funder's cap)
5. Select the cost base
6. Identify excluded costs (if using MTDC)

MTDC Exclusions

Modified Total Direct Costs typically exclude:

• Equipment over $5,000
• Capital expenditures
• Participant support costs
• Subawards over $50,000
• Rent
• Tuition remission

Calculating Indirect Costs

GrantLink automatically calculates indirect costs:

1. Sums eligible direct costs
2. Applies exclusions (if MTDC)
3. Multiplies by the indirect rate
4. Compares to budget limit
5. Displays in grant dashboard

Reporting Indirect Costs

Funder reports show:

• Direct costs by category
• Indirect cost base
• Rate applied
• Indirect amount
• Any cap limitations

Best Practices

1. Know your rate - Establish or document your indirect rate
2. Understand funder limits - Check each grant's allowed rate
3. Track carefully - Indirect cost recovery affects cash flow
4. Review annually - Rates should reflect current costs
5. Consider negotiating - If 10% doesn't cover your costs