How do I use the indirect cost rate to recover/charge indirect costs?
If indirect costs are allowed, the indirect cost rate can be used to budget the maximum amount of indirect costs allowable for a program and then to claim the actual amount of indirect costs after the program expenditures have been made. It is important to remember that when recovering/charging indirect costs, the indirect cost rate is applied to the amount actually expended, not the total amount budgeted. Example of budgeting for indirect costs: Assume an LEA’s approved indirect cost rate is 8.00 percent and the grant amount is $10,000. The LEA plans to spend the entire $10,000 in the same fiscal year and does not expect to spend any of the $10,000 on excluded costs (see question 5 for further information on excluded costs). Since the grant amount is for $10,000, and indirect costs are part of the grant amount rather than in addition to it, you must back into a budgeted indirect cost amount that keeps the grant from exceeding $10,000. To do this, divide $10,000 by 1.08, which equals $
Related Questions
- If an organization does not have a federally approved indirect cost rate; can the organization request indirect costs in the budget submission? If so, what is the limit?
- Does an LEA have to charge the entire amount of indirect costs allowed by its indirect cost rate?
- How do I use the indirect cost rate to recover/charge indirect costs?
