What are indirect costs?
Indirect costs, also known as overhead, and now officially known as facilities and administrative costs (F & A Costs), are those costs that cannot be charged as direct costs to a sponsored project. The amount charged is based upon a rate that reflects the University’s negotiated and federally approved rate or, if conditions warrant, a lesser rate abased upon such things as a maximum percentage or amount allowed by a sponsor. Please note: RSPA does not have the authority to reduce or waive indirect costs in an award budget. The amount charged is intended to pay for such costs as utilities, building maintenance, snow removal, administrative salaries, etc.. Click on Indirect Costs for a more detailed explanation of this subject.
Indirect costs are overhead costs for basic operational functions of a facility, organization, or business (e.g., lights, rent, water, insurance). If the applicant currently has a negotiated indirect cost rate with a Federal government agency (i.e., “cognizant agency”), an amount for indirect costs can be included in the budget. Indirect costs can be included in both the Federal and non-Federal cost shares as long as the method of calculation is clear and certain rules are followed. For the Prescott program, the Federal share of the indirect costs cannot exceed 25% of the total proposed direct costs. If the approved indirect cost rate is greater than 25% of the total proposed direct cost, the amount above the 25% level can be used as matching costs. If indirect costs are included, the package should include a copy of the current, approved, negotiated indirect cost agreement with the Federal government.
Indirect costs are those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project. Examples include depreciation and use allowances for an organization’s building and equipment, operation and maintenance expenses, sponsored projects administration, and departmental administration.
Indirect costs represent the expenses of doing business that are not readily identified with a particular grant, contract, project function or activity, but are necessary for the general operation of the organization and the conduct of activities it performs. In theory, costs like heat, light, accounting and personnel might be charged directly if little meters could record minutes in a cross-cutting manner. Practical difficulties preclude such an approach. Therefore, cost allocation plans or indirect cost rates are used to distribute those costs to benefiting revenue sources. Looking at it another way, indirect costs are those costs that are not classified as direct. Direct costs can be identified specifically with particular cost objectives such as a grant, contract, project, function or activity. Direct costs generally include: • Salaries are wages (including vacations, holidays, sick leave, and other excused absences of employees working specifically on objectives of a grant or cont
Indirect costs are agency wide, general management costs (i.e., activities for the direction and control of the agency as a whole). General management costs consist of administrative activities necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data processing. Conversely, direct costs are costs that provide measurable, direct benefits to particular programs. For LEAs, these can include costs that relate directly to instructional programs and also support costs that relate to the peripheral services necessary to maintain the instructional programs. Examples of LEA direct costs include salaries and benefits of teachers and instructional aides, payments for textbooks, instructional supply purchases, and pupil service costs (e.g., counseling, health services, pupil transportation).
