What are indirect costs?
In a multi-program organization, all costs can be divided into two different types: direct and indirect. Direct costs are those which are clearly and easily attributable to a specific program. For example, the cost of new basketballs is clearly related to the after-school athletics program. Similarly, it is easy to justify charging counselors salaries to the counseling program. Indirect costs are those which are not easily identifiable with a specific program, but which are, nonetheless, necessary to the operation of the program. These costs are shared among programs and, in some cases, among functions (program, management and general, and fundraising). The executive director’s salary is a common example of an expense which benefits all programs and functions. Other indirect, or shared, costs may include rent, telephone, postage, printing and other expenses which benefit all programs and functions of an organization.
Indirect costs, ie, overhead or administrative costs, are costs to the institution for the support of your study. Indirect costs are not easily identifiable in an economically feasible way as exclusively related to a particular project but are necessary to conduct the grant. Some examples of these costs are human resources department costs, payroll processing and accounting costs, janitorial services, utilities, property taxes, property and liability insurance, and building maintenance.
In a multi-program organization, all costs can be divided into two different types: direct and indirect. Direct costs are those which are clearly and easily attributable to a specific program. For example, the cost of new basketballs is clearly related to the after-school athletics program. Similarly, it is easy to justify charging counselors salaries to the counseling program.
Indirect costs, also known as overhead and now officially known as facilities and administrative costs (F&A Costs), are those costs that cannot be efficiently charged as direct costs to a sponsored project. The amount charged is based upon a rate that normally reflects WPI’s currently negotiated and federally approved rate or, if conditions warrant, a lesser rate based upon such things as a maximum percentage or amount allowed by a sponsor or a reduction approved by the University. 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.
