What is an indirect cost rate, and do I need one?
In addition to the direct costs that may be assigned readily to a given project, there may be other costs that are not so easily designated because they benefit more than one project or activity. Such common or joint costs usually are referred to as indirect costs, or overhead. Examples of indirect costs might include rent, utilities, etc. The federal government has developed a method for determining each project’s fair share of an organization’s indirect costs. This method is based on an indirect cost rate (ICR), which first must be established by agreement between an organization and a federal agency. The organization must initiate the negotiation for an ICR. Generally, the agency that provides the preponderance of the organization’s federal funding is responsible for negotiating the ICR. Once an organization has an ICR from one federal agency, that ICR may be used when applying for a grant from any other federal agency. The ICR agreements are valid for a fixed period only and usuall
