Why use an indirect cost rate? How does it benefit an organization?
General management costs are necessary for any program to exist. For instance, all programs will use the business office at one time or another for services such as contracts, purchasing, payroll checks, and personnel management. Without the benefit of an indirect cost rate, there would be no standard way for each program to contribute its share of the general management costs without spending a lot of staff time having to “time account” to each activity. By using an indirect cost rate, LEAs have a standardized, efficient way to recover a share of general management costs from individual programs.
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?
- Whats the difference between the fringe benefit rate and the indirect cost rate?
- Why use an indirect cost rate? How does it benefit an organization?
