Indirect Cost Options

You have four options for determining indirect costs:

1. You may choose not to include indirect costs in your budget.

2. If you already have an existing negotiated indirect cost rate in effect with another federal agency, you may use this rate to calculate total project costs, as long as you apply the rate in accordance with the terms of the negotiated agreement and include a copy of the negotiated agreement as a Conditionally Required Document with your IMLS application. We will only accept an indirect cost rate that is current at the time awards are announced.

3. If your organization is in the process of negotiating an indirect cost rate with another federal agency, you may use the proposed indirect cost rate to estimate total project costs, as long as you apply the proposed rate in accordance with the terms of the proposed agreement and include a copy of the indirect cost proposal as a Conditionally Required Document with your IMLS application. In such situations, if we award a grant, we will only accept the rate if the negotiations are final by the award date and a copy of the final agreement is submitted to us. It is possible that we may reduce the amount of the award if the final negotiated rate is less than the rate that was used for budget estimates in the application budget. However, we will not increase the amount of the award if the final negotiated indirect cost rate is higher than the rate that was used for budget estimates in the application budget.

Whether your organization has an existing negotiated agreement or is in the process of negotiating one, you must calculate total project costs using an indirect cost rate appropriate to the type of project activity proposed. For example, you may only calculate total project costs using an existing negotiated rate for research activity if the activity proposed to us is a research project. Once we accept an indirect cost rate, this rate shall be considered fixed for the duration of the award even if during the course of the award you negotiate a new indirect cost rate.

4. If your organization does not have a negotiated indirect cost rate in effect with any federal agency and does not wish to negotiate one, you may use an indirect cost rate of up to 15 percent to calculate total project costs. If you choose to use this rate, you must be careful to exclude from the budget all administrative indirect-cost-type items, including but not limited to general telephone, postage, office supplies, and office space expenses. The 15 percent rate may be applied to only the first $5,000 of any single equipment purchase, and only the first $5,000 of each individual consultant fee, contract, service, and other distorting costs.

However you arrive at your indirect cost rate, you may receive federal funds for only that portion of the total direct costs for which you are requesting IMLS funds. However, you may also apply your indirect cost rate to the cost share portion of your project’s total direct costs, and count it as part of the calculated cost sharing in the project budget.

The cost of student scholarships, fellowships, other stipends, and/or tuition may not be included in the amount on which you request indirect costs.