What are indirect costs?
An indirect cost is an organization’s incurred cost that cannot be readily isolated or identified with just one project or activity. These types of costs are often referred to as “overhead costs.” Typical examples of indirect costs are general telephone service, postage, office supplies, office space expenses, and administrative or financial operations for an entire organization.
What are my options for calculating and including indirect costs in my project budget?
You can choose to:
Use a current indirect cost rate already negotiated with a federal agency;
Use an indirect cost rate proposed to a federal agency but not yet approved;
Use a rate not to exceed 15% of direct costs; or
Not include any indirect costs as part of funds requested from IMLS.
What is a federally negotiated indirect cost rate, and how do I use one?
Federally negotiated indirect cost rates are negotiated agreements between federal agencies and non-profit organizations. If your organization already has 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 current negotiated agreement with your grant application. We will only accept federally negotiated indirect cost rates that are current at the time awards are announced.
How do I use the 15% indirect cost rate?
No additional documentation is required to use this rate. If you choose to use this rate, you must be careful to exclude from the budget all indirect-cost-type items, including but not limited to general telephone service, postage, office supplies, and office space expenses, and administrative or financial operations for the applicant’s entire organization. The 15 percent rate may be applied to only the first $5,000 of equipment to be purchased and the first $5,000 of each individual consultant fee, contract, or service cost.
What if my organization is currently in indirect cost rate negotiations with a federal agency, or my organization’s current indirect cost rate will change or expire before grants are awarded in this IMLS program?
If your organization is in the process of negotiating an indirect cost rate with another federal agency, you may use the indirect cost rate that was proposed to the federal agency to estimate total project costs. You must include with your grant application a copy of the indirect cost proposal. In such situations, if we award a grant, we will accept the rate only 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.
Can I apply my indirect cost rate to the cost sharing portion of my proposal budget?
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.
Are there any other project costs that cannot be included in my indirect cost calculations?
Support costs provided directly to students such as scholarships or fellowships, stipends, wages, tuition, student materials including books or other supplies, student memberships in professional organizations, internship expenses, or travel may not be included in the amount on which you request indirect costs.