Section 8.2.3.3. covers indirect cost agreements and indirect costs. If an applicant has a federally approved indirect cost rate agreement, the applicant may use its approved rate. If an applicant does not have a federally approved indirect cost rate agreement, the applicant may include up to a de minimis rate of 15% of direct program costs as indirect costs.
Examples of indirect costs are rental costs for office space (excluding the cost of short-term rentals for event space for program-related activities), costs of operating and maintaining facilities, salaries and expenses of executive officers and/or administrative personnel, accounting, office equipment and office supplies.
If an applicant has a reasonable allocation methodology for identifying overhead expenses such as telephone expense or rent expense as allocable to a specific project, those expenses may be included as a part of direct expenses as long as their federally approved indirect cost rate or the de minimis rate calculation also takes into account overhead expenses as a part of direct expenses. For example, if in calculating an organization’s federally approved indirect cost rate, 100% of rent is included in the calculated rate, an applicant cannot include any portion of rent as a direct expense in its budget because that would result in a duplication of indirect expenses. Conversely, if a portion of rent is allocated as a direct expense of various programs and only a portion of rent is included as a part of the organization’s federally approved indirect cost rate, rent expense that can be reasonably allocated to the funded program may be included as a part of the direct expenses in the applicant’s budget.
