Indirect Cost Rate Calculator
Indirect Costs Are Real Costs That Don't Fit Neatly Into a Line Item
Rent, utilities, IT support, and central administrative salaries all keep a program running, but none of them belong to any single grant-funded activity. Rather than trying to itemize a fraction of the electric bill for every project, organizations negotiate or apply a single indirect cost rate that recovers those shared costs as a consistent percentage of a defined direct cost base.
The Formula
The direct cost base is whatever category of direct costs the rate is calculated against — often total direct costs or modified total direct costs (which typically excludes items like equipment and subcontracts above a threshold), depending on the organization's negotiated agreement or the funder's specific rules.
Why This Rate Shapes Federal and Foundation Awards
- Negotiated rate agreements — organizations that receive significant federal funding typically negotiate a formal indirect cost rate with a cognizant federal agency, which then applies across their federal awards.
- The federal de minimis option — under the Uniform Guidance (2 CFR §200.414(f)), any organization that has never had a negotiated indirect cost rate may elect to charge a de minimis rate of 10% of modified total direct costs, without needing to negotiate one.
- Full cost recovery — an indirect rate that's too low leaves an organization subsidizing grant-funded work out of unrestricted funds; getting the rate right is central to financial sustainability.
- Comparing funder policies — some foundations cap indirect cost reimbursement well below an organization's actual negotiated federal rate, which this calculation helps quantify as a real funding gap, not just a policy footnote.
How to Use This Calculator
- Enter Indirect Costs ($) — the shared costs being recovered.
- Enter Direct Cost Base ($) — the direct cost figure the rate is applied against.
- Select Calculate to see the resulting indirect cost rate as a percentage, along with total costs combined.
Related Calculations
Compare against a general operating overhead figure with the Overhead Rate Calculator, or build indirect costs into a full program budget with the Program Budget Calculator.