Indirect costs represent the expenses of doing research that are not readily identified with a specific activity but are necessary to the general operation of the project. To be blunt, indirect costs are anything that is not a direct cost, such as: heat, light, or accounting. In general, indirect costs are calculated as a percentage to determine the proportion of departmental organizational costs each project should bear. This will allow for each project represented in the direct costs base to assume their fair share of indirect costs when the rate is applied.
- Indirect Costs avoid burdensome and impractical tracking of items or services that support the general research enterprise. They are calculated as a percentage of direct costs and are awarded in addition to direct costs.
- When preparing a proposal, read the instructions carefully to determine whether indirect costs ARE or ARE NOT included in the budget limit.
- Your institution likely negotiates its federal rate annually. Only Research Administration, in consultation with other administrators, may waive or lower this rate for individual proposals. It is never negotiated with a funding agency during the competitive review process.
| Foundation 1 | Foundation 2 | Foundation 3 | Federal | |
| Indirect costs | 10% | 20% | 0% | 50% |
| Salary | Capped at $200,000 | No cap; but only 25% of budget may be spent on salaries | No PI or other investigator salary, but support staff OK | Capped at $183,300 for HHS agencies |
| Supplies | Office supplies OK | No supplies allowed | Not mentioned | Office supplies not OK |
| Equipment | Equipment OK | Equipment not allowed | Equipment OK | Equipment OK; defined as $5000 per item |
| Matching | Institution must match 1:1 | No match required | Institution must match PI effort 1:1 | Rarely required, but must be tracked if committed |
| Payment | 100% up front | Cost reimbursable | 2 payments; second payment dependent on progress | Usually cost-reimbursable |