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Grantee Budget: Direct and Indirect Costs. Presented by: Freddie Isaac March 28, 2013. What are direct costs?. Direct costs are those costs that can be identified specifically with a particular sponsored project.
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Grantee Budget: Direct and Indirect Costs Presented by: Freddie Isaac March 28, 2013
What are direct costs? • Direct costs are those costs that can be identified specifically with a particular sponsored project. • Direct costs consist of salaries and wages, fringe benefits, material and supplies, services, travel, etc.
What are indirect costs? • Indirect costs are those costs that cannot be identified specifically with a particular sponsored project but are necessary to the operation of the organization and the performance of its programs. • Examples of indirect costs: operating and maintaining facilities, administrative salaries, equipment, and tuition are examples of the types of costs that are usually treated as indirect costs.
Types of Indirect Cost Rates • Provisional rate: a temporary indirect cost pending the establishment of a final rate. • Predetermined rate: is a rate based on an estimate of costs to be incurred. • Final rate: not usually subject to adjustment. • Fixed rate: similar to predetermined rate except the rate is carried forward
Things to know • Who needs an indirect cost rate? • Any organization in which cost can no longer be identified with a direct cost source. • Why do I need an indirect cost rate? • So that the organization can have more efficient accounting records which helps with audits, and financial management. • Which agency should approve my indirect cost rate(s) and issue a Negotiation Agreement? • Usually the agency you receive the most funds from.