Indirect Costs

Indirect costs are those expenses that have been incurred for shared objectives and cannot be readily identified with a particular final cost objective.  The basis for indirect costs vary according to the organization.  For example, some organizations apply their indirect costs to all of their expenses, while others apply their indirect costs only to salaries, subgrants, etc. Therefore indirect cost rates are unique and should not be compared.  

A NICRA (Negotiated Indirect Cost Rate Agreement) is the indirect cost rate that has been negotiated between an organization and its cognizant US Federal Government Agency (e.g. the agency that provides the highest amount of funds to the organization). NICRAS are verified by an external auditor annually. 

Key Resources:

• USAID Best Practices Guide for Indirect Costing
• Global Fund: HQ Support / Indirect Cost Recovery Policy from the Global Fund  
• Indirect Cost Policy - Revised February 2012

Articles and Reports:

• GAO Report: Treatment and Reimbursement of Indirect Costs Vary Among Grants, and Depend Significantly on Federal, state and Local Government Practices - May 2010