Indirect costs are the real costs of running your organization that are not attributable to one project — rent, accounting, HR, insurance, administration. Federal awards let you recover them.
The number changed
The de minimis rate rose from 10% to 15% in the 2024 Uniform Guidance revision, effective for federal awards issued on or after October 1, 2024.
If you have no negotiated rate agreement, you can charge up to 15% of modified total direct costs with no negotiation and no justification required.
A great many organizations are still budgeting at 10% out of habit. On a $300,000 project that is roughly fifteen thousand dollars left on the table, for changing one number.
Applied to MTDC, not to everything
The rate applies to modified total direct costs — total direct costs minus:
- Equipment and capital expenditures
- Rental costs
- Tuition remission and scholarships
- The portion of each subaward above $50,000 (raised from $25,000 in the same revision)
Applying your rate to total direct costs instead of MTDC is the most common budget error in federal grantseeking, and it happens in both directions.
Overhead is not a dirty word
There is a persistent belief, strongest in the nonprofit sector, that overhead should be minimized and apologized for. That belief is expensive and it comes largely from private funders who cap or refuse indirect recovery.
Federal awards are not like that. An organization that systematically declines to claim indirect costs is funding the government’s programs out of its own reserves, and will eventually run out.
Claim the rate you are entitled to.
Negotiated rates
If federal funding is a recurring part of your budget and your true indirect structure is meaningfully above 15%, a negotiated indirect cost rate agreement is worth pursuing — it applies across all your federal awards.
Below that threshold, the de minimis rate costs nothing to use.
Going deeper
Grant budgets, indirect rates and cost share covers the full picture, including cost share and the Single Audit threshold.