Indirect Cost Policies

Most foundations with formal grant-making programs have a policy that states whether they will allow any portion of a grant to be allocated to Facilities and Administrative Costs (also known as indirect costs or overhead). A typical range for foundations that do fund indirect costs is between 10 percent and 20 percent.

Facilities and Administrative Cost rates are set by the Federal government through negotiation with the Department of Health and Human Services, Division of Cost Analysis. Washington University submits a proposal based on its audited financial statements and in accordance with guidelines issued by the Federal Office of Management and Budget (OMB A-21). The proposal is subject to review and further audit at the discretion of the Federal negotiators.

Since the indirect costs foundations allow is usually lower than the university’s actual costs, investigators are required to request the maximum allowable indirect costs. Washington University employees can view details of the School of Medicine policies regarding indirect costs on its Finance Office web site.