The first question is what are the funding agency guidelines on
indirect costs. Some are specific about a fixed % of salary items or
not allowing indirect costs. Second what are the terms of the
indirect cost agreement established by your cognizant agency (DHHS)
with your institution for government grants? They may be based on
total direct costs modified by subtracting the cost of equipment,
student stipends and tuition and subcontracts over $25,000 to give a
modified total direct cost which is then multiplied by your indirect
cost percentage. This is the figure added to the direct cost to give
the total project cost. If your institution is the grant recipient
then it will cost you this much or more to run the project. If you do
not receive the full indirect cost the difference is an additional
institutional contribution to the project. You can establish this
total cost level for projects even where the agency guideline limit
the indirect cost to flat percentages of salaries. Even if other
sources contribute to the project you have the reporting costs for
them. They may provide you with their off campus indirect cost rate
if they are a subcontractor to your grant. Their budget in turn may
show they are contributing to the project by waiving full indirect
costs on their portion of the activity. This is the quickie version,
chech with your Grants & Contract Manager in Financial Administration
for the more detailed description. Good Luck. xxxxxx@LUC.EDU.