Fiscal & Administrative Review Assistance for IDHS Providers: Indirect Costs Overview

What are indirect costs?

Costs incurred for common or joint objectives and cannot be readily identified with a particular final cost objective.

What is an indirect cost rate?

A calculation used to fairly determine the proportion of indirect costs each specific grant program should bear. An indirect cost rate is the relation between the total indirect expenses and some direct cost base.

Does my organization need an indirect cost rate?

An organization must have a negotiated indirect cost rate agreement (NICRA) or elect to use the Federal 10% de minimis rate to be reimbursed for any indirect costs within a program. All State of Illinois grantees also have the option to select "no rate" and not claim any indirect cost as part of their program.

What options are available to my organization to receive an indirect cost rate?

1. Current Federally Approved Indirect Cost Rate.
2. Negotiate a rate with the State of Illinois by submitting an Indirect Cost Rate Proposal (ICRP) to the State of Illinois' Centralized Indirect Cost System through the Grantee Portal.
3. Elect the 10% "de minimis" rate of Modified Total Direct Costs (MTDC).
4. Elect to use a "restricted" or "special" rate that is statutorily required within program rules.

Indirect cost reminders

1. Indirect costs are reimbursed at the approved and effective indirect cost rate.
2. Review your specific funding notice for any indirect cost restrictions or limitations on the award.
3. Develop and document a cost allocation methodology which consistently defines costs as either direct or indirect.
4. Select an indirect cost election in the Grantee Portal on an annual basis.
5. Strictly adhere to the approved effective indirect cost rate and base when calculating and claiming indirect costs throughout the award period.

Indirect Costs Overview

Fiscal & Administrative Review Assistance for IDHS Providers