Indirect costs are general overhead and administrative costs like rent, information technology, human resources, and office supplies, etc., that support the entire operations of a grantee. When these costs are covered, it enables grantees to adequately pursue their critical, mission-driven work, unfettered by additional financial pressures.

The Kauffman Foundation now provides an indirect cost rate based on the grantee organization’s budget size:

• Up to 25% of direct costs of the grant for organizations with budgets of $100 million or less.
• Up to 15% of direct costs of the grant for universities, government, or other organizations with budgets over $100 million.

The indirect cost rate awarded in a grant budget may vary depending on the cost structure of the grant such as the effort to manage sub-awards.

This structure covers the reported indirect costs of most of our grantees and will ensure the majority of these grantees have the flexibility and support to cover the true cost of their work. The rates listed above reflect the maximum allowable under the Foundation’s policy. Organizations with lower actual indirect cost rates should request only their true cost.

Direct vs. indirect costs

Direct costs are expenses that are essential and clearly linked to a specific grant-funded project. These might include salaries or travel expenses for the project staff, stipends for consultants, and costs associated with hosting meetings.

Indirect costs, on the other hand, are expenses that support the broader operations of an organization and cannot be easily tied to a single project. These might include costs from the accounting department, IT services, or executive offices. While not directly connected to a specific project, these costs are crucial for the overall functioning of the organization.