The Great Indirect Cost Debate
Get Informed. Demand Better.
Let’s talk about something that sounds boring but actually shapes everything: indirect costs.
I know. Your eyes might be glazing over already. But stay with me because this matters more than most people realize.
The current de minimis indirect rate for many federal grants is 15%.
Fifteen percent.
That’s supposed to cover your accounting systems. HR. Legal compliance. Office space. Internet. Time tracking. Subrecipient monitoring. Payroll. Procurement. Insurance. Technology. Training. Audits. Admin support.
And still have some fuel left in the tank to grow.
It’s laughable.
Especially when the expectations keep growing—more rigor, more reporting, more risk management. But the overhead allowance? Yes, it just went up in November, but not high enough.
Meanwhile, many large institutions (hospitals, universities) have negotiated indirect rates far higher—because they have the time, money, and staff to do so. And the sheer amount of federal funding makes this worth the effort.
Smaller nonprofits with just one or two federal grants? Not so much. And yet we’re out here delivering outcomes, building trust, and carrying the weight in communities that need it most.
So when we talk about equity in federal funding, we have to talk about indirects.
This isn’t just about fairness. It’s about capacity. Sustainability. Whether organizations can say yes to funding without hurting themselves in the process.
I want a future where:
All federal grants include indirect costs on top of the award, not inside it.
Community-based organizations have access to NICRA support.
We stop treating indirect as overhead to be cut, and start treating it as infrastructure to be invested in.
Until then, we build power by getting informed and demanding better.
Want to learn how to bake real capacity into your grant budgets without playing small?
I break this down (with examples and templates) inside the Federal Grants Accelerator.
But I also share resources, tools, monthly coaching, and real talk every week in Quick Tips.
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