Budget and Narrative

Indirect costs are associated with the general operation of you organization. These can include such expenses as rent, utilities, insurance, equipment usage, administrative oversight and accounting services. Indirect costs are not listed as separate line items, but are usually expressed as a percentage (called the indirect cost rate) of the direct costs of a project. Calculating indirect costs (also sometimes called Faculties and Administration, "F & A") can be an extremely complicated process. On the other hand, the benefit of charging an indirect cost is that it is a more efficient use of time to charge shared costs than to determine the exact cost of each item used in a project and charge for indirect costs. Others allow no indirect costs or put a limit on how much you can charge for indirect costs.

Calculating Indirect Costs

NMSU has a negotiated Federal indirect cost rate. You will have to state somewhere in the budget what that rate is, what costs are included in the rate, and how you calculated the indirect percentage you want to claim.

In-Kind Expenses

These are non-monetary donations to your project of such things as volunteer time, staff time, equipment, supplies, and office space. They can be donated by other programs within your organization or by outside sources.

Direct Costs

These are those that are related to a specific project. They are listed as separate line items in your budget. Common direct costs include personnel, fringe benefits, travel, materials, supplies, and rent. The important thing is that you explain in the budget justification section how you calculated the formula for direct costs.