When applying for a grant, keep in mind that the funding organization wants to support a specific project rather than give a general donation. As part of the application, often you will have to include indirect or administrative costs as part of the budget estimate. This is because funding organizations want to see the majority money put towards the actual project and not towards staffing, which is typically the major portion of the administrative costs. When calculating the administrative costs, consider the entire project length and its needs from start to finish.
Read the grant instructions for what constitutes administrative costs. Some grants are very specific about what must be included in this estimate while others may give you more leeway.
Write down the staff positions you need to accomplish the project and how long you expect the project to last. Write down the expected salary next to each position and the cost of any benefits such as health care premiums and worker’s compensation insurance. For example, if the project requires only a manager for six months, then calculate that position’s salary and benefits for six months.
Write down any other administrative costs that you expect to incur during the project as required by the grant application. This may include rent on office space or the purchase of computer equipment. Some grants may not include facilities as an administrative cost. Do not add these in if they are not part of the grant’s definition of administrative costs.
Add up all the personnel and other administrative costs. Use this estimate for your project’s budget.
Calculate the percentage of the administrative costs if required. Divide the administrative costs by the total project estimated cost, then multiply that answer by 100.
- U.S. Department of Health & Human Services: Frequently Asked Questions Modular Research Grant Applications
- U.S. Department of Health & Human Services: Treatment of Administrative and Clerical Salaries Under NIH Grants and Cooperative Agreements Awarded to Educational Institutions; September 23, 1994
- The Gransmandship Center: Understanding Indirect Costs; Henry Flood and Richard W. Phelps
- United States Department of Labor: Guidelines for Preparing Indirect Cost Rate Proposals