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Policy on Indirect Costs

The Open Philanthropy Project maintains a policy that limits indirect costs (‘overhead’) as follows:

  • For universities and community colleges: maximum 10% rate, i.e. indirect costs may not exceed 10% of total direct costs

Open Philanthropy defines indirect costs as expenses related to the general operations and administration of an organization, which are not directly allocated to or identified with a specific project.

Example Calculation
To explain how our indirect costs policy works, here’s an example calculation.

Let’s say you want to request a $110 grant and your indirect costs are $10. This would fit exactly within our policy, since the direct costs (direct costs = total - indirect costs) are $100, and the indirect costs are 10/100=10%.

However, if the total grant amount was $100 including indirect costs of $10, then that would be too high, since the direct costs would be $90, and 10/90=~11%.