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Indirect Costs

Indirect Cost Distribution Bases

Irrespective of the allocation method used by the organization, only the following three “direct cost” bases for a percentage share of indirect costs will be allowed by OJP and are available to you as a distribution base:

  • Modified Total Direct Cost, or MTDC. This base includes all direct costs incurred by the organization with the exception of distorting items such as equipment, capital expenditures, pass-through funds, and each major subcontract or subaward over $25,000.
  • Direct Salaries and Wages. This base includes only the costs of direct salaries and wages incurred by the organization.
  • Direct Salaries and Wages plus Fringe Benefits. This base includes the costs of direct salary and wages and the direct fringe benefits incurred by the organization.

Transferring funds into or out of the indirect cost category is not allowable without prior approval from the awarding agency. A budget modification is required.