RC Forward (a project of Rethink Charity) 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.
RC Forward 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%.