Direct comparison
Direct Vs Indirect Costs On Grants: Key Differences & Comparison | CASRAI
Direct and indirect costs represent the two primary categories of a research grant budget. Direct costs fund specific project activities like salaries and equipment, while indirect costs cover broader institutional overheads like building maintenance and administrative support.
Side-by-side comparison
| Dimension | Direct Costs | Indirect Costs (F&A / Overhead) |
|---|---|---|
| What it is | Expenses directly tied to and spent on the specific project | Shared overheads incurred to support the general research environment |
| Assignability | Easily and specifically assigned to a single grant | Cannot be easily or accurately assigned to a single grant |
| Common examples | Research staff salaries, lab consumables, specific equipment, travel | Library databases, building utilities, central admin salaries, IT networks |
| Funder caps | Usually capped only by the total award amount requested | Subject to strict percentage caps (e.g., NIH negotiated rates or 10-20% flat caps) |
| Tracking | Tracked item-by-item with invoices and timesheets | Calculated as a flat percentage of the direct cost base (e.g., MTDC) |
| Recipient | Goes directly to the research team's project accounts | Retained by the host institution to support central services |
Common questions
FAQ
What does F&A stand for in grant budgeting?+
F&A stands for Facilities and Administrative costs. It is the formal term used by US federal agencies like the NIH and NSF to describe indirect costs or overheads.
Are indirect costs considered 'profit' for a university?+
No — they cover the real, essential costs of running a research institution that are not billed directly to individual projects, such as research compliance, lab safety, libraries, utilities, and security.
What is a Modified Total Direct Cost (MTDC) base?+
It is the portion of direct costs to which the negotiated indirect cost percentage is applied. It typically excludes major expenses like expensive equipment, sub-awards over a certain limit, student tuition, and rent, to prevent over-inflating overhead claims.
Going deeper
