Direct comparison
Foundation vs. Federal Indirect Cost Rates
How Gates, MacArthur, and Ford set indirect cost rates for grantees, and how that differs structurally from federally negotiated NICRA rates.
Side-by-side comparison
| Dimension | Private Foundations | Federal (2 CFR 200 / NICRA) |
|---|---|---|
| How the rate is set | Published unilaterally by the foundation; not negotiated with the grantee | Individually negotiated between the institution and its cognizant federal agency (HHS or DOD for most higher ed) |
| Typical rate/cap | Gates: 0% (govt/other foundations), up to 10% (US universities/colleges), up to 15% (NGOs, multilateral orgs, non-US universities, for-profits). MacArthur: flat 29% minimum. Ford: 25% minimum (raised from 20% in 2023) | Commonly 25%-70% of MTDC at major research universities/medical centers; 10% de minimis MTDC available without negotiation to entities with no prior negotiated rate |
| Cost base | Gates: Budgeted Indirect Costs / Budgeted Total Direct Costs, foundation-defined. MacArthur/Ford: percentage of project costs, no itemization required | Modified Total Direct Costs (MTDC) as defined in 2 CFR 200 Appendix III |
| What counts as "indirect" | Gates pushes dedicated project management/support into direct costs wherever possible, narrowing its own indirect pool | Uniform Guidance requires many administrative/facilities costs into the indirect pool regardless of project dedication |
| Negotiation/audit burden on grantee | None for MacArthur/Ford (automatic); Gates may request substantiation but does not require a formal negotiated agreement | Substantial: formal rate proposal, supporting cost data, negotiation with and periodic renewal through a cognizant agency |
| Stability over time | Can change by foundation policy update at any time (e.g. Gates's 2017 revision, Ford's 2023 increase, MacArthur's 2020 adoption) | Legally protected once negotiated; recent attempts at a flat government-wide cap (NIH's 15% notice, a DOE cap) were enjoined/rescinded rather than taking effect |
| Applies to sub-grantees/subawards | Gates: sub-grantee's own organization-type cap applies independently of the primary grantee's cap | Subrecipient may hold its own separate NICRA, or elect the 10% de minimis rate, independent of the prime recipient's rate |
Common questions
FAQ
Does the Gates Foundation match a grantee's federally negotiated (NICRA) rate?+
No. Gates's published FAQ states that it classifies dedicated project management and support costs as direct rather than indirect, so its percentage is calculated on a narrower, foundation-defined cost base than a federal NICRA and is not designed to reproduce the same total reimbursement.
Is Gates's 10% cap for US universities the same as the federal 10% de minimis rate?+
No. They share a number but are mechanically unrelated: the federal 10% de minimis rate (2 CFR 200.414(f)) is an opt-in rate on MTDC for any entity without a negotiated rate, while Gates's 10% is a foundation-specific maximum on Gates's own direct-cost definition, applicable only to US universities and community colleges.
Why did MacArthur and Ford move to flat indirect cost minimums instead of negotiating rates per grantee?+
Both cite the nonprofit "indirect cost equity" movement. MacArthur based its 29% figure on a commissioned study of IRS Form 990 data across 130,000+ nonprofits identifying the minimum rate associated with financially healthy organizations; Ford raised its minimum from 20% to 25% effective January 1, 2023, alongside similar commitments from Hewlett, Open Society, and Packard.
Are foundations legally required to follow 2 CFR 200 cost principles?+
No. 2 CFR Part 200 governs federal awards specifically; foundations set policy voluntarily and are free to define direct/indirect costs, rates, and mechanics however they choose, which is why Gates, MacArthur, and Ford each publish distinct, non-interchangeable policies.
