Indirect Cost Policy

To qualify for indirect costs, an organization must meet the following criteria:

Annual Budget: The organization must exceed an annual budget of $750,000.
Multi-Program Entity: The organization must operate as a multi-program entity, managing more than one program or service.

Once these criteria are met, the organization is eligible to include an indirect cost budget line item in its grantee budget.

The indirect cost rate shall not exceed 15% of the total grant funds awarded per year.

For example, out of a 2026 Grassroots grant of $100,000, only up to $15,000 could be available for indirect costs.

The indirect cost rate will be applied to the total of the grant, reduced by any pass-through funds or sub-awards. For example, for a $100,000 grant with sub-awards of $50,000, only up to $7,500 could be available for indirect costs.
The indirect costs must be allocated among functional areas (various programs, M&G and fundraising) on a rational, systematic and consistent basis that results in an allocation of costs that is reasonable, such as employee hours or salaries incurred by functional area or square footage used by each functional area. Time sheets are highly recommended to track employee time or salaries by functional area.
Note that this consistently applied method may result in less than or more than 15% of allocable M&G expenses being allocated to a grant or program. If it is less than 15%, include only that amount in reported indirect costs. (Indirect cost reported would be less than 15% of the total grant.) If it is more than 15%, only include the 15% in reported indirect costs. (Indirect cost reported would be limited to 15% of the total grant)

Administrative Costs: Indirect costs must be related to the organization’s management and general (M&G) expenses, which relate to more than one program or supporting activity of the organization, rather than direct costs tied to specific programs or projects. For example, costs such as rent, supplies, postage and printing. Accounting fees (accounting, finance or auditing), legal fees (that are related to the overall organization and not the grant program) as well as human resources costs are considered unallowable and are not to be included in indirect costs.
Exclusivity to M&G: Indirect costs may not be attributed to individual programs or projects funded by BCYF. Instead, these costs must be exclusively recorded to the organization’s management and general or administrative program categories.

Evidence of Administrative Costs: Organizations are not required to submit individual supporting invoices for indirect costs. However, they must provide evidence and documentation that supports the allocation of administrative and general expenses. This can include:
- Detailed financial reports showing the allocation of indirect costs.
- A cost allocation plan or methodology that demonstrates how indirect costs are distributed across the organization.
Accounting System Requirements: The organization’s accounting general ledger system must have the ability to separate program, M&G and fundraising costs. This includes maintaining appropriate classifications that allow for the clear identification and segregation of indirect costs within the organization’s financial records.

Indirect costs cannot include expenses directly associated with your organization’s other project or programs, such as direct salaries, materials, or project-specific equipment.
Costs that are specifically disallowed by the Allowable Costs Reference Guide cannot be included as part of the indirect cost base.
Examples of exclusions include: fines, penalties, fundraising, finance charges or lobbying expenses

Recipients of city grants are required to report on the use of indirect costs as part of their grant progress reports. Any deviations from the established indirect cost rate or allocation methods must be promptly reported to the BCYF Compliance Manager.