Published: March 2023; Last Updated: February 2025
For universities and community colleges, the maximum indirect cost rate allowable by GiveWell is 10% of modified total direct costs (MTDC). The term “indirect cost” means an expense incurred by an organization that is of a general nature and is incurred to benefit at least two or more functions or objectives within the organization. Indirect costs are not usually identified specifically with a grant, grant agreement, project, or activity, but are necessary for the general operation and administration of the organization.
For GiveWell grants, MTDCs may only include the first $25,000 in subgrants. MTDCs are calculated by subtracting the amount of any subgrant(s) awarded to each subgrant recipient over $25,000 from total direct costs. $25,000 may be counted towards MTDCs once per subgrant recipient. Below is a sample indirect costs calculation using MTDC for a grant with $100,000 in direct costs, of which $40,000 will be subgranted.
| Calculation step | Amount | Notes |
|---|---|---|
| Total direct costs | $100,000 | Includes $40,000 in subgrants to ABC Inc. |
| Subgrant adjustment | - $15,000 | Portion of subgrants exceeding $25,000 cap |
| Modified total direct costs (MTDC) | $85,000 | Base for indirect cost calculation |
| Indirect cost rate | 10% | |
| Total indirect costs | $8,500 | MTDC x 10% |