What does “Indirect costs” mean in grants?
The cost of the organization existing at all: rent, accounting, IT, leadership attention. They are real costs of doing the work. Funders usually pay them as a percentage rate on top of the direct costs. Leaving them out of a budget means the organization quietly pays for the project's share of its own office, bookkeeping and management out of other money. A three-year project run from your building, through your payroll system and under your director's oversight uses a real share of every one of those shared costs.
A common mix-up
What people assume: Costs that aren't part of the project, so funders won't pay for them.
What it means in grants: Real overhead like rent and accounting. Most funders pay it as a percentage rate.
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