Indirect costs in federal grants are typically considered?

• A. Direct costs only.
• B. Optional and may be ignored.
• C. Shared overhead costs allocated via an approved rate and must be applied consistently.
• D. Reimbursed only after grant ending.

Answer: (C)

Indirect costs are overhead costs that support the project but cannot be traced to a single activity. In federal grants, these are recovered through an approved indirect cost rate, negotiated with the funding agency and applied to direct costs to determine the overhead reimbursement. The essential point is consistency: once the rate is established, it must be applied uniformly across all applicable projects and activities under the award, following the approved rate agreement and policy. This means indirect costs are budgeted and drawn down during the grant period as the work progresses, not only after the grant ends. They are not direct costs, and they aren’t optional to ignore. So the correct description is that indirect costs are shared overhead costs allocated via an approved rate and must be applied consistently.