CALTCM Indirect Cost Policy

The California Association of Long Term Care Medicine (CALTCM), “the association”, has set forth the following policy on Maximum Indirect Cost Rates. 

CALTCM primarily funds specific projects with specific outcomes. The budget for each grant should reflect all of the expenses that are required for, and can be tracked directly to, the grant project. We call these costs “direct costs.” In addition, we may cover a limited amount of expenses that cannot be tracked directly to the grant project. We call these costs “indirect costs.”

Maximum Indirect Cost Rates

Indirect cost rates for grants are subject to the following limitations:

The rates provided above are the maximum rates allowed under the association’s policy. A grantee or contractor with an actual indirect cost rate lower than the maximum rate provided above should not increase the funding request to the maximum allowed. The intent is to sufficiently fund actual costs, not to generate financial surpluses for grantees.

  • The indirect cost rate awarded in a grant budget may vary up to the maximum percentages depending on factors including, but not limited to, the type of project, level of administrative effort required, cost structure of the grantee, overall grant size, and extent of sub‐awards.
  • Maximum Indirect Cost Rates and limitations apply to both the primary applicant organization and any sub‐grantees. Each respective organization may receive indirect costs UP TO the rate applicable to their organization type.
  • We seek consistency across funding mechanisms and thus we reserve the right to apply this philosophy and principles to contracts.
  • For profit entities may propose indirect costs as a percentage from 0% up to 15% to the extent that adequate explanation of the cost is provided.
  • We reserve the right to request substantiation of any grantee’s indirect cost rate.


Direct Costs

Direct costs are the expenses required to execute a grant that are directly attributable and can be reasonably allocated to the project. Program staff salaries, travel expenses, materials, and consultants required to execute the grant are examples. Costs that would not be incurred if the grant did not exist are often indicative of direct costs. 

Indirect Costs

Indirect costs are general overhead and administration expenses that support the entire operations of a grantee and that may be shared across projects. Examples include facilities expenses, e.g. rent, utilities, equipment for the grantee’s headquarters, and associated information systems and support and administrative staff such as HR, general finance, accounting, IT, and legal. Expenses that would be incurred regardless of whether the grant is funded are often indicative of indirect costs. While these costs may not be directly attributable to a project, they are real and necessary to operate as an organization.

Indirect Cost Rate

Indirect Cost Rate = Budgeted Indirect costs/ Budgeted Total Direct Costs (e.g. personnel, sub‐awards, supplies, equipment, etc.)

The indirect cost rate proposed in the budget should not exceed the grantee’s organizational rate (when defined by the same terms.)

While the definitions above are general guidance for all grants, the requirements and activities of each project should be considered when determining direct and indirect costs. We review budget assumptions and cost categorizations on a grant by grant basis, and treatment of specific costs in one grant should not be considered precedent-setting for other grants.

CALTCM Indirect Cost Policy Approved on December 7, 2017.