Indirect costs can be confusing if you are not a seasoned grant expert, finance professional or CPA. Let's be honest. Even among this well-trained group, indirect costs can be a mystery. But the truth is that indirect costs are a necessary and important part of administering your grant-funded project or program. Getting this component wrong can adversely impact your organization. We've compiled a number of resources in this post to help you make sense of indirect costs, including training videos from experts.

So you’ve been awarded a million-dollar contractual grant! Congratulations! But do you know the true cost of performing the services you’ve committed your agency to fulfill? Are you factoring in your overhead costs? Do you know if the full cost of the grant will actually exceed $1,000,000? And if it will, how can you get that additional administrative expense reimbursed? The answer is by preparing a cost allocation plan.

In the summer of 2014, almost everyone either participated in or knew someone who participated in the ALS Ice Bucket Challenge. It was a win/win situation – The ALS Association gained exposure through various social media outlets, and experienced a near 1,000 percent increase in donations from the previous year at that time. However, people started to look a little deeper and wonder, Where is my money going? Is it really supporting research? They are shocked to discover that some of the donation funds actually go toward administrative costs and overhead. While those unfamiliar with a nonprofit budget might find this disenchanting, this is actually common and accepted practice, and must be understood in more detail to clarify some misconceptions.