Insights
Foundation Indirect Cost Policies: What Major Funders Pay
There is no single foundation rule. Each foundation sets its own indirect cost policy, and many don’t publish one. Of the ten we checked on the funders’ own sites on October 30, 2026, MacArthur pays a flat 29 percent, Ford and Packard set minimums of 15 to 25 percent, and Gates, Moore, Walton, Kauffman, and Simons cap it at 12.5 to 25 percent for nonprofits, with lower caps for universities. The base each rate applies to matters as much as the percentage.
For this article, “indirect costs” means the costs of running the organization that a single project can’t easily be charged for, such as rent, finance, IT, and leadership. Foundations also call them overhead or administrative costs. The “rate” is the percentage the funder adds to, or allows on top of, the direct costs, unless its policy defines it another way. Each funder’s own written policy controls. We list what each one said on its own site on the day we checked.
| Funder (source) | Rule | Applied to | Main exclusions |
|---|---|---|---|
| MacArthur Foundation (2024) | Flat 29% | Project costs | General operating, endowment, flexible support, expedited small grants |
| Ford Foundation (2023) | At least 25%; a higher documented rate may be considered | Project grants to 501(c)(3) or equivalent groups; the FAQ doesn’t define the base | General operating and core support, expedited grants, grant increases |
| Packard Foundation (2024) | At least 25%, 20%, or 15%, by grantee budget size | Project grants | Not stated in the post |
| Kauffman Foundation (undated) | Up to 25%, or up to 15% for universities, government, and groups over $100 million | Direct costs | Covers project, research, and collective impact grants; may vary with the grant’s cost structure |
| Simons Foundation (2026) | 20%, nonnegotiable | Direct costs | Equipment over $10,000, tuition, each subcontract’s costs above $25,000 |
| Walton Family Foundation (2022) | Up to 20%, or up to 15% for universities and intermediaries | Total direct project costs | General operating, endowment |
| Gates Foundation (2017) | Up to 15% for nonprofits (NGOs); up to 10% for U.S. universities; 0% for government agencies and other foundations | Total direct costs | May be lowered for heavily subgranted budgets or commodity purchases |
| Spencer Foundation (undated) | None on awards of $75,000 or less; 15% above that | Total direct costs | Non-research grants such as fellowships; no government-approved overhead rates |
| Moore Foundation (undated) | Up to 12.5% | Direct costs, minus consultants, contractors, subgrants, equipment, tuition, and other listed items | The items left out of the base |
| Hewlett Foundation (2019) | No fixed cap or floor for U.S. nonprofits; universities presumptively 10% | Universities: the total grant amount | General operating support |
What do major foundations pay for indirect costs?
The stated rates above run from nothing to 29 percent. That isn’t a ceiling for the whole field. Ford and Packard set minimums, Ford will consider a higher documented rate, and Hewlett sets no fixed maximum for U.S. nonprofits. Spencer pays no indirect costs on research grants of $75,000 or less (Spencer). MacArthur adds a flat 29 percent to its project grants to nonprofits, with a few exceptions such as its expedited small grants. It picked that number after a study found that 29 percent was the lowest rate linked to financially healthy organizations in the data (MacArthur). Most of the rest sit between 12.5 and 25 percent.
We left out Mellon, Sloan, and the Robert Wood Johnson Foundation. Their rates appear in secondary lists, such as university research office tables, but we couldn’t confirm a current policy on the foundations’ own sites. Those lists are often years old, so treat them as leads, not rules.
Is a foundation’s indirect rate a cap or a minimum?
It can be either, and the difference matters when you build the budget. There are five kinds of policy in the table:
- Flat rate. MacArthur applies 29 percent to the project costs and adds it to make up the total grant. You don’t have to itemize the indirect costs (MacArthur).
- Minimum. Ford pays at least 25 percent on eligible project grants, up from 20 percent before 2023, and will consider a higher documented rate (Ford). Packard sets minimums of 25 percent for grantees with budgets under $5 million, 20 percent between $5 million and $50 million, and 15 percent above $50 million (Packard).
- Cap. Gates, Moore, Walton, Kauffman, and Simons set a ceiling. Simons says its 20 percent rate is nonnegotiable (Simons).
- Threshold. Spencer pays nothing on research grants of $75,000 or less and 15 percent of total direct costs above that. It “does not pay government-approved overhead rates on research grants” and pays no indirect costs on non-research grants such as fellowships (Spencer).
- Case by case. Hewlett sets no fixed maximum or minimum for U.S. nonprofits. It either accepts the rate in your proposal or discusses it with you (Hewlett).
A minimum is a floor you can ask above, with records to back it. A cap is a ceiling you can ask below, and Gates expects you to. Its policy says a grantee whose actual rate is 8 percent should budget 8 percent, not the 15 percent maximum (Gates).
What does the indirect rate apply to?
Two foundations with the same percentage can pay very different amounts, because each one applies its rate to a different base. Moore applies its 12.5 percent to direct costs after taking out consultants, contractors, subgrants, equipment, endowments, and several other items (Moore). Simons leaves out equipment over $10,000 and tuition, and counts only the first $25,000 of each subcontract (Simons). Hewlett’s 10 percent for universities is a share of the total grant, not of the direct costs (Hewlett).
The table below is a made-up example, not a client. It runs one $100,000 project budget through four of the policies. The same project could get $10,000 or $29,000 for indirect costs, depending on the funder.
| Policy | How the rate works | Indirect costs | Total grant |
|---|---|---|---|
| MacArthur, 29% of project costs | 29% of $100,000 | $29,000 | $129,000 |
| Ford, 25% minimum | At least 25% of $100,000 (Ford’s FAQ doesn’t define the base, so we assume direct costs) | $25,000 or more | $125,000 or more |
| Moore, 12.5% cap, with $20,000 of the budget in a subgrant | 12.5% of $80,000 (the subgrant is excluded from the base) | $10,000 | $110,000 |
| Hewlett, university at 10% of the total grant | Indirect is 10% of the total, so the total is $100,000 ÷ 0.9 | $11,111 | $111,111 |
Read the definitions in each policy before you do the math. The words “direct costs,” “project costs,” and “total grant” mean different things from one funder to the next.
Do foundation indirect rates apply to general operating support?
No, as a rule. General operating support is unrestricted money for the whole organization, so there is no project budget to add a rate to. MacArthur, Ford, and Walton each say in writing that their indirect cost policies don’t apply to general operating grants, and MacArthur and Walton also leave out endowment grants (MacArthur; Ford; Walton). Hewlett’s policy FAQ says the same about its general operating grants: “The indirect cost policy does not apply” (Hewlett).
If a funder offers you a choice, the general operating grant is usually the better deal for overhead, because you decide how to spend all of it.
Can you ask a foundation for more than its stated rate?
Sometimes. Ford says it will consider a higher rate if you can document it (Ford). Hewlett will discuss a nonprofit’s proposed rate, and says it “may make an exception” for a university rate above 10 percent if the extra costs can be reasonably and openly tied to the project (Hewlett). Simons says its 20 percent rate is nonnegotiable, so there is nothing to ask for there (Simons).
The strongest case is your real rate, worked out from your audited financial statements: total indirect costs divided by total direct costs. If you have a federally negotiated rate, bring the agreement. Ford counts a federal negotiated rate as one kind of documented rate (Ford), but no foundation has to accept it. For comparison, the federal de minimis rate is up to 15 percent of modified total direct costs (2 CFR 200.414(f)), and that rule binds federal awards only. Our post on the de minimis rate vs a negotiated rate explains how that base works.
What if a foundation doesn’t publish an indirect cost policy?
Many don’t. The ten above are large national funders. Smaller family and community foundations may have no written rate at all, and their guidelines may just list “administrative costs” as allowed or not.
Ask the program officer before you submit, in writing, and keep the answer in your file. A short question works: “Does the foundation allow indirect costs on project grants, and if so, at what rate and on what base?” Policies change, so check again for every new proposal. The dates in our table are the dates we checked, not a promise that the policy still reads the same way.
How should I budget indirect costs for a foundation proposal?
- Work out your actual indirect rate from last year’s audited financial statements.
- Find the funder’s written policy. If there isn’t one, ask the program officer.
- Check whether the rate is a flat rate, a minimum, a cap, or negotiated, and what base it applies to.
- Take out of the base anything the policy excludes, such as subgrants or equipment.
- Show the rate as its own line and say how you got it in the budget narrative. Our grant budget template has a line for it.
- If the rate doesn’t cover your real costs, say so, and ask whether general operating support is an option.
Our guide to foundation proposals, from letter of inquiry to renewal covers the rest of the application.
Frequently asked questions
What is a typical foundation indirect cost rate?
There isn't one standard rate. Of the ten published policies we checked on October 30, 2026, most fall between 12.5 and 25 percent. Spencer pays none on grants of $75,000 or less, and MacArthur pays a flat 29 percent on project grants.
Which foundations pay the highest indirect costs?
Among the policies we checked, MacArthur pays a flat 29 percent of project costs, and Ford and Packard set minimums of up to 25 percent. Ford will also consider a higher documented rate.
Do foundations accept a federally negotiated indirect rate?
They don't have to. Each foundation sets its own rate. Ford counts a federal negotiated rate as documentation when it considers a rate above its 25 percent minimum, so the agreement is still useful evidence of your real costs.
Does the Gates Foundation cap indirect costs?
Yes. Its 2017 policy caps indirect costs at 15 percent of total direct costs for nonprofits, 10 percent for U.S. universities, and 0 percent for government agencies and other private foundations. It expects grantees to ask for their actual rate if it's lower.
Are indirect costs the same as administrative costs?
Close, but not always. Foundations use overhead, administrative, and indirect costs loosely. Read the funder's definition: some count fundraising and finance staff as indirect, and some exclude items such as equipment or subgrants from the base.
References: MacArthur Foundation Indirect Cost Policy (updated October 3, 2024); Ford Foundation indirect cost FAQ (effective January 1, 2023); Packard Foundation, “Fostering Equitable Grantmaking Through Indirect Cost Coverage” (January 2024); Kauffman Foundation indirect cost rate page; Simons Foundation policies and procedures; Walton Family Foundation indirect cost guidelines (updated January 2022); Gates Foundation Indirect Cost Policy (February 2017); Spencer Foundation applicant policies; Moore Foundation indirect cost policy (undated); Hewlett Foundation Indirect Cost Policy (August 2019); 2 CFR 200.414(f). All checked October 30, 2026.
This article is general information. It is not legal, tax, or accounting advice.
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