Indirect rates cover administrative and operational expenses, while fringe rates cover employee-related expenses. These two types of overhead expenses are usually calculated separately in grant accounting. When managing grants, understanding the distinction is crucial for accurate cost estimation and allocation.
Indirect rates cover administrative and operational expenses that cannot be directly attributed to a specific project. They may also be called an "overhead rate", "central office rate", or "facilities and administrative (F&A) rate". Examples of costs included in indirect rates are:
In Spendlab, you can specify an indirect rate for each funding source, either as one rate that is constant over time or as a definition that can change over time and can also be used for other funding sources once defined. This percentage is automatically added to every expense for that funding source when calculating funds remaining — except for expense rows where you specify "No indirects" in the row header. Learn more...
Fringe rates (or "fringe benefit rates") cover employee-related expenses. This includes employee benefits such as:
In Spendlab, you can specify the fringe rate as the percentage of an employee's salary, either as one rate that is constant over time or as a definition that can change over time and can also be used for other employees once defined.
Both indirect and fringe rates deal with costs that are not directly tied to specific tasks or work products, but they differ in scope and how they are applied.
Learn even more about indirect rates in the Spendlab documentation.
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