Calculating Indirect Costs for Your
Nonprofit
There was a time when nonprofits avoided the term “overhead” and shunted those line items to the far corners of their balance sheets. But today’s funders and nonprofits realize that knowing and accounting for the full cost of a program or service helps you be a more financially stable organization.
Cost allocation is key to the viability of a nonprofit organization. This white paper by nonprofit consultant Dr. Colton Strawser provides an overview of indirect costs, including:
- How to calculate them, including examples of the simplified allocation method and the direct allocation method
- Why you should be applying your indirect cost rate when planning for new programs
- How indirect cost rates apply to government funding opportunities
- How to explain your indirect costs to funders, including example talking points
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