Linking Indirect Costs and Financial Health: The MacArthur Foundation’s Approach to Revising its Indirect Cost Policy to Better Support Grantees
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Written by John Summers and Gillian Gorra in 2022 for the MacArthur Foundation.
The MacArthur Foundation realized that its longstanding policy mandating a 15% cap on indirect costs in project grants was contributing to the starvation cycle for its own grantees. Analysis of grantee data showed that 70% of grantees had reported indirect cost rates above the 15% cap. Based on this, MacArthur resolved to revisit its indirect cost policy with respect to project-based grants. The next challenge was to determine a method of funding indirect costs that would, at least, “do no harm” to the organizations receiving MacArthur grants.