Linking Indirect Costs and Financial Health: The MacArthur Foundation’s Approach to Revising its Indirect Cost Policy to Better Support Grantees

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.

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