What is indirect cost recovery?

Indirect cost recovery refers to the allocation of indirect costs to grant projects to cover overhead expenses. Indirect costs are those expenses that are not directly attributable to a specific project but are necessary for the overall operation of an organization. These may include administrative salaries, utilities, and office supplies that support multiple projects.

By allowing for the recovery of indirect costs, grant recipients can ensure that they receive appropriate funding to maintain their operations while fulfilling the specific requirements of individual projects. This is crucial for the sustainability of the organization, as it allows them to continue providing support and fulfilling their mission without the burden of absorbing unallocated indirect costs.

The other options do not accurately capture the essence of indirect cost recovery. Reallocating funds to different projects can happen for various reasons but does not specifically relate to indirect costs. Similarly, the notion of increasing project funding or decreasing administrative expenses fails to directly connect to how overhead is accounted for and supported in grant management. Indirect cost recovery is fundamentally about ensuring that indirect costs, essential for an organization's functioning, are recognized and compensated through grant funding.