User-Submitted Question: Calculating Indirect Cost Recovery

VUMC requires grant applicants to include indirect cost (IDC) recovery in accordance with sponsor guidelines. It is important to carefully read the sponsor’s funding opportunity announcement (FOA) regarding its budgetary guidelines when determining your budget calculation with IDC recovery.

Calculating IDC recovery will look different depending on what method you use to determine your budget. The two main types of calculations used to determine budgets include:

  • Modified Total Direct Cost (MTDC)
  • Total Direct Cost (TDC)

MTDC is the calculation used for almost all federal grants. This budget method omits some direct costs from the indirect cost calculation: these are known as “exclusions.” Exclusions include the following items: capital expenditures, equipment, tuition remission, each subcontract portion over $25,000, rental costs of off-site facilities, participant support costs, patient care charges, and fellowships/scholarships.

VUMC’s IDC federal rate agreement can be found on the homepage of OSP’s website under “Forms” or by clicking here.

Calculating MTDC to determine IDC recovery:


While the total direct cost (TDC) calculation is typically used for non-federal grants, it is important to read the FOA carefully to determine if this calculation is allowable. Unlike the MTDC, this budget method has no exclusions. To find the IDC recovery, you would simply multiply all direct costs by the IDC rate. The IDC rate for non-federal grants can be found on Policy Tech or by clicking here.

Calculating TDC to find IDC recovery:


As always, please reach out to your OSP specialist with any questions or concerns.