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Last Updated: Jul 30, 2026, 11:02 AM
Section 1462(a) and (c) of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 limits indirect costs for the overall award to 30% of the Total Federal Funds Awarded (TFFA) under a research, education, and extension grant.
The maximum indirect cost (IDC) allowed under the award is determined by comparing:
The sum of the institution’s negotiated indirect cost rate and any subrecipient’s indirect cost rate, or
30% of the Total Federal Funds Awarded (TFFA)
Whichever is less will be the maximum IDC allowed. In other words, the total indirect costs requested (SIUC IDC + all subrecipient IDC) must not exceed 30% of the total federal funds for the project.
When Subawards Cause IDC to Exceed the 30% Limit
Occasionally, including a subrecipient may cause the combined IDC to exceed the 30% maximum. NIFA guidance states that the prime awardee is responsible for ensuring that total IDC charged to the award does not exceed the limit when combining all parties’ indirect costs. When SIU is the lead institution, it is OSPA policy to require each organization (SIU and all subrecipients) to reduce their IDC proportionally based on their original share of the total indirect costs.
| Item | Amount |
|---|---|
| Maximum IDC allowed (30% of TFFA) | $100,000 |
| SIU original IDC | $150,000 |
| University of Nowhere (UN) original IDC | $30,000 |
| Total original IDC | $180,000 |
SIU’s share of total IDC = 83.33%
UN’s share of total IDC = 16.67%
Adjusted IDC:
SIU reduces to $83,333
UN reduces to $16,667
When IDC must be reduced to comply with the NIFA 30% limitation, the total project budget does not decrease. Instead, the reduced IDC amount is shifted to allowable direct cost categories that directly support the project’s objectives.
See NIFA's published policy and FAQs. When SIU is a subrecipient, if the lead organization has their own policy, that will take precedence.