What Constitutes Operating Expenses for Private Foundations?

Operating expenses, also known as overhead, are any cost associated with operating your organization. These costs can then be divided into two subcategories, direct costs and indirect costs. Direct costs can be defined as any expense that is required to develop a project. Indirect costs are expenses that are not related to the actual project. Salaries and office rent are examples of indirect cost. It is important for the grantmaker and grantee to agree on what percentage of the grant is being allocated towards overhead. In the past, grantmakers have put a 15% cap on the amount used towards overhead. The overhead will vary depending on the project.  

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