Indirect costs for local and national partners: UN agencies and INGOs policy and practice mapping

Is there a policy or guidance?

Yes

What is the policy or current practice?

Shares 50% of the allowable ICR with partners for donor-funded projects; if there is more than one partner: proportional sharing of 50%. For CAFOD-funded projects, an overhead rate is calculated based on need, which does not usually exceed 7%.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Shares 50% of the allowable ICR with partners for donor-funded projects; if there is more than one partner: the split is negotiated. Provides 10% for Christian Aid supporter-funded projects.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

Concern does not have a policy or guidelines on ICR sharing though this is being developed. Concern is currently finalising its Global Partnership Strategy and has made the issue of sharing overhead costs and related indicators with partners a key priority.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

Cordaid shares ICR with partners for humanitarian programming. However, this is not yet organisational policy and is decided on a case-by-case basis. A policy is currently being developed.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

For US-funded projects provides up to 10% to partners (the de minimus rate). CRS also allocates resources to support local organisations in developing their own ICR policies so they can access ICR directly from donors.

A new policy on ICR provision is being developed for non-US funded projects and CRS-funded projects which will include a new mechanism to track funding to partners including ICR. This is anticipated to be rolled out by the end of 2023.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

Yes – new

What is the policy or current practice?

For Denmark-funded projects, provides 7% overhead. ICR is only provided in projects funded by other donors if this is specifically required by the donor.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

DRC does not have a policy on ICR sharing and overheads are generally not provided if this comes at the expense of DRC’s own overhead allocation, except in cases where the donor specifically allows for additional overheads for sub-granted partners when it is strongly encouraged. There are examples of ICR sharing on a case-by-case basis and where a DRC country or regional office wants to provide overhead to the local partner despite the current general position, approval of reduction in DRC’s overhead can be sought.

This position is currently being revised and is expected to be finalised in 2023.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

Yes – new

What is the policy or current practice?

The Netherlands provides 8% overhead to DRA members and 6% or more must be proportionately shared with local partners. In addition, 5% of the total project budget is available for capacity strengthening initiatives, local partners are managing this for at least 5% of their own project budget. DRA members who partner with local and national NGOs can include up to 4% of the partner costs as a budget line to support costs associated with being the intermediary role.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

Yes – new

What is the policy or current practice?

Provides 7% ICR. For US-funded projects provides up to 10% (the de minimus rate).

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Partners must have systems, policies, and processes in place to distinguish between direct and indirect costs. Partners must submit written descriptions of the types of costs and services to be recovered by the ICR to ensure the costs are not double counted.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

Currently do not a specific policy but this in under discussion in an internal localisation task force. Partner overheads are sometimes included in the direct programme budget.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Up to 10% provided, though in some contexts this is 15%. A budget showing planned use is required if the project budget exceeds €25,000.

What are the conditions?

Provided as an unrestricted contribution to partner’s overhead costs. Locally audited financial statements must be submitted including overheads, though overheads are not verified by KNH beyond comparison of the budget and actual expenditure.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

Currently do not provide overheads though cover some partner core costs in the direct budget. A policy is in development and is anticipated to be completed by the end of 2023.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

No

What is the policy or current practice?

Indirect costs are allowed if the donor specifically provides for the overhead costs of the sub-awarded partner. This rate is variable dependent on the donor. Partners must have a methodology for classifying expenditure as direct or indirect and an accounting system to verify consistent use of this methodology. If this is not possible, indirect costs can be charged directly.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

Yes – new

What is the policy or current practice?

Provides 4% indirect costs, or the rate specified by the donor if the donor allows for an additional overhead percentage for local partners.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against and are not subject to audit.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

The Oxfam confederation is finalising an ICR sharing policy, which is anticipated to be completed by July 2023. This will be then operationalised by Oxfam affiliates. Some affiliates and country offices are already providing local actors with overhead costs, including Oxfam in Myanmar and Oxfam Great Britain.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

Localisation policy states Save the Children will strive to provide 10% additional resourcing beyond direct project costs to partners, composed of 7% indirect costs and 3% capacity strengthening costs. However, this is not currently standard practice. When overheads are provided, the rate depends on donor policy or the partner’s established ICR policy. Auditing requirements are dependent on donor requirements.

This position is currently being revised and will include a common, consistent policy and protocol for how ICR is shared with partners and a new mechanism to track funding to partners including ICR and capacity strengthening activities. This is anticipated to be implemented by the first half of 2024.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

Yes – new

What is the policy or current practice?

Shares 50% of the allowable ICR with partners on funding opportunities secured at country level; HQ-managed grants handled on case-by-case basis in line with this precedent. If there is more than one partner, the ICR is proportionately shared. The ICR retained by Trócaire is shared equally between HQ and the Trócaire Country Office.

If ICR is not provided by the donor, Trócaire will aim to cover partners’ overhead costs as direct budget cost allocations.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

A new global policy is in development. Currently there is no standardised approach to the provision of ICR. Partner indirect costs are sometimes included in the programme budget and overheads are sometimes provided out of World Vision’s own private income.

Grand Bargain signatory?

Charter 4 Change signatory?

Pledge for Change signatory?

Is there a policy or guidance?

No

What is the policy or current practice?

FAO does not provide overheads. When direct costs incurred in connection with implementation of the project cannot be easily quantified, FAO accepts a portion charged as a percentage of total operating costs.

Grand Bargain signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Up to 7% provided. Overhead-related expenses are provided where they are in line with the partner’s established policy or “required for the successful implementation of the project to cover administrative support or management costs that are linked to the activities, but not otherwise covered by the budget”.

What are the conditions?

Must be used to cover indirect costs linked to project implementation. No audit requirements except to ensure there is not duplication in cost charges.

Grand Bargain signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Up to 7% ‘Programme Support Costs’ provided for both national and international recipients. Where sub-granting occurs, it is required that the overhead is fairly distributed in a manner that is proportionate to the project budget and the activities undertaken by each party.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against.

Grand Bargain signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Provides a ‘support cost’ rate between 0% and 12% to cover overheads. For partners who sub-contract, an overhead is also allowed to be charged according to first-level recipients’ overhead policies.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against.

Grand Bargain signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Provides 4% indirect costs (7% for international partners) known as the Partner Integrity Capacity and Support Cost.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against.

Grand Bargain signatory?

Is there a policy or guidance?

Yes – new

What is the policy or current practice?

Provides 7% indirect costs for ‘organisational capacity strengthening’.

What are the conditions?

Contribution to costs incurred by the partner for organisational capacity strengthening and/or capacity maintenance which cannot be attributed to a specific activity. These support costs must be recorded and submitted to UNICEF.

Grand Bargain signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Provides up to 8% 'support costs'. The rate is dependent on agreement with the donor.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Subject to annual independent audit.

Grand Bargain signatory?

Is there a policy or guidance?

Yes

What is the policy or current practice?

Provides 7% indirect support costs.

What are the conditions?

Unrestricted contribution to partner’s overhead costs. Does not need to be reported against, is not audited and does not need to be spent within the project time period.

Grand Bargain signatory?

Is there a policy or guidance?

In development

What is the policy or current practice?

WHO does not provide overheads or indirect costs to L/NNGOs as a rule. Unrestricted indirect costs of around 5-7% are allowed in certain cases; where this is not the case, partners may reflect their overheads as a direct cost. These should never exceed 10%. An internal discussion is underway to develop this position. The WHO Localisation Strategy will be finalised by the end of 2023 and emphasises the importance of having a standardised policy.

Grand Bargain signatory?

Is there a policy or guidance?

No

What is the policy or current practice?

IFRC does not provide overheads. All funding IFRC passes to partners is considered as a direct cost. Partners can claim all costs relevant to the implementation of the project as direct costs, including administrative budget lines, but funding for non-project specific expenditure is not provided.

Grand Bargain signatory?