Indirect costs for local and national partners: Policy and practice mapping
These tables summarise the current policies and practices of donors, UN agencies, international non-governmental organisations and RCRC organisations around the provision of overheads or indirect costs for local and national partners.
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Read the reportThis is the 2024 update to our indirect costs mapping. Development Initiatives (DI) has been monitoring changes in donors’ provision of overheads since our first update in 2022 .
About overhead costs
To fully recover the costs of delivering humanitarian programmes, organisations must have access to funding to support their overhead costs. Overheads – also referred to here as ‘indirect costs’ or ‘indirect cost recovery’ (ICR) [1] – support a range of functions (including overall management, administration, infrastructure and ICT services). You can read more research in our report ‘ Overhead cost allocation in the humanitarian sector ’.
There is widespread agreement that donors and intermediary organisations should provide local and national humanitarian actors with funding indirect costs. Members of the Grand Bargain caucus on the role of intermediaries have committed to allocating overheads to local and national partners and the Inter-Agency Standing Committee (IASC) has developed Guidance on the issue , based on research conducted by DI in partnership with UNICEF and Oxfam through the IASC. DI has also published a discussion paper based on interviews with donors , which outlines current donor approaches and proposes ways forward.
This updated mapping shows some positive developments. Since 2023, three organisations and one UN agency have developed new policies that ensure local partner NGOs have access to overhead funding, bringing the total of Grand Bargain signatory organisations with policies to 25 (of 67). When our mapping work started in 2022, only 8 signatories had an overheads policy for local and national actors.
You can learn more about specific organisations’ policies in the tables below. Table 1 contains information on donors (comprising governments, EU institutions and foundations) and Tables 2, 3 and 4 contain information on intermediary organisations (comprising UN agencies , INGOs and the Red Cross Red Crescent (RCRC) movement). In the tables, organisations use the terms ‘intermediary’ and ‘partners’ to refer to organisations that receive funding from donors (and other intermediary organisations). The final (implementing) partners can be national or local offices of intermediary organisations, or separate national or local organisations.
The list of organisations included in this mapping is not exhaustive. Information is gathered directly from organisations or summarised from the Grand Bargain’s Self-Reporting Mechanism .
Is there a policy or guidance?
No – in development
What is the policy or current practice?
The FPS has developed guidance on earmarked funding.
What are the conditions?
Guidance only applies to current Belgian NGO funding programmes (those running 2023–25).
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
No
What is the policy or current practice?
Guidance on ‘Promoting Equitable Partnerships with Local Responders in Humanitarian Settings’ is in place. This encourages partners to develop organisational policies/guidance on the provision of overheads to local and/or national organisations. DG ECHO also prioritises project proposals from partners that provide a share of overhead costs to their local and/or national partners.
What are the conditions?
More information on guidance can be found here: Promoting Equitable Partnerships with Local responders in Humanitarian Settings (europa.eu)
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
The foundation will pay a minimum ICR of 25% for eligible project grants. A higher ICR rate will be considered under certain circumstances.
What are the conditions?
Information on the foundation’s policy can be found online:
Increasing our indirect cost commitment
FAQs: Increasing our indirect cost commitment
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
The GFFO’s funding regulations ensure INGOs pass funding onto local partners (from a minimum of 7% to a maximum of 9%).
What are the conditions?
Revisions to existing policy are pending publication, and revised conditions will be set out when available.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
Global Affairs Canada includes a dedicated budget line, providing up to 7.5% of direct project costs for local and national partners’ overhead costs.
Signatory to
Grand Bargain
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
Is there a policy or guidance?
Yes
What is the policy or current practice?
The Hewlett Foundation has no specific funding restriction, rather it provides flexible funding where possible. When project-restricted grants are allocated, there is a commitment in place to pay for ICR to cover all costs of implementing programmes. The foundation has launched a ‘True Cost Coaching’ pilot programme to support partners to accurately calculate their true indirect cost rate and improve their policies.
What are the conditions?
Partners set out the costs they require to cover ICR in their own budget.
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
Irish Aid’s policy is that all partners should provide overheads to their local and national partners.
Signatory to
Grand Bargain
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
Is there a policy or guidance?
Yes
What is the policy or current practice?
MFAT allows up to 10% of total funding to be used toward ICR:
- This is permitted via the ‘New Zealand Disaster Response Partnership’ and is available for aid-recipient countries.
- An additional 10% ICR is available for those partners who have offices based in New Zealand.
Signatory to
Grand Bargain
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
Is there a policy or guidance?
No – in development
What is the policy or current practice?
The Netherlands is in a period of consultation with the Dutch Relief Alliance to reach a position to agree the costs needed to support effective localisation.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
No
What is the policy or current practice?
Uses internal rules and regulations that guide grant management. Plans to develop a specific policy.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
- For Spanish international NGOs, provides 12% of total budget costs as ICR (of which, 50% must be shared with local and national partners).
- For non-Spanish organisations, provides 3–8% of total budget costs as ICR, if a direct agreement is in place.
Signatory to
Grand Bargain
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
Is there a policy or guidance?
No – in development
What is the policy or current practice?
The draft policy is being reviewed with partners.
Signatory to
Grand Bargain
Charter for Change
Date information was provided
September 2024
Is there a policy or guidance?
Yes – new
What is the policy or current practice?
SDC provides overheads to all of its partners – whether local, national, international, UN or NGO.
What are the conditions?
Overhead rates are determined by discussions with partners, based on SDC’s understanding of the financing of the partner organisation and the calculation of other budget positions.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
No – guidelines only
What is the policy or current practice?
The FCDO has published guidelines for bilateral humanitarian response funding to NGOs, which include recommendations on providing ‘Localisation Support and Administrational Costs’ (LSAC). The guidelines recommend that lead partners pass on LSAC to local and national downstream partners, either at FCDO’s Non-Project Attributable Costs rate or at 10% – whichever is highest.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
The US government has increased the ‘de minimis’ rate for local and national NGOs from 10% to 15%. It also has guidance in place to help local and national NGOs to fully recover indirect costs.
What are the conditions?
More information can be found here: Understanding Indirect Cost Rates (pages 46–48).
Signatory to
Grand Bargain
Date information was provided
September 2024
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.
Signatory to
Grand Bargain
Date information was provided
June 2023
Is there a policy or guidance?
Yes
What is the policy or current practice?
Overheads are provided but cannot exceed the threshold specified within the funding donor agreement (usually 7%).
What are the conditions?
Overheads are provided where they are in line with the partner’s established policy or, in the absence of a policy, as required for the successful implementation of the project. They cover administrative support or management costs that are linked to the activities but not otherwise included in the budget. Overheads must be used to cover indirect costs linked to project implementation, and implementing partners must ensure there is no duplication in costs charged. There is no project audit requirement in place.
Signatory to
Grand Bargain
Date information was provided
September 2024
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.
Signatory to
Grand Bargain
Date information was provided
June 2023
Is there a policy or guidance?
Yes
What is the policy or current practice?
Provides a 7% ICR rate that can be spent on any relevant partner needs.
What are the conditions?
A contribution to costs incurred by the partner for organisational capacity strengthening and/or capacity maintenance (which cannot be attributed to a specific activity) is allowed. While the support costs must be submitted to UNICEF, the fund does not expect detailed breakdowns. UNICEF aims for ICR to be flexible to support the broader capacity of local partners and reduce administrative burdens.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
- Provides 4% ICR for national partners.
- Provides 7% ICR for international partners.
What are the conditions?
Provides unrestricted contributions to partners’ overhead costs. There is no reporting requirement. More information is available here
Guidance for partnering with UNHCR
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
Provides ICR of up to 12% to cover overheads.
What are the conditions?
Partners who sub-contract are allowed to charge an overhead (according to first-level recipients’ overhead policies). The policy is the same for local, national and international NGO partners. This is an unrestricted contribution to the partner’s overhead costs and there is no reporting requirement. More information is available here:
Policy and Procedures for Preparation, Management and Monitoring of Workplans (page 10)
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
Partner will be reimbursed by UN Women for its ICR, not exceeding a rate of 8% or the rate set forth in the donor-specific conditions, if that is lower. The flat rate is calculated on the eligible direct costs.
What are the conditions?
Unrestricted contribution to partners’ overhead costs, based on regulations in the ‘Partner Project Document’. Subject to annual independent audit. Cost categories are aligned to the Money Where it Counts protocol definitions.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
Provides 7% ICR. The policy is the same for local, national and international NGO partners.
What are the conditions?
Unrestricted contribution to partners’ overhead costs. Does not need to be reported against, is not audited and does not need to be spent within the project time period.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes – new
What is the policy or current practice?
WHO provides 5–7% of budget allocations towards indirect costs, depending on donor conditions.
What are the conditions?
Provisions are made in the grant letter of agreement. The implementing partner’s indirect costs must be included in the budget and funded as a percentage of the eligible direct costs. Indirect costs are to be provided by partners with the same conditions as specified by the donor. When requested, implementing partners should provide their policy on the determination, use and reporting of indirect costs to support the indirect costs requested.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
ActionAid works with national partners to ensure ICR takes place. On average, 4% ICR is shared with partners.
What are the conditions?
Capacity reviews are undertaken jointly between ActionAid and partners on an annual basis. All clear national partner costs that include level of effort are considered. This due diligence aims to help ActionAid and partners to make more informed and transparent decisions regarding funding opportunities that are subject to restrictions.
For multi-partner projects, ActionAid allows for negotiations on splits of ICR across partners.
Signatory to
Grand Bargain
Charter for Change
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
Is there a policy or guidance?
Yes – new
What is the policy or current practice?
Local and national partners should recover all costs, including their indirect costs.
What are the conditions?
Guidelines are available that help partners fully recover their costs and highlight the importance of earmarking resources for capacity strengthening and sharing.
Partners can add ICR to direct or indirect costs in their budgets, if they are clearly identified, to avoid duplication and ensure consistency. (This ICR is dependent on restrictions that donors have in place. Where a donor has specific guidance or ceilings on indirect costs to partners, CARE complies with those requirements.)
Signatory to
Grand Bargain
Pledge for Change
Charter for Change
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
- For donor-funded projects, shares 50% of the allowable ICR with partners.
- 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.
Signatory to
Grand Bargain
Charter for Change
Date information was provided
June 2023
Is there a policy or guidance?
Yes – new
What is the policy or current practice?
- For CRS-funded projects and non-USAID funded projects, CRS has developed a new policy on ICR provision, including a mechanism to track funding (including ICR) to partners.
- For USAID-funded projects, CRS provides up to 10% to partners – the current USAID ‘de minimis’ rate (if partners elect to include ‘de minimis’).
Signatory to
Grand Bargain
Charter for Change
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
- For donor-funded projects, shares 50% of the allowable ICR with partners.
- If there is more than one partner, the split is negotiated across all partners.
- For public-funded projects, 10% ICR is added for partners/country offices.
What are the conditions?
Unrestricted contribution to partners’ overhead costs. Does not need to be reported against
Signatory to
Grand Bargain
Pledge for Change
Charter for Change
Date information was provided
September 2024
Is there a policy or guidance?
Yes – new
What is the policy or current practice?
Concern Worldwide has an ICR policy for local partners; rates vary depending on donor conditions.
What are the conditions?
The policy sets out three main approaches. The specific approach taken depends on the project context and donor guidelines:
One: A direct ICR funding approach, including ICR costs with direct programme funding.
Two: A shared ICR funding approach, sharing up to 50% of ICR with local partners.
Three: A general donation funding approach, allocating 6% of a partner’s direct programme costs as ICR
Date information was provided
September 2024
Is there a policy or guidance?
Yes
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.
Signatory to
Pledge for Change
Charter for Change
Date information was provided
June 2023
Is there a policy or guidance?
Yes
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.
Signatory to
Grand Bargain
Charter for Change
Date information was provided
June 2023
Is there a policy or guidance?
Yes – new
What is the policy or current practice?
Provides 4–7% of ICR to partners.
What are the conditions?
Usually 7%, however the decision on how much IRC will be provided is based on an assessment of the risk (to DRC) of engaging with the partner. This is regardless of whether they are a local or international organisations.
Signatory to
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice? DRA provides 6–8% overhead to DRA members and this must be proportionately shared with partners. In addition, partners are provided an additional 5% of the project budget for capacity strengthening initiatives. DRA members who partner with local and national NGOs can include up to 4% of the partner budget as a budget line to support costs associated with being the grant holder.
What are the conditions?
Unrestricted contribution to partners’ overhead costs. Does not need to be reported against.
Date information was provided
June 2023
Is there a policy or guidance?
Yes
What is the policy or current practice?
Provides partners with the maximum ICR that donors allow (typically 7% of ICR when the UN or European countries are the donors, and the 15% ‘de minimis’ rate for US government).
What are the conditions?
Partners are not required to have ICR policies in place but must clearly distinguish between direct and indirect costs and charge consistently. To this end, partners must submit written descriptions of the types of costs and services to be recovered by the ICR to ensure these are not double counted.
Signatory to
Grand Bargain
Pledge for Change
Date information was provided
September 2024
Is there a policy or guidance?
No – in development
Signatory to
Charter for Change
Grand Bargain
Date information was provided
September 2024
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 partners’ 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.
Signatory to
Charter for Change
Date information was provided
June 2023
Is there a policy or guidance?
No – in development
What is the policy or current practice?
Currently does not provide overheads though covers some partner core costs in the direct budget. A policy is in development.
Date information was provided
June 2023
Is there a policy or guidance?
Yes
What is the policy or current practice?
Mercy Corps aims to provide partners with full cost recovery in accordance with donor parameters, so does not have a fixed overhead rate.
What are the conditions?
To receive ICR, partners must have a methodology for classifying expenditure as direct and indirect that can be verified in their accounting system and is consistently applied to ensure that no double-counting occurs.
The rate cannot exceed the maximum allowed by the donor.
If donor regulations allow, Mercy Corps may also pass on a fixed donor rate (e.g. ‘de minimis’) to partners.
If a partner does not have a methodology, their overhead costs can be presented as direct costs in the subaward budget to ensure full cost recovery.
Signatory to
Pledge for Change
Grand Bargain
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
NEAR offers 15% overheads to local and national partners.
What are the conditions?
Partners need to include ICR in their budgets, with some form of oversight body, ensuring that ICR is properly accounted for.
Signatory to
Grand Bargain
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
Is there a policy or guidance?
Yes
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.
Cost categories are aligned to the Money Where it Counts protocol protocol definitions.
Signatory to
Grand Bargain
Date information was provided
June 2023
Is there a policy or guidance?
Guidance only
What is the policy or current practice?
The Oxfam Confederation provides international guidance on ICR, while member affiliates are engaging in developing member-specific trials, practices and policies to share with their individual partners.
Signatory to
Grand Bargain
Charter for Change
Pledge for Change
Date information was provided
September 2024
Is there a policy or guidance?
No – in development
What is the policy or current practice?
Save the Children is currently piloting an ICR-sharing approach with local and national partners on selected donor accounts and awards. The pilot includes research to ensure any agreed ICR rate covers all necessary indirect costs in running programmes. It is using financial modelling across multiple dimensions to understand the implication of various ICR options. Tracking systems are in place and continue to be tested within the pilot. The learning from these initiatives will inform the development of a movement-wide framework on ICR provision.
Signatory to
Grand Bargain
Pledge for Change
Date information was provided
September 2024
Is there a policy or guidance?
Yes
What is the policy or current practice?
- Shares 50% of the allowable ICR with partners.
- If there is more than one partner, this is proportionately shared.
- ICR retained by Trócaire is shared equally between HQ and the Trócaire Country Office.
What are the conditions?
If a donor does not permit ICR, the country office decides on core cost allocation (including some country offices who are drawing on their reserves to provide ICR).
Signatory to
Grand Bargain
Charter for Change
Date information was provided
September 2024
Is there a policy or guidance?
No – 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.
Signatory to
Grand Bargain
Date information was provided
June 2023
International Red Cross and Red Crescent (RCRC) Movement organisation overhead policies
Is there a policy or guidance?
No
What is the policy or current practice?
The ICRC provides its National Society partners with administrative costs or 7% of overheads (calculated on the total programme costs) to run their operations. While there is no policy yet on overheads for other operational partnerships, it is possible to include overheads in the financial agreement with these partners, as relevant.
Signatory to
Grand Bargain
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
Is there a policy or guidance?
No – in development
What is the policy or current practice?
IFRC is not able to systematically cover indirect costs but – with the support of key donors – is pilot-testing solutions that allow local partners to recover 6–7% of indirect costs.
Signatory to
Grand Bargain
Date information was provided
September 2024 (summarised from the Grand Bargain self-report)
De minimis
USAID offers a ‘de minimis’ rate of 10% . This is increasing to 15%, but not all policies are yet updated to reflect that change.
ICR
Indirect cost recovery. ‘Allowable’ ICR refers to conditions of ICR that specific donors or intermediaries have in place. More requirements in place does not necessarily mean that a project audit of ICR spending is needed.
INGO
International non-governmental organisation
True cost
This term is used when, often, ICR is provided but it still does not cover all indirect costs or overheads that the project needs in order to be successfully implemented. The terminology is used when a donor or intermediary is committed to covering all overheads, not just making a contribution via a percentage figure in budgets.
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Notes
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We use ICR as a general term for overheads provision to local and national partners. Where organisations use other terms (e.g. ‘support costs’) we have amended for clarity.Return to source text
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