Indirect Cost Agreement Hhs

Indirect Cost Agreement with HHS: Everything You Need to Know

As a nonprofit organization, working with the U.S Department of Health and Human Services (HHS) comes with a lot of financial and administrative burdens. However, with an indirect cost agreement, you can reduce some of these costs and focus on achieving your mission.

What is an Indirect Cost Agreement with HHS?

An indirect cost agreement, also known as an indirect cost rate agreement, is a contract between a nonprofit organization and the HHS that determines the rates at which indirect costs will be reimbursed. Indirect costs include expenses that are not directly tied to a specific project or program, such as rent, utilities, and administrative salaries.

Why Do You Need an Indirect Cost Agreement?

Without an indirect cost agreement, nonprofits have to allocate indirect costs to their programs and projects, which can limit their ability to offer services or expand their operations. Additionally, it can be challenging to track and allocate these costs accurately, which can lead to compliance issues and audit risks.

An indirect cost agreement streamlines this process by providing a predetermined rate for reimbursement, allowing nonprofits to allocate indirect costs more accurately and consistently.

How to Apply for an Indirect Cost Agreement?

To apply for an indirect cost agreement, you will need to complete the following steps:

Step 1: Review HHS Guidelines: The HHS outlines the eligibility criteria, rates, and submission requirements on their website. It is essential to review these guidelines before applying.

Step 2: Perform an Internal Cost Analysis: Before submitting an application, you will need to perform an internal cost analysis to determine the actual indirect costs associated with your organization`s operations.

Step 3: Submit an Application: Once you have completed your internal cost analysis, you can submit an application to the HHS. The application must include your most recent financial statements, audited cost reports, and a detailed budget that outlines your indirect costs.

Step 4: Negotiate with HHS: After submitting your application, you will negotiate the terms of the agreement with the HHS. Once the agreement is finalized, you can start allocating indirect costs and receiving reimbursements accordingly.


An indirect cost agreement with the HHS can save nonprofits a significant amount of time and resources while providing them with the financial stability needed to achieve their mission effectively. If you are a nonprofit organization working with the HHS, it is essential to consider an indirect cost agreement to streamline your operations and focus more on serving your community.