The de minimis indirect cost rate
It went from 10% to 15% of MTDC in 2024, and most budget templates still say 10%. Who can elect it, and the mistake of claiming zero.
LAST REVIEWED 28 AUGUST 2026
Indirect costs are the real ones an award rarely names: the finance staff who process the drawdowns, the rent on the office the programme runs from, the audit that the grant itself requires. The de minimis rate is how a smaller organisation recovers some of that without the cost and effort of negotiating a rate with a Federal agency. The number most people remember for it is now wrong.
The rate is 15%, not 10%
The 2024 revision of the Uniform Guidance, effective for Federal awards issued on or after 1 October 2024, raised the de minimis indirect cost rate from 10% to up to 15% of modified total direct costs (2 CFR 200.414). A large number of published templates, budget instructions and internal policies still say 10%, which quietly leaves recoverable money on the table on every budget built from an old model.
“Up to” matters: 15% is a ceiling, not an entitlement. You may elect any rate at or below it, but whatever you choose you then apply consistently.
Who can elect it
The de minimis rate is for recipients and subrecipients that do not have a current Federal negotiated indirect cost rate, including a provisional one. If you hold a negotiated rate, you use that; you cannot switch to de minimis because it happens to be higher. The reverse protection also exists in the rule: a Federal agency or pass-through entity may not force you onto a de minimis rate lower than a negotiated rate you already hold.
For most small and mid-sized nonprofits that have never negotiated a rate, this is the whole point of the provision: a defensible way to recover indirect costs without building a cost allocation plan and negotiating it with a cognizant agency.
No paperwork, and it lasts
Two features of the rule are easy to miss and both work in your favour. The de minimis rate does not require documentation to justify its use — you are not building an evidence file to defend the 15%. And once elected it may be used indefinitely, applied consistently across all your Federal awards, until you choose to move to a negotiated rate.
The consistency requirement is the one to hold onto: de minimis is an organisation-level election, not a per-grant lever. You do not take 15% on the award that allows it and something else on the award next to it.
Where this meets the day-to-day is the budget-versus-actual view per award: indirect is recovered as a percentage of a moving direct-cost base, so what you can actually draw shifts as spending does. Grantwell tracks the recoverable indirect against each award’s direct spend so the number you claim stays tied to the base it is calculated from, rather than being set once in a proposal and never revisited.
This guide is general information about how grant compliance work is commonly organised, not legal, audit or accounting advice. Grant rules change, and terms vary by funder and award — always check your own award documents and the current regulation, and talk to your auditor about your specific circumstances.
Primary sources
- 2 CFR 200.414 — Indirect costs — The de minimis rate of up to 15% of MTDC, eligibility, and that it may be used indefinitely without documentation.
- 2 CFR 200.1 — Definitions (modified total direct costs) — The precise definition of the MTDC base the 15% is applied to, including what is excluded.
- OMB — 2024 Uniform Guidance revisions — The final rule, effective for awards issued on or after 1 October 2024, that raised the de minimis rate from 10% to 15%.
This guide is general information about how grant compliance work is commonly organised, not legal, audit or accounting advice. Grant rules change, and terms vary by funder and award — always check your own award documents and the current regulation, and talk to your auditor about your specific circumstances.