Indirect costs for which entities are recognized by the federal government?

The recognition of indirect costs by the federal government primarily extends to state and local governments. These costs can be associated with a variety of services and functions that are not directly tied to a specific project but are necessary for the overall operation of the government entity. The federal government allows these entities to apply for reimbursement of indirect costs through programs such as the Cost Allocation Plan (CAP) or using simplified methods outlined in federal regulations.

State and local governments often have to navigate complex funding arrangements with federal agencies, and being able to recover indirect costs is crucial for their financial health. It ensures that they can sustain the essential services that may not be directly funded.

In contrast, other types of entities, such as federal agencies, nonprofit organizations, or private sector companies, might have different guidelines or requirements for the recognition of indirect costs, which is why they do not fall under the same overarching policy that applies specifically to state and local governments.