#  IDC Below Minimum 

 



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When a non-federal award has an Indirect Cost (IDC) rate lower than Harvard’s [federally negotiated indirect cost rate](https://osp.finance.harvard.edu/fa-rate-agreements), sponsors may permit certain costs typically classified as Indirect Costs to be charged directly to the award. This allows Harvard to recover these costs as direct charges instead of through indirect cost recovery. This is often referred to as “IDC Below Minimum” or “IDC Shortfall.” Charging direct costs in place of indirect costs must comply with both the sponsor’s terms and conditions and our approved budget. At each Tub’s discretion, a separate “8800 subactivity” value can be established to separately track these types of charges in GMAS and the general ledger. For additional guidance, please review the *Charging Project-Related Overhead Costs to Non-Federal Sponsors* section on the [Budget Expense Object Codes](https://osp.finance.harvard.edu/budget-expense-object-codes) page.

**Example**: A non-federal award has a published IDC rate of 25%, while Harvard’s federally negotiated rate is 68.5%. During the negotiation of this award, the sponsor approves the budgeting of network fees and space costs as Direct Costs, whereas they would otherwise be covered as part of the Indirect Costs. Although the sponsor requires the IDC rate on the award to remain at 25%, categorizing these Indirect Costs as Direct Costs can help recover a portion (or possibly all) of the “IDC Shortfall.”