TLDR
The de minimis indirect cost rate is a flat overhead rate — raised from 10% to 15% of MTDC by the 2024 Uniform Guidance revision — that eligible nonprofits may claim on federal awards without negotiating a NICRA. Once you negotiate a NICRA, you cannot revert to de minimis.
The de minimis indirect cost rate is a flat overhead rate — currently 15% of Modified Total Direct Costs (MTDC) — that eligible nonprofits may claim on federal awards without negotiating a formal Negotiated Indirect Cost Rate Agreement (NICRA). The 2024 Uniform Guidance revision raised it from 10%, where it had sat since 2014.
How it works
Under 2 CFR 200.414(f), nonprofits that have never received a federally negotiated indirect cost rate may claim the de minimis rate in lieu of going through the cost allocation plan and NICRA negotiation process. The rate is applied to MTDC — not total direct costs — and must be used consistently across all federal programs within the same fiscal year.
The calculation is straightforward: take the MTDC base for each award (total direct costs minus the exclusions defined at 2 CFR 200.1), multiply by 15%, and that is the indirect cost recovery amount for the award. No separate documentation of actual overhead is required; the rate is taken as given.
For a grant with $200,000 in total direct costs, $20,000 in equipment (excluded), and a $40,000 sub-award (first $25,000 included, $15,000 excluded), MTDC = $165,000. At 15% de minimis, indirect recovery = $24,750.
When it applies
Eligibility. An organization qualifies when it has never had a federally negotiated indirect cost rate. This includes organizations that are receiving their first federal award, have only ever used the de minimis rate, or have previously had a NICRA that lapsed — though the lapse situation is nuanced. HHS and other cognizant agencies have held that once a NICRA has been executed, the organization cannot revert to de minimis even after the NICRA period closes.
Consistency requirement. The de minimis rate must be applied uniformly to all federal programs in a given fiscal year. A nonprofit cannot selectively apply the de minimis rate to lower-overhead programs while using a NICRA rate on others.
No expiration. The rate can be claimed indefinitely as long as eligibility is maintained. There is no requirement to transition to a NICRA after a certain number of years or award volume.
Award-date transition. The change from 10% to 15% applies to awards made on or after October 1, 2024. Awards made earlier under the prior version of the Uniform Guidance continue at 10% unless the award is formally modified to incorporate the new rate.
Common misconceptions
The de minimis rate is not always the easier or correct choice. For an organization with actual overhead exceeding 15% of MTDC, using de minimis means absorbing real costs from non-federal revenue. A nonprofit with $350,000 in overhead and $1,000,000 MTDC has an actual rate of 35%. Claiming 15% leaves $200,000 in overhead unrecovered on federal awards each year.
Once a NICRA is negotiated, there is no return. Some organizations negotiated NICRAs early in their history and allowed them to lapse, believing they could revert to the simpler de minimis option. Federal agencies have consistently rejected that position — the organization must continue to negotiate.
The base is MTDC, not total direct costs. This distinction appears in audit findings every year. The most common version: an organization applies the de minimis rate to the full award budget rather than computing MTDC first.
De minimis is available even if a funder never mentions it. Award agreements frequently omit the de minimis option, leading grantees to assume no indirect cost recovery is available. The eligibility is statutory; it does not require the awarding agency to offer it in the agreement.
Related terms
- Indirect cost rate — the general concept; de minimis is one method of establishing a rate.
- Modified Total Direct Costs (MTDC) — the base to which the de minimis rate is applied.
- Cognizant agency — the agency that would negotiate a NICRA if the organization chooses that path instead.
- Negotiated Indirect Cost Rate Agreement (NICRA) — the alternative to de minimis for organizations with overhead above 15% of MTDC.
How GrantPipe handles the de minimis rate
GrantPipe stores the indirect cost rate type — de minimis or NICRA — at the organization level and propagates it through every grant budget. When a grant is set up, the system calculates MTDC, applies the stored rate, and flags any award agreement language that conflicts with the allowed recovery amount. Finance Directors see indirect recovery per award alongside actual overhead spend, making it visible when de minimis is leaving significant overhead unrecovered.
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Source: Office of Management and Budget, 2 CFR Part 200 (2024 revision)
Source: Urban Institute, National Center for Charitable Statistics
Source: U.S. Government Accountability Office, Nonprofit Sector report
- MTDC (Modified Total Direct Costs)
- The direct-cost base against which the de minimis rate is applied — total direct costs minus equipment, capital expenditures, patient care, tuition remission, off-site rental, scholarships, participant support, and sub-award amounts above $25,000 per subcontract.
DEFINITION
- NICRA (Negotiated Indirect Cost Rate Agreement)
- A formal agreement between a nonprofit and its cognizant federal agency establishing an approved indirect cost rate and base. Once a NICRA is executed, the de minimis rate is no longer available to that organization.
DEFINITION
- Consistent application
- Requirement under 2 CFR 200.414(f) that the de minimis rate be applied uniformly across all federal programs within a fiscal year — not selectively by award.
DEFINITION
Q&A
What is the de minimis indirect cost rate in 2026?
15% of MTDC, as updated by the 2024 Uniform Guidance revision. Awards made before October 1, 2024 under the prior version continue to use 10% unless the award is modified.
Q&A
Who is eligible for the de minimis indirect cost rate?
Nonprofits that have never received a federally negotiated indirect cost rate and have not previously negotiated a NICRA. Once a NICRA has been negotiated, the organization cannot return to de minimis.
Q&A
Can I use the de minimis rate and a NICRA on different awards simultaneously?
No. 2 CFR 200.414(f) requires the de minimis rate to be used consistently across all federal programs for the fiscal year. You cannot apply NICRA rates to some awards and the de minimis rate to others.
Q&A
Is the de minimis rate applied to total direct costs or MTDC?
MTDC only. Applying it to total direct costs overclaims indirect recovery and produces an audit finding. The MTDC base excludes equipment, capital expenditures, sub-awards above $25,000, participant support, and other items.
Q&A
When should a nonprofit negotiate a NICRA instead of using de minimis?
When actual overhead exceeds 15% of MTDC, negotiating a NICRA recovers more. A nonprofit with $400,000 in indirect costs and $1,000,000 MTDC has a 40% rate — de minimis leaves $250,000 in overhead unrecovered on federal awards.
Frequently asked