Allocating Indirect Costs

How do I allocate indirect costs in my budget?

Indirect costs are typically accumulated in the ‘Management and General’ (M&G) cost pool. As most HUD grantees and subrecipients are either government or nonprofit organizations, there are a few methods for allocating indirect costs that are acceptable under OMB regulations:

  • Direct Allocation Method
  • Simplified Allocation Method
  • Multiple Rate Allocation Method
  • Special Indirect Rate
  • Federally-Approved Indirect Cost Rate by Cognizant Agency

Looking for definitions of the common CoC and ESG Program terms referenced throughout the Virtual Binders?

Virtual Binders Glossary

View the Multifamily Housing Program Financial Management Toolkit for more information.

Example of Calculating the Budget Line Items total in a CoC Program Budget:

Eligible Cost Category

Direct Cost Allocation

Approved Indirect Cost Allocation of 29.44%
(b) times .2944 = (c)

Budget Line Item Total
(b) + (c)

Rental Assistance




Supportive Services








Project Administration




Grant Total




For additional information on allocating costs and financial management, see the Multifamily Housing Program Financial Management Toolkit and the Financial Management Curriculum.