This basic method treats all indirect costs as “direct” costs, pro-rating and “charging” each cost to the grant based on the “relative benefit” provided to the grant.
All indirect costs are separated into three categories: General administration; Direct functions; Fundraising (not an allowable HOPWA cost).
Indirect costs such as depreciation, facilities costs, phones, and office equipment are treated as direct functions
and are prorated individually as direct costs to each category and to each federal award or other activity.
This method is acceptable, provided each joint cost is prorated using a base which accurately measures the benefits provided
to each federal award or other activity. The bases must be established in accordance with reasonable criteria, and be supported by current data.
This is the most common method for allocating indirect costs.