indirect costs grants

. You may use your organization's negotiated indirect cost rate or the minimum rate of 10% of modified total direct costs (MTDC)if your organization does not have a negotiated rate. Communications Care needs to be taken to ensure that amounts claimed do not exceed award limitations or indirect cost rate ceilings. See also 2 CFR 200, Subpart E, Section 200.442, Fundraising and investment management costs, and. A one-time extension of a currently negotiated rate may be approved for up to a 4-year period. Review the organization chart for a visual picture of the flow of responsibility, identification of areas of common costs, and the location of those areas in which federally-funded activity exists. IDC (Indirect Cost) Submission:indirectproposalsub@nih.gov, IDC Inquiry:dfas-idc@nih.govIndirectCostProposal@mail.nih.gov301-496-2444, SRB Inquiry:specialreviewrequest@nih.gov301-496-4494, Division of Acquisition Policy and Evaluation (DAPE), Continuously Open Broad Agency Announcements, Division of Financial Advisory Services (DFAS), Division of Simplified Acquisition Policy and Services (DSAPS), The NIH Enterprise Document Generation System, Reference Material for Prospective Offerors and Contractors, The NIH Path to Excellence & Innovation Initiative, NIH Small Business Program Office Appointment & Inquiry Tool, Office of Acquisition and Logistics Management (OALM), Office of Acquisition Management and Policy. Timekeeping is performed in accordance with company policies and procedures. A. As of November 1, 2016 the following changes have been made to the OCC Guide for Non-Profit Organizations. The accounting system must provide adequate internal controls to safeguard assets, insure fund accountability by cost category, assure accounting data accuracy and reliability, promote operating efficiency, and comply with Government requirements and accounting procedures. The de minimis rate allows you to claim indirect costs of up to 10 percent of modified total direct costs (MTDC) (see 2 CFR 200.1). Confirm that the organization has a USAID prime award that includes indirect cost rates. This section of the guidance applies to organizations that are requesting new provisional rates for future periods and/or the finalization of provisional rates for past periods. Indirect costs are costs necessary to provide a service but may not be readily identified with or easily allocable to a particular cost objective for a Title program. A fixed rate, however, must not be negotiated if (i) all or a substantial portion of the organization's Federal awards are expected to expire before the carry-forward adjustment can be made; (ii) the mix of Federal and non-Federal work at the organization is too erratic to permit an equitable carry-forward adjustment; or (iii) the organization's operations fluctuate significantly from year to year. Scam Advisory: Recent reports indicate that individuals are posing as the NEH on email and social media. Indirect costs are applied equitably across all of the business activities of the organization according to the benefits each gains from them. This post is not intended to replace information provided in our Notices of Funding Opportunity, specific terms on your award, NEH General Terms and Conditions for Awards, or 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. This was incorrect because the applicants indirect cost base specifically excluded participant support costs. Document meetings, telephone conversations, and e-mails. Final The grantee is required to provide written notification to the indirect cost negotiator prior to implementing any changes which could affect the applicability of the approved rates. ODH applicants may request both direct and indirect costs in their budget. Presentation by PD Peter (Pete) Ziegler, Title IX of the Education Amendments Act of 1972, Equal Opportunity and Civil Rights Resources, NIFA Office of Equal Opportunity and Civil Rights, Responsible and Ethical Conduct of Research, Upcoming Request for Application (RFA) Calendar, Sample Language to Request De Minimis Indirect Cost Rate, AgrAbility - Assistive Technology Program for Farmers with Disabilities, Capacity Building Grants for Non-Land-Grant Colleges of Agriculture Program, Food and Agriculture Service Learning Program, Biotechnology Risk Assessment Research Grants Program, Sustainable Agriculture Research and Education (SARE) Regional Host Institution, From Learning to Leading: Cultivating the Next Generation of Diverse Food and Agriculture Professionals (NEXTGEN), Community Food Projects Competitive Grants Program, Small Business Innovation Research and Small Business Technology Transfer Programs Phase I, Land-grant Universities Helping Solve Needs of Specialty Crop Industries, NIFA, APLU & Cooperative Extension Award Top Honors in Extension Excellence and Diversity, Land-grant Universities Help Educate Public about Antimicrobial Resistance, Land-grant University Researchers Helping in Fight Against Antimicrobial Resistance, USDA Invests More Than $59M to Improve Dietary Health and Nutrition Security, Land-grant Universities Make Thanksgiving Dinner More Delicious, Helping Keep Fisheries Healthy and Productive, NIFA Invests Nearly $25K in AFRI Foundational Knowledge of Ag Production Systems, NIFA's Agriculture and Food Research Initiative: Addressing the nation's agricultural challenges, Reversing Pollinator Decline is Key to Feeding the Future, NIFAs Commitment to civil rights through diversity, Iowa Takes an Ethnic Studies Approach to 4-H, National Honey Month shines a light on pollinator health, Hispanic-Serving Institutions develop future leaders in STEM, Happy Birthday NIFA: Celebrating seven years of research, education and extension milestones, NIFA Programs Key to Reducing U.S. Household Food Insecurity, NIFA Programs Salute and Assist Veterans and their Families, How 4-H Rocks for Missouri Youth of All Abilities, National Institute of Food and Agriculture, You do not have a NICRA and want to negotiate a NICRA with the cognizant agency; or. If you are unable to obtain a negotiated rate from the cognizant agency, NIFA may not reimburse indirect costs and only reimburse allowable direct costs. Responsibility for the negotiation of indirect cost rates for sub-awardees rests with the prime recipient. Therefore, the organization must agree in writing not to recoup the reduction in the rates on other awards with the U.S. Government - the reduction must be taken from other non-governmental sources of revenues. Download Appendix I through Appendix V [PDF 238 KB], Find out about career opportunities at USAID. 2 CFR 200, Subpart F, Appendix IV, Section B.3.a, states that where an organization's indirect costs benefit its major functions in varying degrees, indirect costs must be accumulated into separate cost groupings. USAID provides the majority of the organizations funding from the Federal government. If an organization believes the future rates will be materially different than the previous finalized rates, it should propose the more accurate provisional rates with adequate supporting documentation and rationale. At eCivis, her role is to advise clients on how they can save time and hassle when it comes to finding and managing grants through their grant management systems. Your entire organization uses these items both for administrative purposes and for other programs. Please note, until revised DOI templates for commercial entities are available, the non-profit DOI templates are to be used for all entities. Election of the 10% de minimis rate does not require approval of the cognizant agency for indirect costs. Title changed on 3.B from Time Distribution Report to Personnel Activity Report. Preparedness Grants Manual . The first set of procedures is for an organization seeking its first NICRA and the second set is related to the issuance of subsequent NICRAs. Utilities 2 CFR 200, Subpart F, Appendix IV, Section B.4.a, states that some nonprofit organizations treat all costs as direct costs except general administration and general expenses. This method should also be used where an organization has only one major function encompassing a number of individual projects or activities, and may be used where the level of Federal awards to an organization is relatively small. Follow up, after reviewing the indirect cost proposal, with questions, and/or concerns and may request additional documentation, and/or narrative responses, in support of the proposal (for more detailed steps see Section 2.G., Indirect Cost Proposal M/OAA/CAS/ OCCs Review Procedures, of this guide.). Note - changes in allocation bases need to be approved on a prospective basis. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. Note that a final indirect cost rate is established after an organization's actual costs are known, typically a fiscal year. It is not subject to treatment as a direct cost. The organization must maintain a time distribution system for use by employees whose time is charged to more than one cost objective. A predetermined indirect cost rate is applicable to a specified current or future period, usually the organization's fiscal year. Prior year audited financial statements including any affiliated organizations, and the single audit in accordance with 2 CFR 200, Subpart F, Section 200.512(a)(1). The decision to use either method will depend on the grantee's accounting system. Applicability: This policy applies to all federal and nonfederal sponsored agreements . If an educational institution has a provisional rate at the time of award, NEH must use the provisional rate until a final cost is negotiated and approved by the cognizantagency. In any instance where an indirect cost rate other than that specified in the NICRA is used in an award, the grantee is required to acknowledge the above stipulations by providing a written acknowledgement to USAID. 2 CFR 200, Subpart A, Section 200.56 defines Indirect (facilities & administrative (F&A)) costs for Major nonprofit organizations: Indirect (F&A) costs means those costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. Perform a mathematical verification of each indirect cost rate calculation provided by the organization. Since the nature and use of indirect costs are not specific, they can be scrutinized closely in an audit or involve meticulous documentation in a final report that may be required by a funding agency. Send the appeal to the Deputy Assistant Administrator, Bureau for Management, U.S. Agency for International Development, Management Bureau, 1300 Pennsylvania Ave, NW, Washington, D.C. 20523. The simplified allocation base includes all direct costs (labor, travel, ODC, subaward, etc.) The appeal must be in writing and must be postmarked within thirty (30) calendar days of receipt of the AOs final decision. Indirect cost payments are actually reimbursements for costs that universities have already paid for expenses incurred in conducting federally-sponsored research. 2 CFR 200, Subpart E, Section 200.414 (g) states that any non-Federal entity that has a federally negotiated indirect cost rate may apply for a one-time extension of a current negotiated indirect cost rate for a period of up to four years. To calculate indirect costs on total project costs, use this formula: Calculation: Direct costs/(1 In these instances, the percentage rate of indirect on total project costs will be lower than the standard method method of calculating percentage of indirect costs on total direct costs. NIFA applicants should identify their program type and follow the indirect cost limitation identified in the request for applications (RFA). Breakdown of indirect salaries by position title, amount and indirect percentage. If an extension is granted, the grantee may not negotiate a new rate until the extension period ends. As a reminder, the indirect cost rate proposal must not include expressly unallowable costs identified in 2 CFR 200, Subpart E, Sections 200.420 through 200.475. A sample is as follows: The Agreement Officer (AO) decides any dispute between the organization as defined in 2 CFR 200.86, and USAID arising under an assistance award. Therefore, the maximum allowable indirect costs is $300,000. The indirect rate is a calculated percentage of total direct costs, modified direct costs (i.e., direct costs minus equipment costs), personnel costs, and salaries/wages. The system used in the United States to measure the costs of research grants has not changed in principle since 1958. To determine if your project fits into the AFCP guidelines, . of this guide and included as a stand-alone document in Appendix III. Modified Total Direct Cost (MTDC) excludes equipment, capital expenditures, participant support costs and the portion of each subaward in excess of $25,000. Investing in moderngrants management softwaretoday is no longer an option, it is a necessary step to keep up with today's demands and changing federal requirements. ), a. The allocation base selected by the non-profit organization must be: Per 2 CFR 200, Subpart F, Appendix IV, Section C.2.b., organizations that do not have a NICRA with the Federal government are required to provide their initial indirect cost proposal immediately but no later than 3 months after the effective date of the Federal award which first incorporates indirect cost rates. The indirect cost amount is used to determine how much of the indirect cost the entity can use as a match or for cost sharing. contact your program lead or assigned Grants Administrator. Cost sharing is required. Leave absence such as vacation, holiday, sick leave, and other paid absences were included in salaries. FLC Grant Assistance Program Registration, Grants Management Challenges: Being Direct About Indirect Costs, Secrets to Success From a Former Grants Administrator, Why Excel Is No Longer Sustainable for Government Grants Management, Top 10 Reasons to Have a Grants Management System, Costs associated with operating and maintaining buildings and grounds. Reliability and accuracy of an organizations labor charging system is essential. (A) An indirect cost pool of $200,000 (B) A salary and fringe total of $300,000. Indirect Costs (definition extracted from FAR Part 31.2). It also provides awardee personnel with a record of the awardees practices in the event of personnel changes (only changes to accounting practices or allocation methods need be submitted after the first year). Whether an organization has an automated or manual personnel activity reporting system there must be procedures, controls and an audit trail of documentation to support the labor costs. reasonable and consistently applied to direct costs, appropriate to the particular cost being distributed, and. M/OAA/CAS/OCC provides support and guidance to Agreement Officers (AO) and Agreement Officers Representatives (AOR) at Missions regarding the negotiation of NICRAs as requested. Direct salaries and wages including vacation, holiday, sick pay, and other paid absences excluding all other fringe benefits. A fixed rate is an indirect cost rate with the same characteristics as a predetermined rate, except that the difference between the estimated costs and the actual costs of the period covered by the rate is carried forward as an adjustment to the rate computation of a subsequent period. A predetermined rate may be negotiated for use on Federal awards where there is reasonable assurance, based on past experience and reliable projection of the organization's costs, that the rate is not likely to exceed a rate based on the organization's actual costs. What are indirect costs? The purpose of the CPS is to establish a clear understanding between the organization and the federal government as to what costs will be charged directly and what costs will be charged indirectly. Indirect costs are costs incurred by an organization that are not readily identifiable with a particular project or program but are nevertheless necessary to the operation of the organization and the performance of its programs. Determine that costs that are statutorily unallowable, or for reasons of non-allocability, have been eliminated from the indirect cost pool. I. Provide a comparative analysis of indirect cost pools and bases by detailed account to prior fiscal year actual costs. You should verify whether your agency has a negotiated indirect cost rate or inquire with the funding agency about how to obtain an indirect cost rate. A review by the cognizant agency for indirect costs is only required when a negotiated rate is requested. Promotion, lobbying, and other forms of public relations. Description of non-profit's timekeeping system and a copy of a completed time sheet, if applicable, when an employee works on multiple activities or cost objectives. Download Example - DStatement of Treatment of Paid Absence, Lobbying Cost Certificate, and Certificate of Indirect Cost [PDF 47 KB]. "AFCP 2023 GRANTS Program: Project Name - Applicant Name" by midnight January 8, 2023. Indirect costs are frequently referred to as overhead expenses (e.g., rent and utilities) and general and administrative expenses (e.g., clerical and managerial staff salaries). Modified Total Direct Cost (MTDC): See Appendix II of this guide titled, Frequently Asked Questions, for additional information on the 10% De minimis rate. For each grant, the direct costs are estimated and then multiplied by the indirect cost rate of the university to compute the total indirect costs. Review severance payments for reasonableness. Entitys written policy for allocating and identifying direct and indirect costs, i.e. The applicant's financial contribution may include both direct and indirect expenses, in-kind contributions, non-Federal third-party contributions, and any income earned directly by the project. Option 1. Each grouping must then be allocated individually to benefitting functions by means of a base which best measures the relative benefits. These costs are grouped into common pool (s) and distributed to benefiting activities by a cost allocation process. Also, 2 CFR 200, Subpart E, Section 430(i)(3) states that in accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR part 516),charges for the salaries and wages of nonexempt employees, in addition to the supporting documentation described in this section,must also be supported by records indicating the total number of hours worked each day. Lobbying Cost Certificate in accordance with 2 CFR 200, Subpart E, Section 200.450(c) 2 (vi) Federal Listing of Awards The U.S. Department of Health and Human Services defines indirect costs as those costs of an institution that are not readily identifiable with a specific project or activity, but are nonetheless necessary to the general operation of an institution and how activities are conducted. When you are budgeting for a project, it is important to classify and document any indirect costs appropriately. Indirect Cost Rate for applications to the Arts Endowment's Research program and research awards. If that event does not occur, a final rate will be established and upward or downward adjustments will be made based on the actual allowable costs incurred for the period involved. Grantees that already have a NICRA and wish to finalize indirect cost rates for a prior period are required to submit their audited financial statements and single audit in accordance with 2 CFR 200, Subpart F, Section 512(a)(1) and certified indirect cost rate proposal to USAID within the earlier of 30 days after receipt of the auditors report, or. A schedule that summarizes total cost by line item expenditure, which should include , but not be limited to: Total expenditures (reconcilable to the audit if using actual numbers), Indirect cost rate calculation and federal percentage. one which results in an accurate measure of the benefits provided to each activity of the organization. Calculating and Including Indirect Costs in an Award Budget. First Time Provisional NICRA Submission The base of application for this example is total costs excluding G&A expenses. Reconciliation schedule for each indirect cost pool and allocation base showing each reclassification and adjustment to the financial statements to arrive at the cost pools and allocation bases. Determine that "pass-through" funds have been excluded from the base. Description of Cost Allocation Methodology. The Office of Management and Budget (OMB) published Title 2 of the Code of Federal Regulations Part 200 (2 CFR 200), titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards to streamline the Government-wide guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards. When an organization considers the final indirect cost rate to be a reasonable estimate of its rate for coming year, it will be established as the new provisional rate. As described in 2 CFR 200, Subpart E, Section 200.403, Factors affecting allowability of costs, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. The grant includes subrecipients who are also requesting indirect costs. b. Once elected, the rate must be used consistently for all federal awards until the entity chooses to negotiate a rate, which the entity may request at any time. USAID predominantly uses the provisional and final indirect cost rate methodology when negotiating rate agreements. 53.5%, so $267,500 would be provided to the university as F&A to cover indirect costs associated with the research project. All Rights Reserved. Predetermined or fixed rates may replace provisional rates at any time prior to the close of the organization's fiscal year. This category must also include its allocable share of fringe benefit costs, operation and maintenance expense, depreciation, and interest costs. This checklist is also included in Appendix III, Indirect Cost Rate Proposal Checklist for First Time NICRA, and includes the basic instructions to complete and submit an indirect cost rate proposal. Indirect costs represent the expenses of doing business that are not readily identified with a particular grant, contract, project function or activity, but are necessary for the general operation of the organization and the conduct of activities it performs. Review and analyze direct costs for the determination of: Review the grant budget and payments, or grantee records, for a determination of: (if deemed feasible under the circumstances), Check with the appropriate Agreement Officer for any problems he/she may be aware of relating to the charging of costs. We hope this will make your job a little easier. The Appendix III includes the indirect cost proposal (ICP) checklist for nonprofit entities which identifies the required documentation to be provided by each non-profit organization. Scenario 2: When NIFA is not the Applicants Cognizant Federal Agency. The Data Gateway enables users to find funding data, metrics, and information about research, education, and extension projects that have received grant awards from NIFA. You might be requested to provide additional information so that NIFA can assess approval of extensions. Certificate of Indirect Costs in accordance with 2 CFR 200, Subpart F, Appendix IV, Section D. Compile all remaining documentation identified in the indirect cost proposal checklist, such as: The following allocation bases are acceptable examples for use when indirect costs are allocated to benefiting cost objectives by means of an indirect cost rate. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely. Fiscal Period If an educational institution has a provisional rate at the time of award, NEH must use the provisional rate until a final cost is negotiated and approved by the, NEH uses the indirect cost rate(s) in effect at the time it issues your award, except as provided in, If you have questions about determining the indirect costs for your application, please contact NEHs Office of Grant Management at, State and Jurisdictional Humanities Councils, NEH General Terms and Conditions for Awards, Standing Together: The Humanities and the Experience of War, Chronicling America: History American Newspapers. Fringe Benefits Indirect costs are those costs which are not readily identifiable with a particular cost objective (e.g., direct organizational activity or project), but nevertheless are necessary for the general operation of an organization. Download Example - Simplified Allocation Method [PDF 42 KB]. 6/16 Page 1 Office of Research Administration ORA-00-04: INDIRECT COSTS . Many organizations negotiate a federal indirect cost rate, known as a Negotiated Indirect Cost Rate Agreement, or NICRA. General & Administrative (G&A) rate. Note that Section 2 of the Guide identifies steps to prepare an indirect cost rate proposal. Before sharing sensitive information, make sure youre on a federal government site. Consistency in charging specific items of cost. The information is intended only to provide clarity to NIFA award recipients regarding existing requirements under the law or agency policies. Applicable audited financial statements including any affiliated organizations, and the single audit in accordance with 2 CFR 200, Subpart F, Section 200.512(a)(1). Indirect costs are usually grouped into common pools and charged to benefiting objectives through an allocation process/indirect cost rate. Do not charge for the same items that the indirect cost rate will cover. At the end of the 4-year extension, the non-Federal entity must re-apply to negotiate a rate. Indirect costs are costs incurred for common or joint objectives and therefore cannot be readily and specifically identified with a particular project or activity. Organization legal name, address, telephone number. 2022 Education Service Center Rates, effective 7/1/2021 - 6/30/2022. Once affirmed, the grantee should prepare its Indirect Costs Proposal (ICP) using the DOI Guidance. Applicant/subrecipients with an approved federally recognized and valid Negotiated Indirect Cost Rate (or Recovery) Agreement (NICRA) from their cognizant agency can charge indirect costs to projects based on their negotiated indirect cost rate and modified total direct cost (MTDC) base, both as listed in their NICRA. Report scam, The National Endowment for the Humanities. The Appendix I includes a sample of the USAID Negotiated Indirect Cost Rate Agreement (NICRA). Written policies and procedures for screening unallowable costs. A copy of the appeal must be concurrently furnished to the AO. Generally, indirect cost rate structures for commercial organizations follow a single, two-rate (for example, fringe and overhead rates), or three-rate (for example, fringe, overhead, and General and Administrative expense rates) system. A predetermined rate is not subject to adjustment. The AO must place a copy of the final decision in the award files. 2 CFR 200, Subpart D, Section 200.333(f)(1) and (2), Retention requirement for records states the following: (f) Indirect cost rate proposals and cost allocations plans. Unless specifically designated by entity type, the cognizant agency is the agency from whom you receive the most federal funds. Where an organization's major functions benefit from its indirect costs to approximately the same degree, the allocation of indirect costs may be accomplished by (i) separating the organization's total costs for the base period as either direct or indirect, and (ii) dividing the total allowable indirect costs (net of applicable credits) by an equitable distribution base. Contact person information (preferably the person who prepared the ICR): Entitys internet website address, if any. For example, many higher education institutions negotiate multiple rates, such as on-campus, off-campus, instruction, research, or other sponsored activities.. If you only collect the de minimus rate of 10%, that means you still need to raise $130 thousand to cover all of your indirect costs. NIFA supports research, educational, and extension efforts in a wide range of scientific fields related to agricultural and behavioral sciences. The Lobbying Cost Certificate certifies that the entity has been in compliance with the requirements and standards of 2 CFR 200.450, Lobbying. 2 CFR 200, Subpart E, Section 200.414 (c) (1) states that the negotiated rates must be accepted by all Federal awarding agencies. Unallowable Costs. charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. The base of allocation for this example is total costs excluding indirect expenses. No proposal to establish indirect cost rates must be acceptable unless such costs have been certified by the non-profit organization using the Certificate of Indirect Costs. The purpose of this spreadsheet is to identify effected awards, gauge materiality and identify any indirect cost limitations. The information herein is used by the organization for the development of the indirect cost rates as shown on the subsequent sections of the guide, Download Example - Statement of Total Cost Table [PDF 84 KB]. d. Availability of data on square footage, number of transactions, employees, purchase orders, etc. The CPS should include, as a minimum, the following information: Basis of Accounting Make sure you have chosen the appropriate IDC rate, and that you have calculated your IDC base correctly to ensure that your budget is not reduced. c. Costs must consistently be charged as indirect or direct; costs may not be double charged or inconsistently charged as both, as per 2 C.F.R. Federal award recipients that recover administrative overhead costs through the use of an indirect cost rate (ICR) must submit an annual ICR proposal to: The organization must have an established accounting system prior to being awarded a grant or contract with a federal government agency. At the end of the extension, the grantee must re-apply for a NICRA. The rate methodology selected by an organization needs to match a business operations. Refer to 45 CFR 75.414 Indirect (F&A) costs for more information. Note: Salaries and fringes included in this exhibit are for illustrative purposes only. An entity that does not have a current NICRA (or provisional rate) and does not want to negotiate indirect costs may be eligible to elect a de minimis rate of 10% of modified total direct costs (MTDC), as defined in 2 CFR 200.414(f). Indirect (F&A) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.. This checklist is also included in Appendix IV, Indirect Cost Rate Proposal Checklist for Subsequent NICRAs, and includes the basic instructions to complete and send your revised provisional or final indirect cost rate proposal. CFR 200.413 Direct costs. ID: MA.252690. Despite its name, indirect costs are important to the execution of a project. Knowledge Check. Indirect costs represent business expenses that do not readily fall within a project-specific functional activity. Description of the allocation base used in each rate calculation. The National Institute of Food and Agriculture provides leadership and funding for programs that advance agriculture-related sciences. 2 CFR 200, Subpart F, Appendix IV, Section B.2.e. 2 CFR 200, Subpart E, Section 200.414 (f) specifies that any non-Federal entity that has never received a negotiated indirect cost rate may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. The Appendix II includes a list of some frequently asked questions by organizations on areas such as the OMB Super Circular (2 CFR 200); establishing indirect cost rates and a NICRA; the time period for establishing a NICRA; direct versus indirect costs; and award modification based on the NICRA. Appendix I of this Guide contains a sample of the NICRA used by USAID. For each type of rate proposed provide a detailed rate calculation to include the pool of expenses, the base of application, and all unallowable costs. The following links lead to current and prior-year indirect cost rates for education service centers: 2023 Education Service Center Rates, effective 7/1/2022 - 6/30/2023. **Important Note on Statutory Limitations (CAPS) on Indirect Costs. Miscalculated indirect costs are a loss for institutions. e. Additional effort and cost required to achieve a greater degree of accuracy. The statements must be reconciled to the indirect cost rate(s) calculation. This Indirect Cost Rate Guide (Guide) has been prepared to assist non-profit organizations to understand the requirements for the determination of indirect cost rates for application on cost reimbursable grants and other agreements awarded by the United States Agency for International Development (USAID). Example Personnel Cost Worksheet regarding timesheet with comments from the 2 CFR 200 addressing the use of records to support the work performed. Direct & Indirect Costs for Sponsored Projects . Please understand that you will not be able to draw down indirect cost funds unless you have an approved Negotiated Indirect Cost Rate Agreement (NICRA) from your cognizant agency, or you have elected and are eligible to use the 10% de minimis rate. In some instances, a single indirect cost rate for all activities of an organization or for each major function of the organization may not be appropriate, since it would not take into account those different factors which may substantially affect the indirect costs applicable to a particular segment of work. Submit a draft NICRA to the organization for their review of the indirect cost rate methodologies, and obtain their concurrence. C.F.R 200.402 Composition of costs. Rather, costs must be consistently charged as either indirect or direct costs. Each indirect cost pool must then be allocated individually to benefitting functions by means of a base which best measures the relative benefits. Let's say your nonprofit has one program with two government grants worth a total of $1.7 million per year and you have indirect costs of $300 thousand. An organization which does not yet have a NICRA but wishes to propose indirect cost should follow the steps below and explain in response to any award applications that no NICRA yet exists because this will be its first prime USG award. Photocopying and Printing If your organization does not have a current or provisional NICRA, you may claim a standard 10 percent in indirect costs. c. Total Federal funds involved. Subsequent one-time extensions (up to four years) are permitted if a negotiation is completed between each extension request. Determine that the applicable cost principles stated in 2 CFR 200 were followed. Examples of unallowable activities include: services to members, maintenance of membership rolls, public relations, lobbying, and fund raising. Financial statements must be reconciled to the indirect cost rate calculations. Title: Employee referral form Author: ORA-00-04 Indirect Costs; Rev. eCivis is the nations leading grants management software solution and the ideal platform for improving grants performance for local governments and community-based organizations. The rate is based on an estimate of the costs to be incurred during the period. Knowing these procedures while preparing an indirect cost rate proposal, may make the review process more efficient and timely. Download Example - Direct Allocation Method [PDF 62 KB]. Added to item 7. in the Indirect Cost Rate Proposal (ICR) Checklist for First Time NICRA comments on documentation to be provided by small business to support the proposed indirect cost rate. b. Indirect Costs in Grants Management for Grantee (GM-GTE) are occurred when Sponsor have agreed to provide a certain %age of selected combination of Sponsored Programs and Sponsored Classes of a Grant as Indirect Expense. An applicant may elect not to request recovery of indirect costs. Prior to the preparation of an indirect cost rate proposal and supporting documentation, the cost principles established by 2 CFR 200, Subpart E, Cost Principles, should be thoroughly reviewed. Indirect costs are frequently referred to as overhead expenses (e.g., rent and utilities) and general and administrative expenses (e.g., clerical and managerial staff salaries). If adequately supported, a revised provisional rate will be issued. CRIS - Current Research Information System, REEIS - Research, Education and Economics Information System, Food and Agricultural Education Information System (FAEIS). If the indirect costs are lower, NEH will reduce your award. In addition, 2 CFR 200, Subpart A, Section 200.57 defines an indirect cost rate proposal as the documentation prepared by a non-Federal entity to substantiate its request for the establishment of an indirect cost rate. For example, a community-based art project to paint a mural on a public facility may require indirect costs related to personnel time to supervise volunteers, the use of scaffolding or other painting equipment owned by a city, and administrative costs associated with the public unveiling of the completed mural. An official website of the United States government. If not, USAID does not have the authority to negotiate the organizations rates. The following are samples of G&A bases of application: Simplified Allocation Base: Administration of group benefits on behalf of members or clients, including life and hospital insurance, annuity or retirement plans, and financial aid. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect (F&A) costs. M/OAA/CAS/OCC establishes Negotiated Indirect Cost Rate Agreements (NICRA) for U.S. and foreign organizations with awards issued by the Bureau for Managements, Office of Acquisition and Assistance (M/OAA) in Washington, DC. Please note, the prime awardee is responsible for determining indirect costs for their sub-recipients or pass through sub-awardees. Grantees with a current NICRA may apply for a one-time extension of the rate for up to four years. indirect costs on awards pending the establishment of a final rate for the period. Use of the tool is entirely optional. In another case, the applicant incorrectly included matching costs in their indirect cost base. Review your institutions NICRA to ensure that you use the most appropriate rate type for your project. If indirect costs are allowed under the terms of the award, the entity will then be ready to prepare an indirect cost rate proposal beginning with the following steps: a. The Federal agency with the largest dollar value of Federal awards with an organization will be designated as the cognizant agency for indirect costs for the negotiation and approval of the indirect cost rates unless different arrangements are agreed to by the Federal agencies concerned. NSF, NIH and Dept. Indirect costs are calculated by multiplying the direct project costs that are included in the indirect cost base by the indirect cost rate. a. The site is secure. New non-profit recipients should email their IDC proposals to EPA's IDC email box at OGD_IndirectCost@epa.gov . While your institution does not have to request indirect costs in its application budget, you may apply the de minimis rate if it does not have an existing current or provisional NICRA (see 2 CFR 200.414(f).). Some sponsors request that indirect costs do not exceed a percentage of total project costs. Executive compensation Refer to Appendix V for a sample of a deviation letter from the NICRA. some costs are exempted when the Indirect Costs are calculated. . Upon completion of the negotiation process, the grantee will need to contact its grant official to discuss changes to the grant budget resulting from applying negotiated rates. Depreciation schedule if depreciation is included as indirect costs. They should also support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Schedule of all awards grouped by funding agency with majority federal funding listed on top. If you don't have a NICRA, you can use the federal government's de minimis rate of 10% for indirect costs (the unrestricted rate) or 8% (on restricted rate programs). The rate in each case must be stated as a percentage which the amount of the particular indirect category (i.e., Facilities or Administration) is of the distribution base identified with that category. NEH uses the indirect cost rate(s) in effect at the time it issues your award, except as provided in 2 CFR 200.414(c)(1),. Treatment of paid absences and signed statement of treatment of paid absences if it has changed. Universities and the federal government both contribute to the cost of supporting the infrastructure and environment necessary to keep labs running and research advances coming. When it comes to dealing with indirect costs in the budgeting process, it is important to be familiar with the concept of indirect costs, what they can be budgeted for, and exactly how much can be allocated toward these expenses. Reconcile the indirect cost rate proposal to the audited financial statements. Cost sharing may be in the form of allowable direct or indirect costs. If this is not the case, an organization must provide a detailed forecast supporting the desired rate(s). These are expenses directly related to the proposed project, like equipment for the project or salaries of the individuals who will work on the project. Description of the accounting system software, Direct and indirect labor ** Disclaimer: The contents of this page do not have the force and effect of law and are not meant to bind the public in any way. Indirect cost rates identified in the NICRA apply to all cost reimbursable awards that incorporate provisional indirect rates. For major Institutions of Higher Education (IHE) and major nonprofit organizations, indirect (F&A) costs must be classified within two broad categories: "Facilities" and "Administration." "Facilities" is defined as depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings . To facilitate preparation of an indirect cost proposal, shown below are (1) some definitions of the term "indirect costs," (2) a brief discussion of indirect cost rate structures and (3) a simple example of an indirect cost rate computation. In business terms, these costs are referred to as overhead.. Once established, a final indirect cost rate is used to adjust the indirect costs claimed. This extension will be subject to the review and approval of the cognizant agency for indirect costs. 2018 District and Charter School Indirect Cost Rates, effective 7/1/2017 - 6/30/2018. Awardees must comply with the T&C of any indirect cost limitation identified in the RFA. Stay tuned! Almost a quarter of ODH awards were reduced because they applied the incorrect indirect cost rate. To calculate the rate, you would divide (A) by (B), yielding an indirect cost rate of 66.66%. Incorrectly calculating your indirect cost base can lead to a reduction in your award. Are the maximum allowable indirect costs of $300,000 to be divided among us and our subrecipients? Indirect Costs vs. Determine that the itemized costs in the indirect cost pool pertain to functions that are supportive of all direct activity. b. If this is not the case, an organization provides a detailed forecast to support the rate they consider more accurate. The 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. totaling $1,000,000. For example, in one case, an applicant incorrectly included gift cards for participants in their indirect cost base. 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