If youre a state, local or tribal governmentagency that is seeking to secure and properly manage federal and/or non-federal grants, you know it's getting increasingly harder without technology. Photocopying and Printing Allocation Basis for Individual Cost Elements This is known as the, Make sure you apply the correct indirect cost rate, While your institution does not have to request indirect costs in its application budget, you may apply the, You cannot change your indirect cost rate after you receive your award, NEH will not adjust your award amount as a result of changes to your negotiated rates. Example Personnel Cost Worksheet regarding timesheet with comments from the 2 CFR 200 addressing the use of records to support the work performed. 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. 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. Reliability and accuracy of an organizations labor charging system is essential. **Important Note on Rate Adjustments resulting from NIFA Terms and Conditions (T&C) for Small Business Innovation Research (SBIR) awards. 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). 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. 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. Some issues that may be raised by an M/OAA/CAS/OCC indirect cost rate negotiator during, or after, the review of an indirect cost rate proposal, usually result from non-profit organizations not following the required procedures. states that provisional and final rates must be negotiated where neither predetermined nor fixed rates are appropriate. Download Example - Multiple Allocation Method: Fringe benefits indirect cost rate, Overhead indirect cost rate and General and Administrative (G&A) expense rate. Indirect costs represent business expenses that do not readily fall within a project-specific functional activity. Determine that the applicable cost principles stated in 2 CFR 200 were followed. As a result, NEH reduced the award amount by more than $10,000. Financial statements must be reconciled to the indirect cost rate calculations. Submit a draft NICRA to the organization for their review of the indirect cost rate methodologies, and obtain their concurrence. 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. b. ** 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. Review executive compensation of the top five executives for reasonableness. Only final and predetermined rates may be eligible for consideration of rate extensions. Indirect cost rates identified in the NICRA apply to all cost reimbursable awards that incorporate provisional indirect rates. The awardee will be required to provide a current negotiated rate from the cognizant agency in order to recover indirect costs. Direct & Indirect Costs for Sponsored Projects . A 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. To determine if your project fits into the AFCP guidelines, . II. The AO must place a copy of the final decision in the award files. Some examples of these types of activities include: The checklist below addresses the documentation to provide and steps needed when an organization is seeking a NICRA for the first time. 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. In business terms, these costs are referred to as "overhead." Examples of indirect costs are: Costs associated with operating and maintaining buildings and grounds Equipment depreciation General salaries Providing services and information to members, legislative or administrative bodies, or the public. A provisional rate or billing rate is a temporary indirect cost rate applicable to a specified period and is used for interim billings pending the establishment of a final rate for the period. Indirect Expense might cover the processing cost of a Grant (e.g. Scam Advisory: Recent reports indicate that individuals are posing as the NEH on email and social media. 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. The National Fish and Wildlife Foundation is providing the Indirect Cost Calculator tool to assist applicants with calculating the allowable amount of indirect costs that can be included in proposal budgets, as applicable. What is the indirect cost rate? ______ No. Conversely, if the organization is not successful in securing the award, no NICRA will be issued. National Museum of American History. Typically these are costs that would not be incurred if it was not for the awarded contract or grant. [PDF 259 KB]. Review your institutions NICRA to ensure that you use the most appropriate rate type for your project. 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]. According to 2 CFR 200, Subpart F, Appendix IV, Section A.1: Indirect costs are those that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective.. Lobbying Cost Certificate in accordance with 2 CFR 200, Subpart E, Section 200.450(c) 2 (vi) 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. If not, USAID does not have the authority to negotiate the organizations rates. Subsequent NICRA Submissions to Establish Final and Provisional Indirect Cost Rates. The rate is based on an estimate of the costs to be incurred during the period. 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. Documentation and steps needed to revise provisional indirect cost rates: Prepare the indirect cost rate proposal using the Indirect Cost Rate (ICR) Proposal Checklist for Subsequent NICRAs included in Section 2.F. If you have received an award from NIFA and would like to claim indirect costs, the information on this page should provide useful information. 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. I. It is the ratio between the total indirect costs of an applicant and some equitable direct cost base. Some sponsors request that indirect costs do not exceed a percentage of total project costs. 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. Joint costs, such as depreciation, rental costs, operation and maintenance of facilities, telephone expenses, and the like are prorated individually as direct costs to each category and to each Federal award or other activity using a base most appropriate to the particular cost being prorated. 2018 District and Charter School Indirect Cost Rates, effective 7/1/2017 - 6/30/2018. Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. Audit adjustments need to be clearly delineated to be readily identifiable for verification by this office. Each reclassification and adjustment must be explained in notes to the reconciliation schedule. The site is secure. The extension will be subject to the cognizant agencys review and approval. The National Institute of Food and Agriculture provides leadership and funding for programs that advance agriculture-related sciences. An indirect cost rate is calculated as a percentage by dividing the total allowable indirect costs by an equitable distribution base, as an example: Indirect pool$150,000 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. Therefore, the organization should have internal controls in place regarding labor costs incurred that are evident, well defined, regularly maintained and updated as necessary, and verify effectiveness. The indirect cost rate is designed to provide a method for full cost recovery, and it is an equitable, logical and consistent process for allocating costs not directly associated with a single grant/contract, project or cost objective. Indirect costs represent business expenses that do not readily fall within a project-specific functional activity. 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. 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. This paragraph applies to the following types of documents and their supporting records: indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates). b. After USAID issues a final indirect cost rate, M/OAA/CAS/OCC will establish a provisional rate for the next fiscal year. Some examples of this category include central offices, such as the director's office, the office of finance, business services, budget and planning, personnel, safety and risk management, general counsel, and management information systems costs. Entitys written policy for allocating and identifying direct and indirect costs, i.e. F. Indirect Cost Proposal Checklist for Subsequent NICRAs of this guide for the required documentation. . 2 CFR 200, Subpart F, Appendix IV, Section B.2.a., states that 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. Title: Employee referral form Author: ORA-00-04 Indirect Costs; Rev. If you have questions about determining the indirect costs for your application, please contact NEHs Office of Grant Management at @email or (202) 606-8494. Description of the allocation base used in each rate calculation. Executive compensation These procedures are broken down into two sections. NHPRC grant recipients are not permitted to use grant funds for indirect costs (as indicated in 2 CFR 2600.101). Occupancy Expenses The rates for school districts and BOCES are calculated using ST-3 and SA-111 data for the school year ending June 30, 2020. Contact person information (preferably the person who prepared the ICR): Entitys internet website address, if any. Description of the allocation base used in each rate calculation if it has changed. If an extension is granted the non-Federal entity may not request a rate review until the extension period ends. Please review the U.S. Department of Interior, Interior Business Center (IBC) indirect cost rate information page for non-profit recipients at Proposal Submittal Instructions for Nonprofit Organizations. If you do not calculate your indirect cost rate correctly, NEH will recalculate it for you. Are the maximum allowable indirect costs of $300,000 to be divided among us and our subrecipients? Treatment of paid absences and signed statement of treatment of paid absences if it has changed. Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. The following are samples of fringe benefits bases of application: Total direct and indirect labor dollars excluding leave (vacation, sick, and holidays), Total direct and indirect labor dollars including leave (vacation, sick, and holidays). Did your organization receive more than $10 million in federal funding of direct costs in the fiscal year(s) in which you are requesting an indirect cost rate? Incorrectly calculating your indirect cost base can lead to a reduction in your award. First Time Provisional NICRA Submission To the extent that indirect costs are reasonable, allowable and allocable, they are a legitimate cost of doing business payable under a U.S. Government contract or grant. After USAID issues a final indirect cost rate, M/OAA/CAS/OCC will establish a provisional rate for the next fiscal year. A predetermined indirect cost rate is applicable to a specified current or future period, usually the organization's fiscal year. 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. 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.. December 31, XXXX. b. The indirect cost rates will then be reviewed for propriety by M/OAA/CAS/OCC and the Contracting/Awarding officer will be advised of approved rates after negotiation with the organization. The indirect costs allocated to each function are then distributed to individual Federal awards and other activities included in that function by means of an indirect cost rate(s). Distribution base$776,700. Make a general inquiry or suggest an improvement. Treatment of paid absences and signed statement of treatment of paid absences. Despite its name, indirect costs are important to the execution of a project. After receiving the indirect cost proposal M/OAA/CAS/OCC will perform the following steps: Note that NICRAs are not issued to sub-awardees since there is no legal relationship between USAID and the sub-awardee. Therefore, fringe benefits treated as indirect costs should not be included as a direct cost in the "Personnel" category of the budget form of the grant application or on a contract proposal. 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. The ceiling indirect cost rates or the indirect cost rates cited in grants or agreements, whichever is lower, will be used to determine the maximum allowable indirect costs on the grants or agreements. 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. * Includes costs associated with independent (self-sponsored) research and development (IR&D) activities. If NIFA is your cognizant agency, please send your requests for extension to NIFA at RecipientsICPs@usda.gov and indicate the rate and fiscal periods to be covered by the rate extension. Outside Services Schedule of all awards grouped by funding agency with majority federal funding listed on top. If so, the applicant should write "None Requested" in the space allotted for item H of the budget sheet. Commercial (for-profit) organizations usually treat "fringe benefits" as indirect costs. NEH will not adjust your award amount as a result of changes to your negotiated rates. If adequately supported, a revised provisional rate will be issued. Submit a draft NICRA to the organization for their review of the indirect cost rates methodology, and obtain their concurrence. Preparedness Grants Manual . The organization must maintain a time distribution system for use by employees whose time is charged to more than one cost objective. Some examples of indirect costs are office space rental, utilities, and clerical and managerial staff salaries. 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. The Negotiated Indirect Cost Rate Agreement shall not change any monetary ceiling, obligation, or specific cost allowance or disallowance provided for in each grant or contract between the parties. 2. Establishing Indirect Cost Reimbursement (ICR) Rates: The Business Office is responsible for documenting and preparing the appropriate forms required under OMB Circular No. Awardees must comply with any indirect cost limitation identified in the award. Explain significant variances for all cost elements. (See 2 CFR 200.414(f) for more information about de minimis rates. 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. Grantees that already have a NICRA 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 nine months after the close of each fiscal year. Where an organization's indirect costs benefit its major functions in varying degrees, indirect costs must be accumulated into separate indirect cost pools. states a breakout of the indirect cost component into two broad categories, Facilities and Administration as defined in subparagraph A.3 of this appendix is required. Provide the amount of executive compensation paid to the top 5 executives. 10% De minimis CFR 200.56 Indirect \(facilities & administrative \(F&A\)\) costs. "AFCP 2023 GRANTS Program: Project Name - Applicant Name" by midnight January 8, 2023. Indirect cost negotiation is performed by the U.S. Department of the Interior (DOI) on NIFAs behalf. 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. Each reclassification and adjustment must be explained in notes to the reconciliation schedule. ), a. 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. NIFA's indirect cost caps have traditionally been separately applied at each level. Prior to the preparation of an indirect cost rate proposal and supporting documentation, the cost principles in 2 CFR 200, Subpart E should be reviewed to determine if the costs proposed are reasonable, allowable and allocable. Fixed rates may be negotiated where predetermined rates are not considered appropriate. 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. The indirect cost rate proposal must be submitted to the HHS Indirect Cost Rate Group through the Federal Funds Office Landing Page for Subrecipients. fundraising, and exclude G&A expenses. Therefore, care needs to be taken to ensure that amounts claimed do not exceed award limitations or indirect cost rate ceilings. The grant includes subrecipients who are also requesting 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. of this guide. 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. 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. Appendix I of this Guide contains a sample of the NICRA used by USAID. Billings and charges to federal grants and contracts must be adjusted if the final rate varies from the provisional . Indirect cost allowances vary by applicant, so it is important for you to know exactly what your organizations allowable indirect cost rate is and on what basis it is calculated. 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. As of November 1, 2016 the following changes have been made to the OCC Guide for Non-Profit Organizations. Indirect costs are calculated as a percentage of direct costs. This was incorrect because the applicants indirect cost base specifically excluded participant support costs. The selection of an appropriate base for allocating indirect costs. A copy of the organizations bonus policy. The measurement selected should be based on relative benefits received, and should be able to replicate the process. 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