The organization must maintain a time distribution system for use by employees whose time is charged to more than one cost objective. Scenario 2: When NIFA is not the Applicants Cognizant Federal Agency. These records must support the distribution of the employees 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. Indirect Cost Proposal for the fiscal year ended The National Institute of Food and Agriculture provides leadership and funding for programs that advance agriculture-related sciences. To calculate the rate, you would divide (A) by (B), yielding an indirect cost rate of 66.66%. 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. Ensure All Appropriate Costs Are Included in the Base of Allocation(s). At the end of the extension, the grantee must re-apply for a NICRA. b. In 2022, for example, one applicant requested 56 percent in indirect costs, which was their institutions on-campus organized research rate. Organizations must have a system in place to equitable charge costs. Option 1. 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. The result of this process is an indirect cost rate which is used to distribute indirect costs to individual Federal awards. This category must also include its allocable share of fringe benefit costs, operation and maintenance expense, depreciation, and interest costs. Grants and contracts should provide for sponsor support of the total costs (direct and indirect) of each project when possible. Conferences except those held to conduct the general administration of the non-Federal entity, Maintenance, protection, and investment of special funds not used in operation of the non-Federal entity. Review changes in the indirect cost rate allocation bases for propriety, if applicable. 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. Refer to 45 CFR 75.414 Indirect (F&A) costs for more information. 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 But. d. Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. Review executive compensation of the top five executives for reasonableness. E. Cost pool and base for distribution NHPRC grant recipients are not permitted to use grant funds for indirect costs (as indicated in 2 CFR 2600.101). Make any agreed upon changes, and request any revised, and/or supporting documentation. 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. The Negotiated Indirect Cost Rate Agreement shall specify: (a) the final rate(s), (b) the base(s) to which the rate(s) apply, and (c) the period(s) for which the rate(s) apply. Direct and Indirect Travel Title 2 of the Code of Federal Regulation Part 200 (2 CFR 200), titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards establishes the federal requirements for the determination of allowable and unallowable direct and indirect costs, and is available at the following website: http://www.ecfr.gov. An indirect cost is any cost not directly identified with a single, final cost objective, but identified with two or more final cost objectives or an intermediate cost objective. 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.. Document meeting, telephone conversations, and e-mails. F. Indirect Cost Proposal Checklist for Subsequent NICRAs of this guide for the required documentation. b. For reference purposes, see 2 CFR 200, Subpart D, Section 200.302, Financial Management. "AFCP 2023 GRANTS Program: Project Name - Applicant Name" by midnight January 8, 2023. U.S. Agency for International Development, Diversity, Equity, Inclusion, and Accessibility, Acquisition & Assistance Policy Directives, Indirect Cost Rate Guide for Non-Profit Organizations, COVID-19 Guidance For Implementing Partners, Preparing for a World Altered by COVID-19, Download Example - Multiple Allocation Method, Title changed in the section 3.B of the Table of Contents from Time Distribution Report to Personnel Activity Report. 9/23/2021 - 2021-2022 Indirect Cost Rates: Chief Administrative Officers will soon receive letters notifying them of their agency's preliminary 2021-2022 maximum indirect cost rates. Direct costs are easy to identify. Refer to Section 2. 2 CFR 200, Subpart F, Appendix 4, Section C.2.f. If your organization does not have a current or provisional NICRA, you may claim a standard 10 percent in indirect costs. Once established, a final indirect cost rate is used to adjust the indirect costs claimed. 6/16 In most cases, this led to recipients receiving less money than they requested in their application. 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. 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).). Reconcile the indirect cost rate proposal to the audited financial statements. If you apply the de minimis rate and receive an award, it will be in effect for the awards period of performance. As outlined in 2 CFR 700.15, if the organization disagrees with the AOs final decision, the organization may appeal the AOs decision to the USAIDs Deputy Assistant Administrator, Bureau for Management, or designee. 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. Scenario 1: When NIFA is the Applicants Cognizant Federal Agency. These organizations generally separate their costs into three basic categories: (i) General administration and general expenses, (ii) fundraising, and (iii) other direct functions (including projects performed under Federal awards). Examples of unallowable activities include: services to members, maintenance of membership rolls, public relations, lobbying, and fund raising. 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. Prepare the indirect cost rate proposal by using the Indirect Cost Rate (ICR) Proposal Checklist for First Time NICRAs included in Section 2.E. Document meetings, telephone conversations, and e-mails. I. A decision under this provision by the Deputy Assistant Administrator, Bureau for Management is final. If adequately supported, a revised provisional rate will be issued. 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. legal formalities, Court Stamp Charges, Salaries Paid to . Preparedness Grants Manual . 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. 2 CFR 200, Subpart E, Section 200.413 (f), states that the costs of activities performed by the non-Federal entity primarily as a service to members, clients, or the general public when significant and necessary to the non-Federal entity's mission must be treated as direct costs whether or not allowable, and be allocated an equitable share of indirect (F&A) costs. 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. Example - List of Grants with the Period-of-Performance, Organization ABC The measurement selected should be based on relative benefits received, and should be able to replicate the process. It is not subject to treatment as a direct cost. Direct costs: "costs that can be identified specifically with a particular final cost . Organizational structure 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. Knowledge Check. If charging an indirect cost rate, include this cost on page 7 of the budget. 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. Applicability: This policy applies to all federal and nonfederal sponsored agreements . 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). If this is not the case, an organization must provide a detailed forecast supporting the desired rate(s). cost allocation methodology. Each reclassification and adjustment must be explained in notes to the reconciliation schedule. National Museum of American History. * Includes costs associated with independent (self-sponsored) research and development (IR&D) activities. states that provisional and final rates must be negotiated where neither predetermined nor fixed rates are appropriate. ODH applicants may request both direct and indirect costs in their budget. NEH recalculated the indirect cost and reduced the award by $599. Before sharing sensitive information, make sure youre on a federal government site. Provide a comparative analysis of indirect cost pools and bases by detailed account to prior fiscal year actual costs. Indirect Cost Rate Proposal (ICR) Checklist for Subsequent NICRAs. 2021 drove home the need for grant modernization in a new and urgent way. Indirect cost payments are actually reimbursements for costs that universities have already paid for expenses incurred in conducting federally-sponsored research. 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? Indirect costs include costs which are frequently referred to as overhead expenses (for example, rent and utilities) and general and administrative expenses (for example, officers' salaries, accounting department costs and personnel department costs). Indirect costs represent business expenses that do not readily fall within a project-specific functional activity. . If you plan to apply for an NEH grant, we encourage you to review this information carefully and share it with the appropriate program and financial offices within your organization. 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. General & Administrative (G&A) rate. When the ICP is complete, the grantee submits the complete ICP package, including excel and pdf templates, to RecipientsICPs@usda.gov. This indirect cost rate allocates expenses related to the management or supervision of activities or cost that benefit more than one final cost objective (e.g., division middle management, supervisors, project leadership benefiting multiple awards, site rent, etc.). Revised: December 26, 2014 . The purpose of this spreadsheet is to identify effected awards, gauge materiality and identify any indirect cost limitations. The indirect cost rate proposal must be submitted to the HHS Indirect Cost Rate Group through the Federal Funds Office Landing Page for Subrecipients. Determine that costs that are statutorily unallowable, or for reasons of non-allocability, have been eliminated from the indirect cost pool. Indirect cost rates identified in the NICRA apply to all cost reimbursable awards that incorporate provisional indirect rates. The statements must be reconciled to the indirect cost rate(s) calculation. Further, if at any time during the fiscal year an organization determines that its current provisional rate is no longer accurate and materially misstated it should advise M/OAA/CAS/OCC accordingly. 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. 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. 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. 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. Note that Section 2 of the Guide identifies steps to prepare an indirect cost rate proposal. the determination of indirect costs on cost reimbursable grants, contracts, and other agreements awarded by the U.S. Department of Labor (DOL). 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 following is a list of some of the elements that must be provided for in the labor charging system: The direct labor amount must be supported by the organizations labor distribution report, and internal accounting system. Prior approval from HHS is required. If the indirect costs are lower, NEH will reduce your award. 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. Grantees with a current NICRA may apply for a one-time extension of the rate for up to four years. 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. You would like to request to extend your current negotiated rate for 4 years. The Appendix I includes a sample of the USAID Negotiated Indirect Cost Rate Agreement (NICRA). Report scam, The National Endowment for the Humanities. Fiscal Period Indirect cost Proposal Checklist for First Time NICRA of this guide for the required documentation. NIFA applicants should identify their program type and follow the indirect cost limitation identified in the request for applications (RFA). 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. This website houses a large volume of supporting materials. Subsequent one-time extensions (up to four years) are permitted if a negotiation is completed between each extension request. This method should also be used where an organizations major functions benefit from its indirect costs to approximately the same degree, and may be used where the level of Federal awards to an organization is relatively small. The rate methodology selected by an organization needs to match a business operations. After USAID issues a final indirect cost rate, M/OAA/CAS/OCC will establish a provisional rate for the next fiscal year. 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. Level of Federal fundingvalue= c. Reports generated from their accounting system 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. To minimize withholds of indirect costs for lack of adequate support we suggest that upon award approval, you inform NIFA Awards Management Division - Administrative Point of Contact (awards@usda.gov) of your selected indirect cost recovery option. 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. Perform a mathematical verification of each indirect cost rate calculation provided by the organization. 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. Each reclassification and adjustment must be explained in notes to the reconciliation schedule. 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). Review your institutions NICRA to ensure that you use the most appropriate rate type for your project. The information is intended only to provide clarity to NIFA award recipients regarding existing requirements under the law or agency policies. 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. Once a NICRA is issued, either by a Mission or M/OAA/CAS/OCC, this NICRA will apply to all Federal awards. Despite its name, indirect costs are important to the execution of a project. 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. Employees have sole access for entering own time. 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]. 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. Severance CRIS - Current Research Information System, REEIS - Research, Education and Economics Information System, Food and Agricultural Education Information System (FAEIS). See Appendix II of this guide titled, Frequently Asked Questions, for additional information on the 10% De minimis rate. Submit a draft NICRA to the organization for their review of the indirect cost rates methodology, and obtain their concurrence. Indirect Cost Rate Allocation on each indirect cost rate Expenditures for federal grants can be from both direct and indirect costs. II. Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. contact your program lead or assigned Grants Administrator. 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. Review severance payments for reasonableness. Direct costs are those that can be easily assigned to a federal award program, they include cost of goods and services directly related to the grant activity as well as compensation and related fringe benefits of employees who work on the federal grant award. Note that responsibility for each specific organization is based on the first letter of its name, i.e. 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. 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