This guidance does not supersede information and requirements on the development, calculation, and application of indirect costs and indirect cost rates in, 2 CFR Part 200, Uniform Administrative Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, General Terms and Conditions for Awards to Organizations (For grants and cooperative agreements issued January 1, 2022, or later), general operating support costs to State Humanities Councils (SHC), Applicant organizations submit an NEH project budget using the, , unless otherwise instructed in the NOFO, When preparing your budget, you must treat costs that you classify as direct or indirect consistently. 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). (i.e., capital expenditures and major contracts and subgrants). A decision under this provision by the Deputy Assistant Administrator, Bureau for Management is final. Project information available. 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. Modified Total Direct Costs, excludes equipment, capital expenditures, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. If the rate agreement in effect at the beginning of the period does not cover the entire period of performance, then NEH will use the rate in effect for the last year of the negotiated rate agreement to determine indirect costs for the duration of the period of performance, Likewise, recipient organizations that issue subawards (referred to as pass-through entities) must accept subrecipients applicable federally negotiated indirect cost rates. The checklist below addresses the documentation to provide and steps needed when seeking a revised provisional rate and/or final rates. Common bases for indirect costs include: Provides the separate rates for allocating employee benefits (e.g., payroll taxes, vacation, sick, retirement, health care, bonus, deferred compensation, insurance). A NICRA establishes the following to calculate indirect costs: The rate(s) established in a NICRA are typically effective for a two- to four-year period. A NICRA establishes the following to calculate indirect costs: base (s) rate (s) applicable period (s) M/OAA/CAS/OCC will be the federal cognizant agency for the issuance of the NICRA until the organization no longer has USAID prime awards, or the preponderance of funds shifts to another U.S. federal agency and cognizance has been transferred. 2 CFR 200.332 Requirements for pass-through entities, Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions for Higher Education (IHEs), Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations, State and Jurisdictional Humanities Councils, General Guidance on Calculating Indirect Costs, Chronicling America: History American Newspapers. If your organization does not have a current negotiated (including provisional) rate or has an expired rate, your organization may choose to negotiate a rate with its cognizant agency. 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. 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. The rate methodology selected by an organization needs to match a business operations. NEH does not reimburse indirect costs under the following types of awards: NEH Project BudgetApplicant organizations submit an NEH project budget using the Research and Related budget form, unless otherwise instructed in the NOFO. Establish a final ICR for a prior fiscal year. Availability of data on square footage, number of transactions, employees, purchase orders, etc.e. However, a cost may not be allocated as an indirect cost if any similar costs have been assigned as a direct cost. A predetermined rate is not subject to adjustment. Example 1: Applying a 34% Indirect Cost Rate using a MTDC base. Note: Salaries and fringes included in this exhibit are for illustrative purposes only. ), you may choose to use a de minimis rate of 10% of modified total direct costs (MTDC). Facilities and administrative costs Facilities costs are the overall costs of operating and maintaining facilities owned or leased by the organization in which activities that may directly or indirectly support your project are taking place. Schedule of all awards grouped by funding agency with majority federal funding listed on top. A final rate is used to adjust indirect costs claimed based on a provisional rate. F&A costs for the first $25,000 of each consortium may be included in the modified total direct cost base, when calculating the overall F&A rate, as long as your institution's negotiated F&A rate agreement does not express prohibit it. Direct costs are salaries, services, and goods that are directly related to the project and are accounted for with a high degree of accuracy. Consistency in charging specific items of cost.b. The fringe benefits base of application is total direct and indirect labor dollars. 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. If you have never received a negotiated indirect cost rate, you may elect to charge a de minimis rate of 10 percent of modified total direct costs. The Overhead, Special Cost, and Closeout Branch (M/OAA/CAS/OCC), within the Cost Audit Support Division, Office of Acquisition and Assistance, within the Bureau for Management is the central unit authorized to negotiate indirect cost rates with concerns awarded contracts, grants or cooperative agreements by USAID. If no approved rate exists, the pass-through entity may negotiate an indirect cost rate with the subrecipient or accept the de minimis rate (2 CFR 200.332 (a)(4)). 2 CFR 200, Subpart F, Appendix 4, Section C.2.f. If any litigation, claim or audit is started before the expiration of the 3-year period, the records shall be retained until all litigations, claims or audit findings involving the records have been resolved. Submit your nominations for the 2024 NEH Jefferson Lecturer, NEH Jefferson Lecture in the Humanities nominations, General Guidance on Calculating Indirect Costs (PDF). The AOs decision is final unless the recipient appeals the decision. 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. 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. Provisional rate or billing rate is a temporary ICR applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on federal awards pending the establishment of a final rate for the period. 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 period during which the indirect cost rate is applicable. Per 2 CFR 200.414 (f), if you do not have a current or provisional negotiated rate (except for local governments claiming central service costs under 2 CFR 200, Appendix VII D.1.b), you may choose to use a de minimis rate of 10% of modified total direct costs (MTDC). Make any agreed upon changes, and request any revised, and/or supporting documentation. The cognizant Mission initially negotiates, and subsequently updates, the NICRA on a company-wide basis; not per grant/award. The proposed allocation base(s) is subject to negotiation and approval by USAID. Administrative Assistant, 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. Scam Advisory: Recent reports indicate that individuals are posing as the NEH on email and social media. Timekeeping is performed in accordance with company policies and procedures. M/OAA/C will: Within sixty (60) calendar days of receiving the appeal, M/OAA/C must notify the recipient of the status (i.e., denied, approved, or more time is needed). General & Administrative (G&A) rate. Special remarks (composition of the indirect cost pool). To claim indirect cost reimbursements under a grant program, a government agency must prepare an indirect cost rate proposal with related documentation to support those costs. Submit a draft NICRA to the organization for their review of the indirect cost rates methodology, and obtain their concurrence. Major nonprofit organizations are defined in 2 CFR 200, Subpart E, Section 200.414(a) as those which receive more than $10 million dollars in direct federal funding. 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. It is a manner of assuring fair and equitable reimbursing across different businesses and organizations. 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. ), please provide all applicable final indirect cost rate data as specified in the Federal Acquisition Regulation (FAR) 52.216-7 (d) (2) (iii) for that . An adjustment is also made for the difference between the rate approved for use in a year and the amount of indirect costs actually expended. If your organization has a NICRA, you may apply to your cognizant agency for a one-time extension of a current agreement for a period of up to four years, in accordance with 2 CFR 200.414 (g). Each reclassification and adjustment must be explained in notes to the reconciliation schedule. Examples include depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. To recover indirect costs related to an NEH award, your organization must either negotiate an indirect cost rate with its cognizant agency prior to a federal award or elect to use a de minimis rate of 10% of modified total direct costs (MTDC) (2 CFR 200.414(f)). Costs must be consistently charged as either indirect or modified total direct costs, and may not be double charged or inconsistently charged as both. 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. After USAID issues a final indirect cost rate, M/OAA/CAS/OCC will establish a provisional rate for the next fiscal year. These procedures are broken down into two sections. ( g) Any non-Federal entity that has a current federally-negotiated indirect cost rate may apply for a one-time extension of the rates in that agreement for a period of up to four years. The organization must include all relevant and material evidence to support its position and must provide a copy of the appeal to the AO. 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.. Include the level of transaction testing performed by the independent auditor on direct and indirect costs claimed. In summierung, 2 CFR 200, Subpart A, Abteilung 200.57 defines an indirect cost rate offer as the documentation prepared via a non-Federal business to substantiate its request for the establishment of an indirecly cost rate. a 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 a rate adjustment in future years. Any changes in accounting practice to include changes in the method of charging a particular type of cost as direct or indirect and changes in the indirect cost allocation base or allocation methodology requires the prior approval of the M/OAA/CAS/OCC. 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. These records, among other conditions disclosed in this section, must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; and are incorporated into the official records of the non-Federal entity. To calculate the rate, you would divide (A) by (B), yielding an indirect cost rate of 66.66%. Determine that the proposal reconciles with the supporting audit, official budget and financial statements. To facilitate equitable distribution of indirect expenses to the cost objectives served, your organization may need to establish a number of pools of indirect costs. Special attention will be given to the choice of the individual indirect cost rate allocation bases to ensure they result in an equitable allocation of indirect costs to final cost objectives. Facilities is defined as general administration and general expenses such as the director's office, accounting, personnel and all other types of expenditures not listed specifically un. Reconcile the indirect cost rate proposal to the audited financial statements. 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. As of November 1, 2016 the following changes have been made to the OCC Guide for Non-Profit Organizations.
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