10%
On December 26, 2014 the OMB’s new Uniform Guidance (2 CFR part 200) went into effect.
This was a significant move towards ensuring that those nonprofits working with federal grants receive appropriate reimbursement for their indirect costs.
Governments rely heavily on nonprofits to deliver programs on their behalf. From senior centers, to feeding the homeless, to children’s homes, a significant portion of our country’s social services are delivered by nonprofits. Historically, the organizations delivering these programs have often done so without receiving any indirect cost reimbursement, only being compensated for their actual, direct program costs. To bridge the gap and to ensure their own organizational survival, nonprofits have been forced to seek funding from other sources, like foundations and private donors to fund their indirect costs.
THE TEN PERCENT
16 CAPTURE. COSTTREE 2016 Q1 ISSUE
THE SHIFT.
BACKGROUND.
The new Uniform Guidance changes this. But what does that really mean? To date, many grants have excluded any reimbursement for indirect cost. Some have limited the reimbursement to a maximum of 5 or 10%. Under the new Uniform Guidance, cognizant agencies are no longer permitted to do this. The new regulation states that each federal grantor must reimburse a nonprofit grant recipient for their full indirect cost, if they have a negotiated indirect cost rate (NICRA) or at a rate of 10% (under the 10% de minimis rule) if they do not have a NICRA.
While this is a step in the right direction, it is only a step. To most nonprofits, the 10% de minimis seems like a huge accomplishment, but the conversation can’t stop there. Implementation of the new Uniform Guidance has created a buzz, started a conversation and laid the foundation for stopping the starvation cycle. However, if we truly want to stop the starvation cycle, it is going to take way more than the 10% de minimis to get there.
DE MINIMIS