Preparing For 2022 Government Grants – Calculating Your Indirect Costs

In December of 2020 the DC Council passed the Nonprofit Fair Compensation Act which requires DC agencies who procure/grant for government services with nonprofits to accept the federally negotiated overhead rate (NICRA) if an organization has one. However, if you don’t have a NICRA, the DC government now must accept one of the following from you:

  1. An organization may take a standard 10% de minimus rate of all direct costs under the grant or contract to compensate them for their indirect costs.
  2. An organization may negotiate a new percentage indirect cost rate with the District grant/contract-awarding agency.
  3. An organization may use a previously negotiated rate (negotiated within the last two years) with a District government agency.
  4. An organization may engage a Certified Public Accountant (CPA) to develop a percentage rate and base amount based on the organization’s audited financial statements from the immediately preceding fiscal year, pursuant to the OMB guidance, and certified in writing by the CPA. This option supports nonprofits who seek professional assistance in developing their indirect cost rate.

But what does this mean? Which one of the above options applies to me and if I need to calculate my own rate and negotiate for it, how do I do that?

If you work in DC and currently apply or intend to apply for DC contracts or grants, please register for the first session. This is an update on this new law, what it means, and what you may run into in applying for contracts and grants in the coming months. A law similar to this was already passed in Maryland. So, the first session which is about the DC law is for those who do business in DC only, however, the second session is for anyone, regardless of where you work in the DMV and is about how to calculate your indirect costs.

You can register for one or both as applicable. Both of these sessions are open to Executive Directors, financial management staff and board members. See descriptions below.

SESSION I: 9:00- 9:50 – Implementing the Nonprofit Fair Compensation Law in DC – where we are, what it means to you, and how you can help

Learning outcomes

As a result of this session nonprofit leaders will:

  • Understand the Nonprofit Fair Compensation Act and status of implementation
  • Share experiences, challenges, and concerns with negotiating contracts and grants since the law went into effect
  • Identify ideas and suggestions from nonprofits for how to proceed to ensure your true costs are covered
  • Learn how you can help in efforts to collect data and hold agency staff accountable
  • This is a briefing and information sharing and exchange and will be facilitated by Gretchen Vanderveer, CEO, Fair Chance and members of the Coalition for Nonprofit Equity

10 minute break

SESSION II: 10:00-11:00 – Calculating your true, allowable indirect cost rate – what you need to know and why you might want to do it

Learning outcomes

As a result of this session nonprofit leaders will:

  • Understand the fundamentals of an indirect rate calculation under the OMB Uniform Guidance
  • Learn the basics of negotiation with your contract or grants officer
  • Understand the “likely” definition of “certified” and how to get your rate certified in writing
  • Understand the economics of this process, what it involves, the potential costs, and determine if it’s worth it for your organization
  • This is a workshop conducted by Paul H. Calabrese, Principal, Outsourced Accounting and Advisory Services, GRF CPAs and Advisors

Paul Calabrese is a Principal with GRF and has prepared indirect rates for over 100 nonprofits. He is a prolific speaker on the OMB Uniform Guidance for Federal grant recipients and has a skill-set that includes grant cost accounting, sub-recipient monitoring, development of policies and procedures, outsourced CEO duties, cash flow projections, annual budgets, an grant draws and budget monitoring.

Click HERE to rsvp for the webinar.