Indirect Cost Rates for Nonprofit Organizations: Reimbursement of Facilities and Administrative Costs

Almost every nonprofit must engage in the process of negotiating federal indirect rates or developing a cost allocation plan to charge costs to awards (and sometimes both). Nonprofits face unique challenges in recovering indirect costs either through indirect rates or by directly allocating traditional indirect costs and recovering them as direct costs from awards. These challenges are driven by the various and unique types of awards that nonprofit organizations receive, which may require different allocation practices.

As non-profits go through this process, many often wonder if they have done everything within the constraints of federal regulations to maximize the organization's direct and indirect cost recovery. In this session, we will discuss strategies that may be employed to maximize direct and indirect cost recovery (with an emphasis on indirect), both through indirect rates and the direct allocation methodology. We will discuss some unique challenges with the various federal agencies negotiating rates with nonprofits and how you should prepare and review recent rate agreements to give you helpful tips.

Listen as this session explores rules and best practices for indirect cost rate recovery for nonprofits.

1. Establishing cost practices and policies
2. Indirect cost methods
3. Understanding different rate types
4. Identifying allowable and unallowable costs
5. Negotiating indirect cost rates

The panel will discuss these and other relevant topics:

• Treatment of fundraising and development costs
• Typical examples of direct and indirect costs and why it varies for NFP organizations
• Administration and negotiation of indirect rates
• Negotiation process
• Types of indirect cost rates and the pros and cons of each one

Learning Objectives

After completing this course, you will be able to:

• Identify indirect cost methods
• Discern between allowable and unallowable costs
• Understand different types of rates
• Recognize opportunities to negotiate indirect cost rates

• Field of Study: Accounting
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of cost allocation principles; familiarity with government standards for nonprofit organizations receiving federal grant monies

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.