Developing Indirect Cost Rates for Nonprofit Organizations: Practical Approaches

Calculating and Allocating Shared Expenses, Designing and Defending Methodologies

This program is postponed. New date TBD.

A live 110-minute CPE webinar with interactive Q&A


Wednesday, February 27, 2019

1:00pm-2:50pm EST, 10:00am-11:50am PST

(Alert: Event date has changed from 10/18/2018!)

or call 1-800-926-7926

This webinar will provide accounting advisers to nonprofit organizations with a detailed guide to developing indirect cost rates in a practical, hands-on context. The panel will describe rate development methodologies and allocation questions, discuss strategies for moving indirect costs into direct expenses, and offer guidance in presentation and disclosure to both government agencies and private donors.

Description

Nonprofit organizations receiving grants or contracts from the federal government must follow strictly defined rules for allocating indirect costs, those expenditures incurred for common or joint objectives which aren’t readily identifiable with a particular program or purpose. Advisers to nonprofits, even those not receiving government monies, must be familiar with the principles of developing indirect cost rate methodologies, regardless of whether those nonprofits receive government grants.

The task starts with identifying and choosing the correct category of indirect costs: fringe, local overhead, occupancy, or general and administrative. From there, nonprofits and advisers must make sound decisions about allocation methods for occupancy, and be able to justify those methodologies.

Even nonprofit organizations that do not engage with governmental agencies must often disclose indirect costs to donors and other stakeholders. Designing a system to calculate indirect rates also is a process that requires careful consideration. Experiences from nonprofit consultants on dealing with the practical realities of indirect costing under terms of Circular A-122 can help hone your approach.

Listen as our panel explores rules and best practices for indirect cost rates as used by nonprofits.

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Outline

  1. Fundamental aspects and mechanics of indirect cost rates
    1. Identifying indirect costs
    2. Categories of indirect costs
    3. Essential rate mechanics
    4. Project cost accounting and definitions
  2. Designing a cost accounting system to compute indirect rates
    1. Use of service centers for fringe and occupancy
    2. Isolating administrative from facility costs
    3. Other related topics
  3. Steps for designing an indirect rate
    1. Pooling and indirect expenses
    2. Role of tools such as a cost accounting matrix
    3. Converting annual budget to indirect rate system using Department of Labor model
    4. Indirect cost rate proposal to single G&A indirect cost rate
  4. Substantiating and defending indirect rate methodologies
  5. Presenting indirect rates in non-governmental settings

Benefits

The panel will discuss these and other relevant topics:

  • Essential indirect rate mechanics
  • Components of a compliance project cost system to generate indirect rates
  • Administration and negotiation of indirect rates under OMB Circular A-122
  • Update on new rules that will drastically change the negotiation of indirect rates
  • Development of an indirect cost rate model, using the DHHS model

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