Non-Profit Cost Allocation Plan Strategies

Crafting an Effective Plan to Distribute Direct and Indirect Expenses

Recording of a 110-minute CPE webinar with Q&A

This program is included with the Strafford CPE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, July 26, 2011

Recorded event now available

or call 1-800-926-7926

This teleconference will prepare accounting advisors to work effectively with non-profit organizations on a comprehensive approach to create a cost allocation plan that meets the goals of internal NPO management and the requirements of outside government agencies and donors.


NPOs and their advisors face increasing demands to create detailed cost allocation plans, in order to preserve government funding and assure private donors of proper accounting. However, standards and accounting guidance on creating CAPs is scant, and advisors must make a number of judgment calls.

OMB Circulars A-87 and A-122 offer some structure, but they don't present a path to crafting a CAP that clearly allocates service and administrative costs throughout the NPO. They also don't specifically identify the service and expense item descriptions and other CAP elements needed.

Given the lack of on-point guidance, experiences and observations from veteran advisors are invaluable in preparing your work with an NPO on its first cost allocation plan—and in honing your approach to creating a CAP that is useful for internal management and for outside parties.

Listen as our panel of experienced advisors to non-profits outlines a framework to help non-profit clients create a strategic, effective cost allocation plan.



  1. Purpose of cost allocation plans
    1. Identify, accumulate and distribute allowable direct and indirect costs under sub-grants and contracts
    2. Identify allocation methods used to distribute costs
    3. Include plan for allocating joint costs
    4. Support with formal accounting methods in order to substantiate propriety of eventual charges
    5. May be required by internal management, government agencies, donors
  2. Two types of cost allocation plans
    1. Indirect cost plans
    2. Allocate organization-wide and central services costs to individual departments
    3. Plans to allocate costs within a department to grants and other final cost objectives
    4. Including both indirect costs and department administrative costs
  3. Elements of cost allocation plan
    1. Organization chart
    2. Description of services provided and their relevance
    3. Expense items
    4. Methods of distributing expenses to benefiting cost objectives
    5. Other elements
  4. Relevant accounting guidance
    1. OMB Circular A-87
    2. OMB Circular A-122
    3. Shortcomings in the guidance


The panel will explore these and other important aspects of cost allocation plans:

  • The potential value of CAPs: Meeting requirements of agencies and donors, helping with internal budgeting, and promoting equitable sharing of costs.
  • The two categories of CAPs: Understanding the individual goals and features of indirect and service cost plans.
  • The key features of CAPs: Knowing how to present organizational charts, descriptions of types of services and expense items, methods to distribute expenses to benefiting cost objectives, etc.
  • The principles in creating a CAP: Balancing detail with simplicity, aiming for replicability, using the simplest organizational structure necessary to allocate costs.
  • The relevant accounting guidance for CAPs: Where OMB Circulars A-87 and A-122 can offer some help, despite their shortcomings.

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Jean Gilbert
Jean Gilbert
Outsourcing Senior Manager

Her work involves management and accounting consulting, and supervision of compilations, for non-profit clients. Before...  |  Read More

Hydeh Ghaffari
Hydeh Ghaffari

Senior Partner
Ghaffari Zaragoza

She launched her firm, which specializes in non-profit advisory work, in 1991. She has more than 25 years of financial...  |  Read More

Colette Kamps
Colette Kamps

Senior Manager
Henry & Horne

She specializes in audits of non-profit organizations and closely held businesses.

 |  Read More

Access Anytime, Anywhere

CPE credit is not available on downloads.