overhead

Where do I submit a federal indirect cost rate proposal?

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I have a question about Indirect Cost Rate Proposals. My college has never negotiated one with a federal agency and we need to do so. Can you tell me if there is a central location where such indirect rate proposals are forwarded OR if indirect rate proposals go through individual federal agencies?

Generally, you will negotiate the indirect cost rate with the federal agency to which you are submitting the grant proposal. Once negotiated, that rate will be accepted by all federal agencies. That said, some federal grant programs cap the amount of indirect funding that can be requested regardless of your negotiated indirect cost rate.

For more information: Henry Flood's article on Indirect Costs under Publications for Purchase in the RESOURCES section.

How can I recover indirect costs for a federal grant my organization has been awarded?

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My organization received a federal grant to provide specific assistance to individuals. All the grant funding goes directly to assist those individuals with payments to prevent eviction from their homes. There is no funding to support staff, supplies, paper clips or other costs of implementing the program. I understand indirect vs. direct costs, and I understand how to put together a budget that delineates direct vs. indirect costs. But, who do I propose this to?

You should communicate with the funding agency's grants management staff about your desire to negotiate an indirect cost rate. Even if you can negotiate that rate now, it may, or may not, be possible to use it for this particular grant since it has already been awarded. IF it is possible, its likely that the total amount of the grant would not change, but rather the direct costs would be decreased in order to cover the indirect costs.

It is strange that there was no allowance in the grant budget to cover staff and other direct program operations. Did the Federal agency not allow other costs? Were the program management costs committed as a required “match” for the government funding? Or did the applicant not think about those costs?

As a matter of course, costs for things such as program staff, supplies, and paper clips would be direct program expenses and not indirect costs. Indirect costs are really those related to operating the entire agency that cannot be directly attributed to any one program. In preparation for future federal grant applications, your organization should proceed with negotiating an indirect cost rate. Then, it can be included in grant proposal budgets if the funding agency allows indirect cost rate reimbursements (within the maximum allowed for a particular grant program).

Your organization should talk to the federal agency from which it now receives funding about negotiating the rate. Also, review the Office of Management and Budget (OMB) circulars relevant to the organization. They can be found on the OMB website http://www.whitehouse.gov/OMB/circulars/.