Following up on Ten Ways to Improve the Federal Grantwriting Experience post, here are three more suggestions to provide an even ten ideas:
- Mind The Indirect
Grant budgets include direct expenses; money that is spent on items and services directly related to fulfilling the grant objectives, and indirect expenses; money that is spent as the cost of doing business, such as office expenses, heat, utilities, etc. Grantor agencies may or may not allow you to charge indirect expenses to the grant…but you do have to be able to account for those expenses. Enlightened grant-givers will allow you to charge a portion of your indirect to the grant and they will acknowledge these expenses. They will be suspicious if you don’t account for the indirect expenses.
Indirect can be called different things. For example, the National Institutes of Health call it ‘F&A’ or “Facilities and Administration”. Depending on the nature of the institution, the percentage rate can be quite high. For example, the current rate for our university is around 56%. This means, of course that if I want to receive a hundred dollars worth of services from the uni, it will cost me $156.00. Ouch.
My own history with indirect has been less than stellar. Attempting to follow the example calculations, I came up with a 33% rate, which I thought was fairly reasonable. Turns out NIH has a default rate of 25% if you don’t start negotiating a different rate. If you say you’re going to negotiate a higher rate, then they’ll only give you a provisional rate of 10%. After spending some days on this, including hiring and firing a CPA/consultant who was supposed to figure it all out, (and almost losing my own CPA and bookkeeper in the process), I gave up temporarily and have been living with the 10% rate.
- Plan For Financial Management
Related to the indirect issue, I was amazed and surprised at the amount of time required to just manage a federal grant. Let me count the ways:
- Obtain a DUNS number
- Register for the Central Contracting Registry
- Obtain a Federal Wide Assurance (FWA) number for my company.
- Register with the Institutional Review Board at the university
- Create a plan for the Institutional Review Board (which manages human subjects data and protection…in our case because we’re doing research with human subjects).
- Repeat the above three items on a yearly basis
- Manage three separate online government web applications for reporting and submitting, as well as an application for transferring money to my company bank account
- Maintain separate bank accounts for each grant
- Manage the grant as a separate class or company within QuickBooks.
- Develop the consortium agreement with the university (including budget, and scope of work)
- Pay consortium, and about eight separate contractors or organizations on a bi-weekly basis
I could go on. But the point is, in addition to direct work, there is a 20-25% level of effort that can reasonably be charged for administration.
- Realize that the first grant will change your life and organization.
This is the “be careful what you wish for” idea. For all the effort required to write the application and get all the pieces in place, the real work starts in month 1 of your first budget year.
There are moments of exhilaration. After weeks of trials and tests, we’ve gotten our research project into production beginning this week.