Indirect Expenses: Calculations for Federal Grants

After reading the article from The Grantsmanship Center about calculating indirect rates, I started to drill down a bit further. This is a dense subject. I’m already on my third cup of coffee, and that is probably due to the fact that I don’t have access to anything stronger to ease the pain. However, one way to learn something is to look for patterns and repetition. If you read something three times, and see it referenced by other documents, it starts to fit into some kind of ordered symmetry. So, here are some resources:

The Office of Management and Budget Circular A-122 appears to be the ur-text for all things indirect. The title of this missive is Cost Principals for Non-Profit Organizations and the summary is:

1. Purpose. This Circular establishes principles for determining costs of grants, contracts and other agreements with non-profit organizations. It does not apply to colleges and universities which are covered by Office of Management and Budget (OMB) Circular A-21, “Cost Principles for Educational Institutions”; State, local, and federally-recognized Indian tribal governments which are covered by OMB Circular A-87, “Cost Principles for State, Local, and Indian Tribal Governments”; or hospitals. The principles are designed to provide that the Federal Government bear its fair share of costs except where restricted or prohibited by law. The principles do not attempt to prescribe the extent of cost sharing or matching on grants, contracts, or other agreements. However, such cost sharing or matching shall not be accomplished through arbitrary limitations on individual cost elements by Federal agencies. Provision for profit or other increment above cost is outside the scope of this Circular.

So, assuming you aren’t a government, college or university, or hospital, it appears A-122 is for you if you are a 501c(3) non-profit. Here is a link to a PDF version of the document (accuracy and provenance unknown). For for-profit companies, such as SBIR companies the relevant discussion is in the Federal Aquisition Regulations, FAR Part 31 Contract Cost Principles and Procedures. Indirect is discussed in subpart .203 but only very generally.

Here is a Powerpoint presentation as a PDF that was from a training provided by HUD (Housing and Urban Development).

Here’s a one-page explanation on calculating indirect rates with an example. This is from the Compassion Capital Fund, which appears to be an offshoot of a government initiative to support faith-based and community organizations. Lots of resources and links here.

Jim and Gail Greenwood have a brief discussion of indirect as related to SBIR proposals. This is one of a whole host of useful articles relating to their business in supporting and counseling aspiring SBIR grantees. As an aside, I recommend SBIR grantees attend any of Jim or Gail’s frequent workshops. Be sure to read their material. They are a rare combination of highly knowledgeable consultants who can turn government mush such as FAR 32 Part 3.201 into reasonably understandable English. They will also review your grant proposals. I had them review my Phase II. They are also funny and eminently approachable speakers.

National Institutes of Health – Ruth Bishop’s PowerPoint presentation

Health and Human Services – Example cost proposal by a non-profit. This appears to be quite useful. (or maybe I’m starting to get it?)

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