Indirect Cost Recovery
Leveraging Federal Funding to Increase Revenues
Maximizing and sustaining revenue is more important now than ever. Fiscal Recovery Funds and Federal Grants are a chief source of revenue across the board for state, local, and tribal governments. By maximizing federal funding through Indirect Cost Recovery, you can still come out of this COVID-19 era stronger.
HdL is the only provider to manage the indirect cost recovery process from beginning to end: from indirect cost rate determination to reimbursement to your General Fund.
Will funding be directed away from the program to cover indirect costs?
This is a common perspective. Of course every agency wants the dollars to go entirely to the grant program. However, this perspective assumes that indirect costs are optional, which they are not. Instead, the general fund subsidizes the program to cover the indirect costs, potentially costing your agency more than the grant award. This can lead to general fund deficits, and therefore a strain on other budgeted programs and/or a need for tax increases.
Is Indirect Cost Recovery already included in our recent Cost Allocation Plan process?
Not necessarily. Often, Cost Allocation Plans (CAP) are created to assist with budgeting decisions, user fee studies, etc. While a CAP offers insight into your true costs, there is an additional step required to achieve indirect cost recovery. You must negotiate the indirect cost rate proposal with your cognizant agency (federal agency providing you the largest sum of funding). Once negotiated, a NICRA (Negotiated Indirect Cost Rate Agreement) is obtained. From there, those negotiated rates can be applied to your grant portfolio, where applicable, and you can obtain reimbursement.
Doesn’t our current CAP service provider already do this for us?
Most CAP service providers perform the entire Full Cost Allocation Plan, as well as the Central Services Cost Allocation Plan. Some service providers might even negotiate the NICRA. However, only HdL, through partnership with eCivis, provides the end-to-end process:
- Creates Full CAP
- Creates Central Services CAP (in compliance with 2 CFR Part 200)
- Prepares and Submits Indirect Cost Rate Proposal
- Negotiates the NICRA with cognizant
- Reviews grant portfolio and all NOFAs for requirements and restrictions related to indirect cost reimbursement
- Applies the NICRA to existing grant portfolio (with a 2-year look back)
- Prepares drawdown request(s) for agency to submit to funder(s)
- Manages the cost recovery process until agency receives reimbursements
If we obtain a NICRA, are we required to apply it across all departments?
No, there is no requirement to apply the NICRA once negotiated. There are often political or inter-departmental dynamics to consider, therefore you choose when and where to apply the NICRA.
What do I do with the indirect cost reimbursement once I receive it?
The reimbursements go directly to the General Fund, unrestricted. You may consider using the reimbursements for future grant match requirements, filling budget gaps, creating a new program, or even further funding the original programs.
How much will this service cost our agency?
HdL charges a contingency on the reimbursement amounts for which your agency is entitled. If we don’t find opportunities for indirect cost reimbursement in your grant portfolio, you owe us nothing, but still come out ahead with a refreshed Cost Allocation Plan and NICRA.
What are the average indirect cost rates for local government?
30%-40% of every dollar is the average. If your agency is currently taking the 10% de minimis, it’s likely funds are being left on the table.
What other advantages are there with this service?
- By knowing the true cost of your federally funded programs, you have the insight to go after future grants more strategically.
- You can leverage the indirect cost rate in situations of an admin cap. When you have a NICRA, the admin cap can be applied to the full award amount, not just the funded amount.
- Funders/Grantors look favorably upon agencies with a NICRA. It is an indication that the applicant is aware of true costs and will manage the program responsibly and sustainably.
HdL has partnered with eCivis, the most widely used Saas-based grants management solution, to deliver to our clients indirect cost recovery services. With over 20 years of experience in indirect cost recovery, eCivis is the ideal partner to augment HdL’s revenue enhancement service offerings. Read more about our partnership HERE.