Indirect Cost Recovery

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.

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.

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

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.

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.

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.

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.

• 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.