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Sample Indirect Cost Proposal Format for Non-Profit Organizations

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A. INTRODUCTION

    Name of Organization (nonprofit) is a nonprofit located in Anytown, USA. The nonprofit administers a variety of programs funded by Federal, State, and Local agencies. These programs include Community Service programs, Head Start programs, State Weatherization, and Food Service programs. This example assumes a June 30 year end. Nonprofits can have different year ends and should use the year end of their nonprofit when preparing indirect cost proposals.

B. COST ALLOCATION METHODOLOGY

    This proposal is for an indirect cost rate based on the nonprofits actual costs for its fiscal year beginning July 1, 200X and ending June 30, 200X. The proposal is based on the nonprofit organization's audit report (Statement of Functional Expense Statement) for the year ended June 30, 200X.

    This proposal addresses all elements of cost incurred by "Name of Organization" and identifies shared costs that require allocation.

    The nonprofit treats all costs as direct costs except general administration and general expenses. Joint costs are prorated individually as direct costs to each category and to each award using a base most appropriate to the particular cost being prorated. Therefore, the direct allocation method has been used in allocating indirect costs.

C. DIRECT COSTS

    Direct costs are costs that can be identified specifically with a project and therefore are charged to that project. The accounting system records these costs as they are incurred within the series of accounts assigned for that purpose and further distribution is not required.

D. INDIRECT COSTS

    Indirect costs are costs incurred for common or joint objectives and therefore cannot be readily and specifically identified with a particular project or activity. These costs are grouped into common pool(s) and distributed to benefiting activities by a cost allocation process.

SAMPLE INDIRECT COST PROPOSAL FORMAT FOR NONPROFIT ORGANIZATIONS

E. COST POOL AND BASE FOR DISTRIBUTION

    The nonprofit has created an Administrative Services Pool consisting of salaries, fringe benefits, and non-salary costs. The Administrative Services Pool is charged with all the indirect costs as defined above. The pool is distributed to the various program activities on the basis of direct salaries, including vacation, holiday, and sick pay but excluding other fringe benefits expended on those activities. Volunteers for the Head Start program are included in the direct salaries total.

    The total direct salaries and wages on which this proposal is based is $1,111,343 which includes $99,230 of volunteer salaries and wages for the Head Start program.

    Volunteers involved in any direct activity of the organization should be included in the direct salaries base assuming they meet the requirements outlined in the Uniform Guidance (2 CFR Part 200).

    Uniform Guidance (2 CFR Part 200) can be found at: https://www.ecfr.gov

F. SUPPORTING FINANCIAL STATEMENTS

    The Schedule of Total Expenditures (Schedule C) contained in this proposal is assumed to agree to the nonprofits audit report Statement of Functional Expenses.

- Audit report, Statement of Functional Expenses: $2,632,449
- Indirect Cost Proposal: $2,632,449

    NOTE: Nonprofit must include a complete copy of the audited financial statements with their proposal submission.

SAMPLE INDIRECT COST PROPOSAL FORMAT FOR NONPROFIT ORGANIZATIONS

G. SALARIES

    Listed below are the positions, functions, and budgeted annual salaries for the people who comprise the Administrative Services Pool. These positions are charged 100% to Administrative Services.

Position Function

Salary

Executive Director

General Management $48,754

Deputy Director

General Management $30,664

Administrative Assistant to Executive Director

General Management $21,566

Administrative Secretary / Personnel Officer

Clerical support to the Executive Director and Administrative Assistant Responsible for personnel information $17,087

Finance Officer

Accounting and related activities $26,484

Bookkeeper

Accounting $20,797

Bookkeeper

Accounting $17,215

Bookkeeper / Payroll Clerk

Payroll accounting and general disbursements $16,560

Custodian

Cleaning $2,936

Receptionist

Switchboard / Clerical $14,232
Total Administrative Services Pool Salaries: $216,295


SAMPLE INDIRECT COST PROPOSAL FORMAT FOR NONPROFIT ORGANIZATIONS

H. FRINGE BENEFITS

    Fringe benefits associated with the positions within the Administrative Services Pool are as follows:

      Payroll taxes:

FICA (actual paid) $16,546
State Unemployment (actual paid) $1,145 $17,691
Health and Life Insurance (actual paid) $22,474
Retirement Plan (actual paid) $3,050
TOTAL $43,215

    The nonprofits fringe benefit policies should be included with proposal submission.

I. NON-SALARY COSTS

    Each category on non-salary expenditures has been analyzed based on the facts, and Schedule B shows the allocation between the Direct and Administrative Services Pool. Total non-salary direct costs excluding indirect cost reimbursements are $984,656 of which direct is $861,966 and indirect is $122,690.

SAMPLE INDIRECT COST PROPOSAL FORMAT FOR NONPROFIT ORGANIZATIONS

J. COMPUTATION OF BASE AND POOL COSTS

    Schedule A (attached) shows the computation of the indirect cost rate for the year ended June 30, 200X. A summary of the rate calculation follows:

      Direct Costs (Base - Salaries and Wages):

Community Service $140,831
Head Start $950,615
Weatherization $18,305
Memberships and Fundraising $1,592
Total Direct Salaries: $1,111,343

      Indirect Costs (Pool):

Administrative Services salaries $216,295
Administrative Services Fringe Benefits $43,215
Administrative Services Non-salary costs $122,690
Total Administrative Services: $382,200

K. RATE

    Adjusted indirect costs (above - pool): $382,200  
    ------------------- 34.4%
    Total direct salaries (above - base): $1,111,343  




 

L. FUNDING OF RATE

    When the above rate is applied to the direct salaries paid from the State Department of Human Resource funds (Community Services Block Grant) and funds from the U.S. Department of Health and Human Services (Head Start Grant), the eligible reimbursement is $374,365 ($140,831 + $950,615 = $1,091,446 x 34.4% = $374,365). However, the allowable budgeted funding for indirect costs was significantly less than the eligible reimbursement. The Department of Energy programs and other local funds will have to absorb their fair share of the difference, within their funding limitations. The nonprofit can apply to outside sources to absorb any difference in indirect costs paid by other programs.

SAMPLE INDIRECT COST PROPOSAL FORMAT FOR NONPROFIT ORGANIZATIONS

    SCHEDULE A

    Functional Groupings:

Direct Costs (Base-Salaries and Wages): Total Salaries
Community Services $140,831
Head Start  
  Salaries $851,385  
  Volunteers $99,230 $950,615
Weatherization $18,305
Memberships and Fundraising $1,592
Total Direct Salaries: $1,111,343


Indirect Costs (Pool):

Labor Costs $259,510
Non-Labor Costs $122,690
Adjusted Administrative Services Pool: $382,200

    RATE

    Adjusted indirect costs (above - pool): $382,200
    ------------- 34.4%
    Total direct salaries (above - base): $1,111,343







SAMPLE INDIRECT COST PROPOSAL FORMAT FOR NONPROFIT ORGANIZATIONS

    SCHEDULE B

Elements of Cost Methodology of Allocation
Contractual Services Actual usage.
Depreciation / Use Allowance Indirect Cost.
Emergency assistance payment Direct Cost.
Equipment rental and maintenance Rental and maintenance on equipment used in central office finance office.
Equipment / Capital Purchasing of office furniture for use in performing administrative services.
Equipment / Minor Actual usage.
Insurance Actual usage.
Occupancy Central office repairs and utilities on basis of square footage used for administrative services.
Office supplies Office and janitorial supplies for administrative and program services.
Other expenses Based on administrative services actual use.

SAMPLE INDIRECT COST PROPOSAL FORMAT FOR NONPROFIT ORGANIZATIONS

    SCHEDULE B (continued)

Elements of Cost Methodology of Allocation
Postage Actual usage.
Professional fees Accounting and audit services, payroll processing services, changed on work performed for administrative services.
Program supplies Programs are charged to project as costs are incurred. Costs are direct costs.
Printing Actual usage.
Renovations and improvements Direct cost.
Telephone Basic services allocated on number of instruments, toll calls charged on basis of logs such calls for administrative services.
Travel Charged based in actual administrative and program use of vehicles. Costs include mileage, transportation, per diem, gas, oil, repairs, and insurance on vehicles.

    The methodologies used in this example are not recommended methodologies.
    They are used for purposes of example only. Allocation of costs should be accomplished
    on a cost benefit basis. This cost benefit can be different from one nonprofit to the next.

Sample Indirect Cost Proposal Format for Nonprofit Organizations Total Expenditures for the year ended June 30, 200X

Schedule C

DIRECT PROGRAMS and ACTIVITIES

A B C D E F G H I

ELEMENTS OF COSTS

FINANCIAL STATEMENT ADJUSTMENTS COMMUNITY SERVICE HEAD START WEATHERIZATION MEMBERSHIP &  FUND RAISING (D)+(E)+(F)+(G) TOTAL DIRECT COSTS INDIRECT COSTS
Salaries and wages $1,327,638 a 0 $140,831

$950,615

$18,305

$1,592

$1,111,343 (1)

$216,295

Fringe benefits $245,434 0 $28,138

$170,107

$3,657

$317

$202,219

$43,215

Subtotal labor $1,573,072 0 $168,969 $1,120,722 $21,962 $1,909 $1,313,562 (2) $259,510
Contractual Services $245,420 0 $3,493 $207,770

$34,157

$0

$245,420

$0

Depreciation/Use allowance $41,582 0 $0 $0 $0 

$0

$0

$41,582

Emergency asst. payments $72,859 0 $52,809 $0

$20,050

$0

$72,859

$0

Equipment rental and maint. $11,448 0 $592

$5,197

$0 $281

$6,070

$5,378

Equipment / Capital $58,215 ($58,215) b $0 $0

$0

$0

$0 $0
Equipment / Minor $546 0 $0 $0

$546

$0

$546

$0
Food costs $124,616 0 $0 $124,616

$0

$0

$124,616

$0
Insurance $12,554 0 $92

$8,209

$85

$373

$8,759

$3,795

Occupancy $129,314 0 $24,637 $100,956

$459

$233

$126,285

$3,029

Office supplies $32,540 0 $1,794 $13,317

$3,649

$842

$19,602

$12,938

Other expenses $36 ($36) c $0 $0

$0

$0  $0

$0 

Postage $3,901 0 $476 $301 $125

$2,467

$3,369

$532
Professional fees $34,211 0 $0

$0

$0

$0  $0

$34,211

Program supplies $109,663 0 $7,603 $55,241

$40,659

$6,160

$109,663

$0

Printing $65,697 0 $5,140 $7,022 $1,345

$44,838

$58,345

$7,352
Renovations and improv. $16,470 ($16,470) d $0 $0 $0 $0 $0

$0

Telephone $29,013 0 $5,788 $13,331 $349

$600

$20,068

$8,945

Travel $71,292 0 $7,298 $56,553 $2,513 $0

$66,364

$4,928

Subtotal non-labor $1,059,377 ($74,721) $109,722 $592,513 $103,937 $55,794 $861,966 $122,690
TOTAL $2,632,449 ($74,721) $278,691 $1,713,235 $125,899 $57,703 $2,175,528 (3) $382,200

 

Calculation of the Rate

(1) If the nonprofit organization uses Direct Salaries & Wages excluding fringe benefits as their Base their rate would calculate as follows:

Indirect costs = $382,200              = 34.4%
Base (Direct S&W) = $1,111,343

(2) If the nonprofit organization uses Direct Salaries & Wages including fringe benefits as their Base their rate would calculate as follows:

Indirect costs = $382,200               = 29.1%
Base (Direct S&W) = $1,313,562

(3) If the nonprofit organization uses Modified Total Direct Costs (MTDC) as their Base their rate would calculate as follows: 

Indirect costs = $382,200      = 17.6%
Base (MTDC) = $2,175,528

Explaination of Adjustments

  1. Includes salaries and wages of $99,230 for volunteers of the Head Start program.
  2. Excludes capital equipment purchases.
  3. Remove unallowable costs - $22 Interest + $14 Bad Debt = $36.
  4. Excludes capital renovations and improvements.

General Notes

  • This is a sample proposal only. It is not intended to prescribe a particular method for allocating costs. An organization should choose the Base that they feel will most accurately reflect the true allocation of their indirect costs to each program.
     
  • An organization can use any ONE of the three bases shown. Regardless of what Base (1,2 or 3) is chosen the total indirect costs ($382,200) do not change. The only thing that changes is the distribution Base.

 

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Last revised: June 16, 2017

 

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