Biden Administration recently proposed changes to the rules for federal grantmaking. The proposal seeks to amend the Office of Management and Budget (OMB) Uniform Guidance that provides common rules that govern most federal grantmaking to charitable nonprofits, state, local, and tribal governments, according to data from the National Council of Nonprofits.
One proposed change involves indirect costs that cannot be allocated to a specific program but are spread out across an organization. The proposed reforms fixes the problems in significant ways, according to the National Council of Nonprofits:
* 15% de minimis rate: OMB proposes to raise the guaranteed de minimis rate for indirect costs from 10% to 15% of modified total direct costs. OMB states: “This change would allow for a more reasonable and realistic recovery of indirect costs, particularly for new or inexperienced organizations that may not have the capacity to undergo a formal rate negotiation, but still deserve to be fully compensated for their overhead costs.”
* No Browbeating Allowed: The proposed guidance clarifies that federal agencies may not compel recipients and subrecipients to use an indirect rate lower than the proposed 15% rate, unless required by statute. Organizations can choose not to utilize the 15% minimum, but they can’t be forced to do so.
* Notice of Indirect Cost Disputes: OMB proposes to clarify that recipients and subrecipients may notify OMB of any disputes with regards to a federal agency’s application or acceptance of a federally negotiated indirect cost rates. This means nonprofits can turn to OMB for help when agencies are not following the law.
For more information, go to https://www.councilofnonprofits.org/
