Grants Managers Play Key Oversight Role in Indirect Cost Rate Negotiation

May 30, 2014 | By Jerry Ashworth | Post a Comment

school-tunnel-93658-mIf you’ve followed this blog for any length to time, you’ve realized that I like to use analogies. And as a parent, many of my examples involve my family and our experiences. Here’s another. One thing I’ve tried to instill in my daughters is that if they are ever bullied to tell a teacher about the incident to make sure the situation won’t happen again. Doing so will help ensure that the learning environment is as effective as it is intended to be.

Now, I never thought I’d use the word bullying in terms of grants, but it seems fitting in this case. Last week, Beth Bowsky, policy specialist for government nonprofit contracting with the National Council of Nonprofits, explained to attendees at a National Grants Management Association training meeting how the new Office of Management and Budget uniform grant guidance would affect nonprofits. One thing she said was that federal grant managers can play a key role in ensuring that the nonfederal entities comply with the intent of the uniform guidance. For example, some states that pass federal funds down to nonprofits may reduce the direct costs they had been providing to nonprofit contractors to provide the 10 percent de minimis indirect cost rate, thus providing no gain for the nonprofit while still complying with the uniform guidance. She said states also have used other loopholes to avoid reimbursing indirect costs to the nonprofits to which they have passed down funds.

This, in essence sounds like bullying to me. A nonprofit could wind up going to the federal grants manager to act as the “teacher” in this case to make sure the state provides for indirect costs to assist the nonprofit as the uniform guidance had intended.

Nonprofits “need the money to have the appropriate infrastructure to complete the services,” Bowsky added. “We want to make sure the intent of the uniform guidance really happens, and that can be an important role for federal grants managers. If a subrecipient is saying they are not getting their indirect costs, they can go to the grant manager [to enforce the state to comply with the requirements of the grant]. Grant managers are going to be the ones to find about it first.”

This will be something to watch over the next year or so. What will states do and how will nonprofits respond? Hopefully federal grants managers won’t have to take out a ruler or  paddle on the states. No more bullying!

How do you think states will respond to negotiating indirect costs rates with subrecipients?

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