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Sample Indirect Cost Proposal Format For Nonprofit Organizations
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 Source Reduction Assistance Programs, Pollution Prevention Grants, and Environmental Policy and Innovation Grants. This example assumes a June 30 year end. Nonprofits can have different year ends and should use their year end when preparing indirect cost proposals.
B. COST ALLOCATION METHODOLOGY
This proposal is for an indirect cost rate based on the nonprofit's 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 ending 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. 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.
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 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 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 Circular A-122.
Circular A-122 can be found at: http://www.whitehouse.gov/omb/circulars/index.html
F. SUPPORTING FINANCIAL STATEMENTS
The Schedule of Total Expenditures (Schedule C) contained in this proposal is assumed to agree with the nonprofit's 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.
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.
Executive Director General Management Deputy Director General Management Administrative Assistant to Executive Director General Management Administrative Secretary / Personnel Officer Clerical support to the Executive Director and Administrative Assistant responsible for personnel information Finance Officer Accounting and related activities Bookkeeper Accounting Bookkeeper Accounting Bookkeeper / Payroll Clerk Payroll accounting and general disbursements Custodian Cleaning Receptionist Switchboard / Clerical Total Administrative Services Pool Salaries:
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 $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.
J. COMPUTATION OF BASE AND POOL COSTS
Schedule A (attached) shows the computation of the indirect cost rate for the year ending June 30, 200X. A summary of the rate calculation follows:
Direct Costs (Base - Salaries and Wages): Environmental Policy and Information Grants $140,831 Pollution Prevention Grant $950,615 Source Reduction Assistance $18,305 Outreach $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 Enviro Institute (Environmental Policy and Information Grant) and funds from the State Department of Public Works (Pollution Prevention 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.
SCHEDULE A
Functional Groupings: Direct Costs (Base - Salaries and Wages): Environmental Policy and Information Grants $140,831 Pollution Prevention Grant Salaries $851,385 Volunteers $99,230 $950,615 Source Reduction Assistance $18,305 Outreach $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
SCHEDULE B
Contractual Services Actual usage Depreciation / Use Allowance Indirect cost. Emergency assistance payments 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 Food costs Direct cost. 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. Elements of Cost Methodology of Allocation Postage Actual usage. Professional fees Accounting and audit services, payroll
processing services, charged 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 of such calls for administrative services.Travel Basic services allocated on number of
instruments, toll calls charged on basis of
logs of such calls for administrative services.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 ending June 30, 200X (PDF 15kb)
Sample Indirect Cost Proposal Format for Nonprofit Organizations
Checklist (PDF 10kb)