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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 Exit disclaimer

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.

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.

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


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.

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):
Total Salaries
       
    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

Elements of Cost
Methodology of Allocation
     
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)

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