De Minimis Indirect Cost Rate and Terminology Overview
Now that you have a better understanding of the revisions to Performance Measurement and Program Design in the Office of Management and Budget’s (OMB) Guidance for Grants and Agreements, we wanted to cover a couple more important changes to this Guidance.
Next in our Breaking Down OMB’s Recent Guidance for Grants and Agreements Revisions Series we are reviewing the expanded scope of the de minimis indirect cost rate as well as some terminology changes.
Read on to learn more about each revision as well as to gain tips for maintaining compliance.
De Minimis Indirect Cost Rate Expansion
Indirect costs, costs that you cannot tie to a particular project or function, can play an important role in supporting an organizations ability to manage a grant. So whether administrative oversight or technology or facility costs, you need to account for your indirect costs when managing your funding. Some recipients and funders, however, never negotiate an exact indirect cost rate and instead operate with the Federally recognized rate that may be used to recover allowable indirect costs, otherwise known as the 10 percent de minimis rate.
In previous versions of this guidance, only entities that have never negotiated an indirect cost rate could use the de minimis rate of 10 percent of modified total direct costs. In this updated Guidance, however, the OMB expands this to allow all entities who wish to use this 10 percent de minimis rate to apply it to received Federal grants starting November 12, 2020 (except for those described in Appendix VII to Part 200—State and Local Government and Indian Tribe Indirect Cost Proposals, paragraph D.1).
To be able to interpret how revisions such as the de minimis rate expansion apply to your organization, you need to have a solid grasp of the terminology frequently used to describe grant regulations. Therefore, we recognize how important it is that you are aware of the terminology changes the OMB has made in this version of the Guidance so you can digest these changes with clarity.
Specifically, the OMB has made the following terminology alterations:
- Obligation will be referred to as Financial Obligation or Responsibility
- Catalog for Federal Domestic Assistance (CFDA) number and CFDA program title will be referred to as Assistance Listings number and Assistance Listings program title, respectively.
How to Prepare for Compliance With These Changes
If you choose to apply this de minimis indirect cost rate to any Federal grants come November, proper tracking will be your key to compliance. Given that you may not want to apply this rate to every grant in your portfolio, however, your best bet will be to utilize a system that is equipped to manage multiple rates. For example, with software like AmpliFund, you not only have the ability to track multiple indirect cost rates, whether previously negotiated rates or the 10 percent de minimis rate, you can also apply each rate directly to the appropriate Federal grant — in one centralized system.
And whether it’s your Grant Management Software provider or another service provider, it’s important to partner with experts in the grants industry so you can remain compliant with all Federal data legislation such as this Guidance. As we do at AmpliFund, a reliable partner will provide you with resources and hands-on support to help you best understand and decipher important changes in our industry and how they may affect your organization.
You can access the full version OMB’s updated Guidance for Grants and Agreements here.
Stay tuned for Part Three of this series, covering changes to budget and performance thresholds, purchase thresholds & closeout time.
All editions of this series are now available on our blog:
Image source: Joshua Hoehne