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Office of Management & Budget (OMB) Issues FinalGuidance: New Rules Mean New Responsibility and Additional Support for Nonprofits
The final rules of the OMB Uniform Guidance have been established. The good news is that Governments at all levels - local, state, and federal - that hire nonprofits to deliver services are now required to reimburse nonprofits for the reasonable indirect costs (sometimes called "overhead" or "administrative" costs) they incur on behalf of governments when federal dollars are part of the funding stream.
Nonprofits that have never had a federally approved indirect cost rate can elect either the de minimis rate of 10 percent of their modified total direct costs (MTDC) or negotiate a higher rate in accordance with the federal cost principles. Nonprofits that have already negotiated a federal indirect cost rate must be paid that amount.
The (somewhat) bad news is that the OMB Uniform Guidance only provides a promise of better treatment of nonprofits providing services under programs funded in whole or in part by the federal government. Turning that promise into reality requires actions on the part of every nonprofit earning federal funds, either directly or from pass-through entities. By understanding what the new cost allocation rules allow, and managing costs accordingly, nonprofits can secure reimbursement for more of their costs than formerly allowed.
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Know Your Rights, Ensure Proper Payment:
Resources to Educate & Empower Your Nonprofit
 Nonprofits and the New OMB Uniform Guidance: Know Your Rights ... and How to Protect Them To help nonprofits get started, the National Council of Nonprofits has prepared a overview paper, "Know Your Rights ... and How to Protect Them." This analysis summarizes nonprofit rights and highlights potential compliance challenges and how the Uniform Guidance should be properly interpreted.
Upcoming Webinar: Show Us the Money!
February 6th. Register Now.This session will provide an overview designed to help the executive director, fiscal director, program director, and grants managers alike - get up to speed on what is included in the new OMB Uniform Guidance and identify internal changes that may be needed to keep their good standing, as well as benefit from the recognition that governments need to pay their fair share when purchasing services from nonprofits. Moreover, this session will provide some practical solutions for dealing with the misapplication of requirements you may encounter.
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Understanding a nonprofit's costs is necessary in order for charitable nonprofits to be financially sustainable. Rather than reporting artificially low costs, or ignoring what it really costs to deliver programs and services, the National Council of Nonprofits is encouraging all nonprofits and board members to model transparency of full costs.
OMB has published a joint Interim Final Rule
designed to update the regulations of all federal departments and agencies required to follow the OMB Uniform Guidance. The new regulations went into effect on December 26, 2014, but stakeholders have 60 days to propose changes. Nonprofit personnel are encouraged to review these regulations. Let federal officials know if changes are needed by filing comments before the comment period expires on February 17, 2015.
Designed with the needs and resources of the smaller to medium sized nonprofit in mind, NYCON's Chief Fiscal Officer and staff have designed a "fool proof" tool for developing a streamlined, compliant and easy to understand budget.
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