Indirect Costs for All State and City Budget Agreements

Official Statement of Philanthropy New York on:

Indirect Costs for All State and City Budget Agreements

Many New York State and New York City contracts with nonprofits involve no federal funds, and are therefore not subject to the OMB Guidance on Indirect Costs.  Nonetheless, the basic premise of OMB Guidance – that when governments hire nonprofits to provide services, those nonprofits incur indirect costs and should be paid for those costs – should apply to all contracts, whether or not federal funds are involved. Allowing nonprofits to submit budgets that include appropriate indirect costs on all contracts would not only advance the spirit and intent of OMB Guidance on Indirect Costs, it would also increase predictability in government contracting, and would have the long-term effect of increasing the fiscal stability for the nonprofit sector – an important goal for both the philanthropic and government sectors. 

Philanthropy New York encourages New York State and New York City to integrate contracting procedures that will consistently reimburse nonprofits for their full federally-negotiated indirect cost rate or, for nonprofits that don’t have one, a negotiated rate in accordance with federal cost principles or a minimum rate of 10 percent of total direct costs.

Date of recommendation by the Public Policy Committee: June 20, 2016

Timeframe of open member commentary period: June 29 - July 22, 2016

Date of official approval by Board of Directors: August 3, 2016