The federal government has been revising its Uniform Grants Guidance (UGG) for federal grants over the last two years and there are more revisions coming in 2016. Grantees want to know if they are doing everything right, yet the regulations can be confusing, but there is some good news! In the review process, federal agencies are aligning their definitions and acronyms, guidance on procurement and audit requirements.
Two areas of UGG that create the most confusion are indirect costs and how to properly draw down funding. First, let’s look at indirect costs. These are costs an organization has that support the shared infrastructure, such as payroll, accounting, rent, and other general administrative costs. In contrast, direct costs are those that support a particular program or project rather than the organization as a whole, such as project personnel, travel costs for these staff members and supplies for implementation of specific activities. Organizations can either negotiate an indirect cost rate with the government that will apply to all federal applications or simply charge a ten percent DeMinimus (minimum) rate if they have never had an approved indirect cost rate with the government.
The other big area that is has been clarified is obtaining your funding. Organizations often draw down money based on a monthly or quarterly projection. However, the government wants you to ask for reimbursement of actual charges rather than using estimates and may even ask you to provide documentation. Using a basic expense report is an easy way to determine what you can request in each period.
These concepts are just the basics, but there are many great websites to help you wade through other questions you may have about the changes.