The Real Cost of Grant Funding
Join us for a fireside chat on optimizing your indirect cost rates to ensure that you are covering the real cost of receiving funding. OpenGrants CEO, Sedale Turbovsky, and expert consultant, Aleisha Beckum, dive into the details of indirect grant costs. These refer to expenses that may not be readily identified with a grant but are still associated with the activities necessary to achieve the goals of the grant. This webinar is perfect for any private or public organization that is interested or has received government grant funding.
In This 1-Hour Session, We Covered:
- Understanding possible indirect grant costs & examples
- Predicting indirect grant costs
- Indirect Cost Recovery Funds
- Overhead Reimbursement
- Optimizing indirect cost rates
About the Speakers
Sedale Turbovsky, CEO & Co-Founder, OpenGrants
Sedale Turbovsky is the CEO and co-founder of OpenGrants, a venture-backed startup focused on building modern infrastructure for funding. He has been an entrepreneur since childhood. After honing his leadership skills as an outdoor guide in his younger years, he started his professional career as an independent consultant focused on delivering data products and digital strategies to enterprise clients in South America.
He is experienced in independent grant writing and public/private partnerships at the highest level, having worked directly with OpenGrants’ current strategic partner, Momentum.
Aleisha Beckum, Founder, Aleisha Beckum Consulting
Aleisha Beckum is the Owner/Founder of Aleisha Beckum Consulting. She has her Masters in Business Administration and was previously a State of California Auditor turned Consultant as a Subject Matter Expert. She has seen it all…the good, the bad, and the ugly.
She is here to help you see into the future. To develop strategies that create a future of financial longevity for generations to come. Through her many years of experience working with all types of organizations such as; state/local government, tribes, nonprofits, hospitals, and for profit companies, she has had the pleasure of providing valuable services like accounting, full lifecycle grants management, development of hundreds of cost allocation plans and indirect cost rate proposals, recovered hundreds of millions of grant funds left on the table, and lastly creating compliance programs for organizations to ensure they adhere to the state/federal regulations while maximizing the benefits that exist.
Aleisha helps organizations become HEROES of their communities and those they serve while performing with integrity every step of the way.
Read the Transcription
Please note, this transcription is automatically generated and may contain some spelling and contextual errors.
So oftentimes these organizations will be thinking about just the direct cost, but they don’t realize that that’s really the cost that they’re thinking of. The other part is the indirect cost.
And so when you are factoring in what your true cost of service is, you wanna make sure that you’re factoring in your indirect. Plus your direct cost. So your indirect costs are gonna be the costs that it takes to actually support that department or that program or that service. And so support costs are going to support costs, indirect costs, overhead admin, they’re all kind of the same type of cost.
They’re, some organizations use them interchangeably, different. And so an indirect cost, also known as overhead or admin costs are gonna be costs that it takes to actually support that department or program or service that is being carried out. So if you think about your finance, right? So finance is going to be paying all of your bills and they’re gonna be.
Processing your payroll and then you have HR where they’re gonna be hiring all of the people for that particular department or that program or that service. You have your IT costs, so the IT people to set up all your emails and any type of laptops or computers that the staff will actually need to be able to carry out that grant award or that service or that department or program.
And so when you understand what your indirect costs are and you can ensure that that’s factored into your budget when you’re actually going and seeking out grant funding, then you have a better picture, a whole inclusive picture as it pertains to how much is it actually going to cost us to carry out this grant award.
So those are just some examples of what indirect costs are. It’s gonna be like your finance costs, your IT pay hr, things like that.
Awesome. Thank you so much. Yeah. I think, you know, one of the things we always talk about is like that grant funding isn’t free. You know, it’s like, everyone’s like, Ooh, free money.
It’s like, it’s not free money. There’s, you know, there’s an opportunity cost, but then there’s also these indirect costs that organizations incur. I know that also, and, and maybe you can correct me if I’m wrong, but sometimes you’ll have like, People will be including some, some, like project management or managerial stuff from like a CEO or other things like that in these indirect costs.
So I know there’s different methodologies to approaching this and to figuring out what those costs are, and there’s different things that are allowed and, and are not allowed. What are, you know, maybe you can explain a bit around like just what kind of frameworks should people. Be using to understand what their indirect cost might be, because I assume that this is Well, I know that this is, like, this should be part of the calculus when you’re thinking about a grant award, if it’s, you know, worth it, if it’s actually going to be useful.
Because I, I know personally of projects where, you know, they got the grant, they ended up like costing them. Right. Like it, it didn’t help them at all, . It was just like this big financial drag. So what kind of tools are out there to help predict these costs or any frameworks you might suggest for managing that, that process of, of deciding before you get the grant.
This is a great question and a question that I always like to educate people on as it pertains to, well, how, so if you’re looking for grant funding or if you have grant funding, how do we best manage it? How do we best identify what are, What are, what is our true cost of service? Right. Well I actually used to be an auditor for the state of California, and I would audit cities and counties throughout the state.
For compliance of their grant funding. And so through that process, that’s actually what stemmed me into going and starting my own consulting firm was there was a lack of knowledge and education as it pertains to, well, how do we best be proactive? Right? It’s, it’s one thing to be reactive and you’re trying to establish all these systems and processes when you’ve already been receiving the funds.
However, once you’ve been locked into that grant, Well, you can’t, they’re not gonna be like, Oh, okay, here’s some extra money to cover your, your costs that you forgot that you needed. Right. And so there are situations where you can ask for additional funding depending on, you know, their, their, their the revenues and the, and the funding source that they have available.
But more than likely, once you get awarded a contract, you have to, you have to use what has been awarded to you. And so this is actually something that when I started my consulting firm, why I was super passionate about providing the service is, well, how, Because I’m seeing all of this, right? I’m an auditor.
I see all of the inefficiencies, all of the waste and abuse of funding in California especially. And so I wanted to be able to educate and provide solutions before organizations take on all of this money. And so Organizations, some of the ways that the organizations can best be prepared and identify, okay, is this grant, even a good grant is through a means of developing a cost allocation plan.
And so a cost allocation plan is actually a method and a tool. To be able to identify what is your indirect cost as it pertains to your organization. And so there’s this, there’s a series of different reports and steps that you take to be able to create a robust cost allocation plan. As you’re, as you are developing this, Plan, you can then better identify what is your indirect costs.
And so this plan will identify what your indirect costs are, and then the next step would be, Okay, well now that we know what our total indirect costs are, let’s develop a rate. So the rate allows you to recover indirect costs on your. So a cost allocation plan won’t just allow you to be able to do that.
You have to do the extra step of creating an actual indirect cost rate. And so that rate per the federal guidelines to CFR 200 will allow you to claim indirect costs on the grants that you’re actually being awarded for. And so if you imagine, Okay, I’m looking for a million dollar grant, or I need a million dollars, Okay, so you’re going and you’re looking for a million dollar grant, depending on what type of service that you’re needing that million dollars for.
And if you know that your indirect rate is, say, 50%, 30%. Well, you can ensure that that million dollars allows you to be able to recover your indirect costs associated with that particular grant. Now, could you imagine that if you went into a grant or you’re looking at a grant award and you didn’t know that you were leaving 30% or 50% of your support costs or your indirect costs on the table, and you go and you take that million dollar.
You’re gonna be losing out on 300, $500,000 on that grant. So in this scenario, you were just talking about where, you know, of organizations where it actually costs them more to carry out that grant. This is exactly what happens is that organizations don’t know their indirect cost rate. Let alone their indirect costs.
And so when they go after that million dollar grant or whatever the grant amount is, they’re leaving that portion on the table. And so ways that you can do that is to, is to develop an a cost allocation plan in addition to having a federally negotiated. Indirect cost rate and to develop that, there’s a lot of different ways that you can develop that.
There’s a lot of simplified methods that that can be accomplished. But those would basically be the two tools that you can use to be able to identify and calculate your indirect costs so that you know how to best budget for the grants that you’re actually taking on.
This is super insightful. So, All those methodologies and, and different approaches I think feed well into kinda the next thing that I wanted to discuss. But from a high level you know, as you’re talking about cost allocation plans and that kind of thing, is it, you know, is it a best practice to just go ahead and like find a consultant to do that?
Are there templates and other resources? Is this something. You know, one thing we run into a lot is that, you know, just your general sort of CPA or, or CFO might not know this space. So any thoughts on, you know, obviously your, your firm probably does this. But it, you know, any thoughts on, on resources, just in terms of like, do you hire someone?
Is this something you should try to figure out on your own?
Yeah, I, This is also a really great question. So, because no one, there’s no like schooling that people can go and like learn this stuff, right? Like cpa, there’s like an actual CPA exam that you take to be able to do CPA stuff like accounting and.
You know, file tax forms and fi sign off on financial statements in the grant space. There’s not really, other than if you got your certified grants management specialist but it, even within that, it doesn’t teach you how to actually create a cost allocation plan. It doesn’t teach you how to create an indirect cost rate proposal.
And so what I have found especially being in this space for over 15 years now and as a previous auditor, there are consulting firms out there that actually prepare this data. For clients. I found that it is more common that organizations are hiring consultants to actually prepare this because it’s only done once a year.
Some organizations might do their cost allocation plan multiple times. So like for example the city of LA and even LA County, they actually will, they have a whole department, but they have the resources and the funds to actually have a whole. Cost allocation department, right? Some organizations might not have those type of resources to have a dedicated department just to do that, but they also manage it and track it on a more frequent basis, like a quarterly basis.
And so some organizations, depending on the complexity of the organization, as well as the size and the, and the resources, they might have it in house. However, even those organizations that do it in house, they end up still hiring a consultant because the consultants tend to be. Subject matter experts in this space.
And so for me, for example Because of my background of auditing all, all of this stuff. So I actually used to audit cost plans and indirect cost rate proposals. So I understand the full life cycle as it pertains to what one, one, what does the auditors, what do the auditors even look for? Making sure that once the data’s actually prepared, that it’s prepared in compliance with the federal regulations.
And so I’m always having to prepare everything in accordance with the federal regulations. And so wanting to make sure that whoever you’re working with understands the regulations, what is and is not allowable. But then also because I understand the regulations and you also wanna make sure that they understand the regulations is how can we best maximize our funds.
So it’s one thing to stay in compliance, but it’s another thing to stay in compliance and then also maximize your funding. Right. And so, because I understand that, I know the different golden nuggets to use and to leverage for the clients to be able to maximize their dollars and. Obviously organizations can bring this in house and do it.
There’s a lot of resources out there. The, the Department of Interior actually has like a general, it’s not like a full on cost plan, but it’s like a indirect cost rate proposal on a simplified method. There’s three different ways to actually create a cost plan and even an indirect cost rate proposal.
There’s the simplified direct, and then a multi multi allocation method to be able to do this. The simple and the direct is obviously gonna be very. Simple and direct no pun intended, but it’s, it, it’s not as robust as if you had a multi allocation method, cost allocation plan and indirect cost rate proposal.
So there are different resources out there and templates that some federal agencies have available that organizations can implement internally. But I have seen historically that more organizations, even though they have the resources, will tend to hire a consultant to prepare this.
Awesome. Very cool. So any like any examples you could give real quick of like some strategies to, you know, really like leverage that process?
That’s a great question. So one of the, one of the aspects is match costs. So like most organizations know you have to have a certain percent. Typically, most grants require a certain level of match, whether it’s 10%, 15%, 20%. You have some level of match that’s involved, and usually what organizations are doing when they have to meet a match is that they’re tapping into their unrestricted funding.
Unrestricted funding, as we all know, is like gold to organizations because they can leverage those org. Those dollars, however they see fit rather than restricted funding is obviously for a specific purpose or goal or you know, whatever the case may. And so what happens is that organizations are tend, they tend to tap into these unrestricted funding where if you understand the regulations, you can actually leverage your federally negotiated indirect cost rate as a source of a match.
And so let’s just say for example, your federally negotiated indirect cost rate is 30%. And so you have a grant that requires a 10% match. Well, of the 30% indirect cost rate, you can leverage 10% of that as a match. So now that frees up your unrestricted dollars to be able to use elsewhere because now you’re leveraging your indirect cost rate as a source of a match that still leaves 20% that you can recover of indirect costs associated with that.
So that’s one way that you can definitely leverage. Having a federally negotiated indirect cost rate is being able to leverage it towards your match, which then in turn frees up a lot of those other dollars that you would’ve had to have allocated towards that grant as a match. Also, and then also I wanted to just mention that that is something that you would have to get pre-approved.
And so as you’re, again, this is really good to know beforehand, so you’re proactive so that when you are going and you’re seeking out that grant, these are questions that you can be asking that funding agency in terms of, well, will you allow federally negotiated and direct cost rate is leveraged towards your match costs.
A lot of times you might have to educate the federal. Well, it might not always be federal agency. It might be a state and local government agency, but sometimes, a lot of times I have found I’m having to educate the funding agency as it pertains to the regulations so that they know that this is actually allowable.
So it’s always helpful to cite the regulations to the funders so that they also know that you’re not just making things up. And so match costs. And then also one of the biggest opportunities, and this is something that I’m working with a lot of clientele right now, is being able to go into the organization and pull down funding that has been left on the table.
This is very common for organizations that receive a lot of grant funding. And so let’s just say you are the city of Sun and you have been awarded a hundred million and you’ve only been able to spend 70 million. Let’s, I’m just throwing numbers out there, right? You. Correlated to however your organization is.
You’ve only been able to spend 70 million of it. Well, you still have 30 million that’s left on the table because you don’t really know how to best leverage it. You’ve already spent the direct costs, but you haven’t tapped into any of your indirect costs. Well, in this scenario, if you develop an indirect cost rate proposal, you have a federally negotiated indirect cost rate, you can actually leverage that rate and tap into the remaining 30 million that’s sitting on the table.
So let’s just say of that 30 million that’s sitting on the table, your indirect cost rate is, say 50%. Well, you would be able to pull down 50% of that 30 million, which is 15 million. That you’d be able to pull back into the, into your organization and leverage those however you deem appropriate. So it does not have to be funds.
These funds do not have to be spent on that particular award. Once you pull them down as an indirect cost, it’s no longer considered they’re considered non-federal funds. Which means you can use those for operational purposes, which is extremely beneficial for these organizations to be able to pull that money down, bring it back into their organization, thus into the services and the communities that they serve.
This is super, so this is super helpful because you can actually go back to fiscal years and do this. So there’s Awesome That’s, you can, you can leverage the regulations and the indirect cost rate proposal.
Very cool. That’s super, super interesting. I love that you brought up, you know a lot oftentimes you’re ending up having to potentially educate and work with your funder.
It’s something that we talk about a lot is just the importance of developing a good relationship with your agency and with the funders and realizing that they are also people just trying to get their jobs done. And they may not have this kind of, Deep understanding, because that’s not, you know, that’s not really their job.
They’re just there to administer the program and, and make sure the boxes are getting checked. And so giving them the tools they need to, you know, empower you or, you know, you know, execute on the, the strategy that you’re outlining here is super important. So just, yeah, once again, highly you know, highly re.
You know, diving into that so we talked a little bit about cost allocation models and resources and consultants there and kind of optimizing around that process within direct cost rates. I wonder if you could give like some high level and obviously you don’t have to share any names, but like high level, what kinds of like.
How much money are you talking about with this in regards to like, like how important is this, right? Or like, are you saving 10 bucks or are you like saving a hundred grand? Would love to hear your thoughts on just some of the scale of like the kind of money you’re enabling by you know, paying close attention to this.
Yeah, this is a great question. And so everyone that’s listening right now pays taxes. Everyone, whether it’s federal taxes, state taxes, gas tax, sales tax, everyone’s paying taxes, all of these taxpayer dollars. Funnel back up to the government, right? And then it gets reappropriated down. Well, if we are taking on these grant dollars i e taxpayer dollars, it’s always going to be advantageous to utilize that funding as you’re getting that funding.
And so when, when there’s dollars, a lot of dollars, and actually statistically there’s hundreds of millions of dollars, Across the US in a, a lot of different municipalities and state and local government where they leave hundreds of millions of dollars on the table every single year, every year. Like that’s, that’s just insane to me.
And it’s because they just don’t know how to best manage the funding. And so this is where educating yourself and making sure that you understand the regulations and the implications of not spending those grant funded dollars, whether you’re spending it or you’re sending it back to the federal government.
I know there’s this whole ordeal of, well, if I don’t spend it, I’m not gonna get. Well, if you don’t need it, then give it back so that like, it can be reappropriated. Again, this is, this is me going into my auditing, you know, mindset just cuz I was on auditor before. And so when those dollars are not being fully utilized, so let’s just say those, those, those grant funds were just sitting there for the past two years, that burden actually gets pushed back onto all of.
As taxpayers. And so it’s critical that organizations leverage their funding. They look at their grant portfolio, do an assessment to make sure are we, where are we at, right? As a, as an organization, financially, where are we at? And so I have dealt with many organizations across the us. A very large organization here in the state of California, particular county, just with one department, their Department of Transportation, we were able to identify over a hundred million worth of grant funds that has been left on the table with just one department.
Now that’s, that’s like literally just one department that’s like not their health department. That’s not their education department. Police, fire. So could you imagine that if there was an analysis done on all the cities and counties throughout the, Throughout the state, the nonprofits, the universities, all these organizations that receive a lot of grant funding?
If all of that’s being left on the table, think about the impact that isn’t being able to be made when those dollars are just sitting there. Mm-hmm. Ness, poverty, lack of education, lack of healthcare. There’s so many aspects to why this is extremely critical that we. Best leverage and manage our taxpayer dollars appropriately.
And so by creating just these simple plans of a cost allocation plan and an indirect cost rate proposal, you can really further impact your communities on a scale that you didn’t even realize would be possible.
Awesome. No, that’s amazing. And the scope is pretty staggering. I know that we. Often looked at at this from a little bit of a different lens.
But, you know, a, a bit of why we started open grants was actually because of these inefficiencies within the ecosystem, including including indirect costs where folks simply were just not leveraging and creating the impact they could with the capital that they had access to. And it continues to be a struggle and, you know, It’s, you know, it is not a judgment on the government in any sense, but, you know, it’s a confusing system and they, they do their best generally speaking, but you know, it’s on us to like, you know, learn how to leverage and utilize and bring utility to this space, which is why I love, you know, the work you’re doing and I think it’s so important.
So You know, we, we’ve kind of gone through the, the kind of like top level stuff. We’ve discussed some examples. I’d love to hear your thoughts on just kind of the time and energy it takes to get some of this stuff done. You know, so for folks who are considering engaging someone like yourself or or, you know, building a cost allocation plan, you know, is this something that you can do in like a weekend?
Is it, you know, what kind of. What kind of time from like a hour standpoint maybe? And also what kind of investment should they think about making for, you know, outside services to come in and potentially do this kind of activity for for them.
That’s a great question. So there would be, depending on your level of knowledge as it pertains to developing a cost allocation plan and an indirect cost rate proposal, there might be a learning curve, right?
I’ve been in this space for 15 years, so I don’t really have to think about it. And so, you know, to compare, I’m gonna give two different comparisons, right? So if, if you were to do this in house and you didn’t really have a lot of knowledge you know, you. Search on the internet, right, of cost allocation plans or DOI indirect cost rate proposal.
You can go on the OMB to CFR 200. There’s a lot of different resources like the National Grants Management Association. So there’s a lot of different outlets and avenues that you can kind of get some resources and bring in house without having to hire a consultant. But if you were to do a very simple basic plan, you could do it in probably a.
If you wanted to that’s if you have all of the data and you were dedicated to sit there for a week and like really focus and do it And it might take someone, you know, three months to do it. So we have clients where if we are gathering all of the data, if we have all of the information, we can actually get it done within a month, maybe even sooner, depending on the complexity of the organization.
But some organizations take about three months and that’s just because it’s done only on an annual basis. So if you kind of set around the time, and it’s no different than like when you’re, when you’re scheduling to do your budgets right, you do that on an annual. Most organizations do it on an annual basis.
Some might do it on a quarterly, like they’re, you know, reassessing it on a quarterly basis. But this stuff is only done on a, on an annual basis, only has to be submitted on an annual basis. And so it could take anywhere from a month to three months to actually do. And the, so the investment, it obviously depends on the on the company that you’re working with.
If you are going to hire a consultant to do this I’ve seen anywhere from, you know, 20,000 to 50,000. It just kind of depends on their expertise and the, you know the added value that they provide to the organization.
Awesome. All right. Very cool. Well I’m gonna, I’m gonna grab a couple of the questions.
One of them is can you estimate and I do wanna extend an invitation to, to the audience. Feel free to drop in additional questions. But I saw one here that I think is super relevant and interesting. So the question is, can you estimate to what extent funders are willing to cover indirect costs or general operating costs?
And this person mentions that traditionally they haven’t, which I’m not sure what context this is coming in, but, Yeah, it’s a, I think it’s a good question and kind of relevant to what we’re talking about.
Yeah, this is a great question. So actually with the CARES funds, so if any organiz, and there was so many people that got CARES funds, ARPA funds those funds actually allow for a hundred percent reimbursement of your indirect costs.
So I’m glad that we’re having this discussion because as we all know, every, almost every single city, county, nonprofits got a tribal, governments got them got that funding. And so it’s super important that if they don’t already have a cost allocation plan or indirect cost rate proposal, that they get that prepared.
And negotiated so that they can take a hundred percent of their indirect costs and get reimbursed for that, for those funding or from that particular funding source. And so there is a big. There is a, there is a transition in terms of the OMB and the two CFR 200, and actually the two CFR 200 was established to take eight different circulars and combine them into one so that all the organizations like nonprofits, tribes, the hospitals, et cetera, can benefit.
And they’re under the same guidelines as state and local government has. And so this is why, if you understand what your costs are before you even go after a funder for grant funding, if you know that this funding agency tends to not. Allow for the reimbursement of indirect cost. And that should be an an aspect that you’ll wanna take in consideration is to, well, okay, do we want to work with this funder or are there other grant opportunities that we can get to cover the cost that we’re seeking?
And so there is that shift in terms of organization funding agencies, I should say funding agencies that are allowing the reimbursement of indirect cost more and more because the federal guide. Says that these funding agencies should be and must reimburse organizations their true cost of service.
Obviously, getting everyone on the same page is a, you know, that’s still in the works, but this is where if you understand the regulations, you can leverage it when you are doing your negotiations or even looking for your grant funding.
Yeah, no, and, and it’s a great point. It’s something that we you know, know that we should include.
For example you know, the cost of grant management and those kinds of like, supporting, supporting roles for any, any given project. And so I think, you know, this is part and parcel of, you know, the core part of. What we are here at Open Grants to do is like, make this super easy. And a lot of this is just, you know, not only getting to know your funder but unfortunately also like getting very familiar with the federal regulations around this.
Because as, as mentioned earlier you know, it’s not necessarily the contracting person or like your grant manager at the agency’s. To know this stuff and, you know, they’re humans too. And so they, you know, they also have gaps in their knowledge. And so if you’re in the business of getting grant funding particularly particularly for like governments and non-profits who use it as just a regular stream, right?
Of money. This is a huge opportunity as mentioned as, as you mentioned earlier, Alicia, it’s like, you know, a hundred, you know, millions and millions of dollars, literally, that she could be leaving on the table by not addressing this. And at the end of the day, it turns into an opportunity for you to ensure that you’re also not like losing money on a contract that ultimately is, you know, frequently can be pretty costly to, to manage.
So yeah. Thank you so much for that. There. Another kind of follow up question and maybe you know, you could talk a bit to this, but just a question of like, which funding agencies provide a hundred percent reimbursement for indirect costs? And I’ll just mention that this is also something that you might wanna review.
It’s frequently, like frequently that whoever develops the RFP will. Eligible costs. And the unfortunate thing is they may just cite the cfr, which is the, the federal regulations instead of actually telling you what it is, but then you gotta go look it up. So I don’t know if you could speak to that a little bit Alicia, maybe on just like, in terms of how to best like scan for this within maybe your, your grant funding that you’re looking at.
So the, one of the agencies that I was just mentioning was actually the US Department of Treasury. So they were the ones that actually allocated out the ARPA and the CARES funds. And so they’re with those funds, they’re actually allowing a hundred percent of cost reimbursements. There are some organizations that and I keep saying organizations, There are some agencies that are more prone to.
Reimbursing you, your, your true cost of service. And those are gonna be departments like the US Health and Human Services, the Department of Transportation the Department of Interior, hud, depending, again, depending on what the type of grants that you have. I, I’m just kind of giving you ideas of the type of agencies that are more commonly pro reimbursement of indoor costs.
So, yeah, so Department of Interior, Department of Labor, Department of Transportation, US Treasury, So those are, And then Health and Human Services, those are pretty common ones that will definitely get your full reimbursement of indirect costs.
Awesome. And yeah, just to tag along on that you know, for everyone listening who’s like, All right, well, which agencies cover this?
It does come down to the actual like RFP and how they’re interested in contracting. And so you’ll even find within agencies that there’s, you know, there’s some places that specifically don’t allow it. There’s some places that do, and. It just like can depend on the program and how the money got there and, and there’s a lot of other things that go into it.
So one thing I will say is that you want to, you know, obviously read that RFP really closely. Generally speaking, it will say in like, the request for proposals, like what what is eligible and what is not for reimbursement. And the other cool thing about this though is it does give you an opportunity if there is any vagueness.
You know, one of the things that we always encourage folks to do is to build that relationship. And during, you know, public comment periods, you can and questions periods, you can reach out to the agency and to the team that’s putting the money out there and say, Hey, you know, we want to know about, you know, if you reimburse direct indirect costs and to what extent because there are different approaches to that.
And it does vary by agency and agency. So definitely be aware of that and just realize that you’ll want. You know, dig in and get those clarifications on the way in. Great question here. Are we talking about federal and state money or also private foundation money when it comes to indirect costs?
And I know Alicia, you know, we’ve been mostly talking from the From the federal and government grant side of things. But I, I would love to hear your thoughts if you’ve had any experience or come across, you know, foundations who have different approaches here.
Yeah, so this is also a really great question.
Again, like you were alluding to earlier about the request for proposal, right? So some foundations, some organizations might not even require much. Grant management, meaning like they’re happy to just give you a grant award and then you don’t have to report on those dollars in some situations like that, right, Like you’re usually applying for a grant that’s already capped at a certain.
And so in that scenario, again, this is where you, if you’re only relying on one, and I don’t encourage this, but if you’re only relying on one revenue source, then you might be limited with what you have, right? And so if you’re only going after foundations and they don’t, they don’t really operate the same in terms of like, Oh, indirect cost, direct cost like the government does then you would just have to know from a strategic perspective of.
We might just be going after this foundation for our direct costs, but maybe we need to find other avenues to be able to recover our indirect costs. And so I’m not saying that you have to just look for just one agency to cover the whole indirect plus direct, but it’s, it allows you to identify from a strategic perspective how you should best move forward in terms of being able to get fully reimbursed for your cost of service.
And so it’s not, I don’t wanna say it’s. Not, it’s not doesn’t happen, but it’s not as common for foundations and those type of organizations to reimburse you for your indirect costs, I guess you should say. Yeah. But these, this is all information to help you be more strategic with where you’re headed financially for your organization.
So you can not only be most optimal, like optimize your funds, but also maximize those funds as well.
Yes, a hundred percent. And I’ll, I’ll just echo that. There’s a really great question here. Can you secure a federal indirect cost rate passively if you collaborated with a local government partner for a grant award and included, and it included an indirect cost rate.
Yes. So I just wanna make sure, can you secure cuz I’m a visual person too, can you secure a federal indirect cost rate possibly if you collaborated with the local government? Okay, so in this scenario, if, if I understand it correctly, There’s been federal funds that has been passed down to a state and local government, and in that same local government contracted with you to provide a service.
In that scenario, if this pass through entity is your largest funder, then that would be the agency that you would actually do the negotiation with. If you have a different agency who’s your largest funder, then that would be the agency that you would negotiate that indirect cost rate for, But, The pass through it per the federal regulations, and it’s two CFR 200.32, where it identifies the responsibilities of a pass through entity and what they’re obligated to do.
So if that it pass through entity is your largest funding agency then that would be the agency that you would do the negotiation with, not the actual federal government. If that clarifies that question, if I’m understanding it correct.
Yeah, I think, I think so. And maybe you could just touch on kind of Cause I, I know when you like register and Sam, it asks you if, you know, you have these cost rates, prenegotiated, those kinds of things.
Can you talk a little bit about what, what, what that process looks like and what that is of, like, how do you negotiate like that indirect cost rate with the federal?
Yeah, absolutely. So typically there’s, there’s two steps, well, two prior steps before you actually submit it for negotiations. But this isn’t either or, I do both because you can’t, it’s hard to understand what your cost of service, your indirect costs are without actually developing a cost allocation plan.
So, The ideal way is to develop a cost allocation plan, then you will create an indirect cost rate proposal. An indirect cost rate proposal is just a proposal of costs that you’ve identified to say, Okay, this is what our rate is. But to establish an indirect cost rate is just your indirect cost divided by your direct costs.
That’s, that’s really it. And so once you have that package together, so let’s just say that a. Health and Human Services is our largest funder. Well, the US Department of Health and Human Services is going to have a checklist of the various items that you’ll need for submission of your indirect cost rate proposal to be reviewed and approved.
And so once you gather all of that documentation, There is a contact email or department that will be identified. Typically, sometimes you have to search for this, but typically it’ll be identified as to who is the contact person that you need to submit this data to for review. Once it’s submitted for review they usually, this is why it’s about three to six months for them to actually earn negotiations, But it could take about three to six months for them to actually have you have them review your information and re do all of the questioning and the auditing of your submission, and then go through the approval part.
Some organizations move a lot quicker, but it could be about three to six months for that process. But once you have submitted all of your data, They will likely come back, cuz this happens almost all the time. And they’ll ask additional questions as to, Okay, what are these costs? Can you give me more information?
So there is that back and forth with that agency that’s reviewing the, and approving and negotiating the indirect cost rate with you. And so it’s about three to six months process for that.
Awesome. That’s great to know. Another good question here. Is there a direct cost rate, upper limit if it varies by agency, is there a general range?
No. There’s, there’s no, I mean, there’s no direct cost rate. Like we don’t create a direct cost rate. It would be an indirect cost rate. Right. And I’m not entirely sure. What that means, but there is no limit. So for example, when I was auditing the city and county of San Francisco, their department of transportation rates were like 121.
Yeah, so with organizations that are like, you know, 23%, so it’s all, it’s all relative to that particular agency. Just because it’s 121% does not mean that it is that they spend a lot of time with admin. No. It’s just because of their costs. And it is all appropriate. So a high indirect rate, lower indirect rate doesn’t really matter.
And that is a huge misconception, especially like if you’re a nonprofit and you’re looking for funding and they are very big on like, Oh, well you have too much overhead. It’s, that’s, that’s not, that’s that, that’s not an accurate reflection of, of what’s really happening.
Yeah. Thank you for that. I think, you know, one thing I’ll throw out there too is that, you know, frequently.
I, I think there’s a misconception with granting grant seeking in general activities that you are you are somehow beholden to some cost structure that the government has. In reality, most of the time you’re defining all of that with, you know, all the things you talked about, cost allocation plan, you know you are submitting the budget, like you are the one who’s propos.
So at the end of the day, you know, you’re the one, you know, putting those limits in place for yourself and constructing that narrative. And, you know, ideally you’re, you know, closely aligning those incentives and outcomes so that you are successful. But if not, You know, that can be a reason that they push back on those things.
But it is this is on you really to define. And you know, at the end of the day, just being honest and upfront about what your costs are and what needs to go into it to make the project successful, it’s gonna get you a lot farther than trying to hit some imaginary number that you think they might like.
Because, you know, apart from the things that they have defined, like the hard stops of like, Oh, we wanna make awards of a million a piece or what, what have you, apart from those you know, stipulations, you’re, as a grant seeker, you are defining all of this. And so making sure you’re doing it thoughtfully and in a very intentional way and not leaving money on the table is a big part of being successful in this space.
You are making such valid points regarding that and what sometimes what organizations do. So, like, think about a, a business, like a grocery store, for example. Let’s just say that. Well, everyone wants.
Maybe a grocery store’s not a good example. I’m trying to think of a good example. Like even my services, right? Like if a lot of people were like, Oh, Alicia, like, I don’t, I don’t wanna pay you for that service. Well, there’s plenty of other people that will. And so I’m not going to reduce my price just because people are like, Well, I don’t wanna pay that price.
I still have to run a business and so I had to make sure that I’m getting fully compensated for not only my expertise, but my employees that are working on the projects, me working on the projects, time, energy, resources, all that sort of stuff. And so, so different than with your organization. If you are undercutting yourself, you’re only.
Causing your organization more harm financially because you’re, you’re trying to fit your organization financially into their box when that might not be it. And so if you understand, okay, well this is how much it’s going to cost, actually run this program, again, you can use that as strategic information to say, Okay, well this funding agency’s going to give me $500,000, but I still need an additional 700,000.
So where can I get this other 700,000? Do I need to do fundraising? Do I need to. You know, do something right. There’s a lot of different ways that you can cover those costs. But then also identify, well, is this a grant that we should be supporting to begin with? Because it’s costing us so much. And from a financial perspective, it just doesn’t make sense.
And so all of these tools are used to not only make sure that you’re made whole, but also more importantly to understand what is your true cost of service so that you can be most optimal and strategic as it pertains to. Fully carrying out all of your services as a, as an organization, which should be also ran as a business, if that makes sense.
Yeah, no, that, that’s a really great point and I appreciate it. A good question here. Is the miscellaneous or contingency cost considered as part of indirect cost that should be negotiated for with the funder?
Hmm. I would need more information into your, in terms of what miscellaneous and contingency costs are. Cause I don’t, I don’t understand that fully.
No worries. I, and I think, you know, maybe maybe this question is a little too maybe too specific for a very specific case or maybe a little too general.
But I will say that there are so many d. Variations and mutations on approaching this. And a lot of that has to do with the fact that there’s almost no standardization in terms of this process throughout the throughout the space. So one thing to just be aware of is that as you are out there looking for grants, and I, I know I just said this a bunch of other times, but read the RFP because even within one agency it can be.
And they will outline and really help you understand what’s eligible. And sometimes it may require you reading through the CFR and understanding like what they are referencing there. And that is where it is frequently super nice to have the help of a consultant who knows the space and is deeply aware of like how certain agencies interpret certain things.
All of that to say that I wish there was a very, you know a better answer, but really it’s like, it depends. That’s a lot of, that’s oftentimes that’s the answer to these questions. Like it depends, I don’t know.
Exactly. And if you, if whoever’s a asking that question if you wanna clarify, then you know, I’m, I’m happy to answer.
Yes, definitely feel free to drop another question or additional info into the q and a and we can try to respond to that. I’m gonna hop through a few of these that I think are a little more focused on open grants generally. But I’ll do a little lightning round through here. And then if anyone has additional questions about about this space, preparing cost allocation plans, anything like that, please do.
Drop ’em into the q and a. But I’ll address some of this stuff up here. So some questions about grant funding on open grants. We regularly pull funding from all over the United States. We don’t generally list grants from international regions, but we do have a lot of info about like us funding to other parts of the world.
And so with the pro account, You can save searches for sure and get automatic emails about opportunities. question about grants actually getting I’m not actually sure what this question is. Is there a grant writing that actually gets funded or is so not entirely sure. If you want to if you want to follow up and throw another question, please do.
We did an analysis for indirect cost. Our development coordinator determined that costs were various admin in our budget, and then our accountant came up with a cost per client served. I’m not sure if that’s a question or if there’s a question in there. So Alicia, I don’t know if you had, is that a question?
Like from, from your lens?
Like cost per admin, et cetera, and our budget and the other accountant came up with the cost per client served. Yeah, yeah, I mean that’s a good approach in terms of how you are identifying your indirect cost. There’s, again, there’s a whole bunch of different ways that you could.
Again, there’s no cookie cutter way to establish this. So whatever analysis that you’re doing internally to be able to identify where your indirect costs are there are best practices in terms of how to best calculate this. But you know, every organization is different. it just depends.
That is the thing that I repeat more often than not. So where can I get help with grant searches? I mean, there’s a ton of resources. There are a ton of resources. Open grants is great. grants.gov, California’s grants.gov. Your local small business development center can help you with certain.
Types of grants. And your local procurement technical assistance center can help you with certain kinds of grants. So they are free, paid and everything in between services to help you with grant search. We are happy to point you in the direction of many of those. If you get open grants.io and hit up our support team, we’ll also include resources and links in a follow up email to this session.
Great question about pro bono or free business tools for veterans. There are a lot of them, however one of the things that the government sometimes struggles to do is communicate and advertise services for a variety of reasons, not necessarily their fault. But yeah, happy to.
Happy to just say that we do work closely with a variety of services and there are a variety of tools from the federal government to support veterans. And we regularly get folks access to that kind of thing. And I don’t know if Alicia, if you have any specific services that you offer in that space, but that’s, that’s, you know, go to open Grant, hit us up and we’ll be happy to help.
Let’s see. Thank you. Thank you Dean. I want to just touch on, I guess one other thing here which is that you know, this whole this whole process you know, we talked a lot about government grants. We’ve talked, touched a bit on foundation grants as well. But I think one of the things that is an incredible opportunity here is just the fact.
There are, or something to take away is that there are a lot of experts in this space who can take you from like zero to 10 when it comes to navigating all of these nuances. And so as as folks who are working within the government as folks who are working outside I know that we often, as just people in general struggle with the idea of, you know, like paying someone versus, you know, we, we balance that in our minds a lot of like, do we pay someone, do we not?
And I’ve said it many times on, in these discussions that. This is one of those things that makes sense to at least have a discussion with somebody, have some discovery and get set off in the right direction because I’m sure Alicia, you are like booked solid. Like I’m sure you’ve got like, you know, more work than you can deal with.
And generally speaking this, like everyone that I talk to in this space, like yeah, we have like, you know, we have more work than we can handle but we are always interested in having conversations in particular. This is something, at least for me, that I’m passionate about. I know that it’s something that you’re passionate about.
It’s just like, Hey, look, you could be doing so much more. And, and it’s just right there. So highly encourage y’all to reach out and you know, make connections. If there are any other questions feel free to drop those in the q and a, but I’ll turn, turn it over to you. Alicia, if you have any like, closing thoughts or perspectives that you wanna share words of advice or encouragement for those listening on the webinar.
Yeah, absolutely. So I definitely I, first I just wanna say thank you all for attending today. I hope that you guys got a lot of valuable information as it pertains to your grant portfolio and how you might be able to best leverage the regulations to your benefit and to your organization’s benefit in turn that you can impact more lives within your communities in whatever regard it is that you do that.
And so I am offering a free grant assessment. So grant portfolio assessment. So you can then go to my website, alicia beckham.com. It’s just my name right here dot com. And you can schedule the free grant portfolio assessment and I can assess your grant portfolio to identify one, do you have any, What’s your potential recovery for indirect costs on your grants?
And then also can identify some strategic perspectives in terms of how you can best move forward with your grants your grant, your overall grant portfolio, and any other questions that you might have as it. To the regulations. So I love educating. I’m very passionate about making sure that the information that I have up here, I feel like it’s my duty and my responsibility to ensure that that gets disseminated out among everyone else because, like Ella was mentioning earlier there is a lot of education in this space and I highly encourage everyone to become a, at least a little bit more knowledge knowledgeable about it so you can be most successful in your organization.
Awesome. Well, thank you so much and, and for those listening I will, we will at Open Grants be sending out not only the recording, but also links to all these great resources as well. So if you didn’t catch anything please just keep an eye out for that email. Alicia, thank you so much for coming on to discuss this with us and to share.
Your insights into the space is massively valuable. Just as a, as a kind of a takeaway for folks you know, if you didn’t hear again, you know, folks are leaving upwards of, you know, tens, twenties, hundreds of millions of dollars on the table by not understanding and failing to leverage these kinds of strategies.
So as you look at your grant portfolio, please do dive in, reach out to Alicia, take a. Sounds like an awesome deal. Get like someone to look at what you’re doing and tell you how much money, more money you could have access to. So definitely keep an eye out for those emails. Really appreciate y’all for coming.
You can pop in to you know, open grants any time and saw a couple of yes. So thank you all for, for being here, for sticking with us and, you know, tune in tune in next month. But yeah. Thanks everyone. We’ll see you.