LA County Leads the Way on Reimbursing Indirect Costs

According to Nonprofit Quarterly, Los Angeles County has adopted new beneficial rules regarding payments to nonprofits that contract with the government to provide services, such as social service agencies.

Anyone who has worked with charities that contract with the government (or anyone else, for that matter) knows that it is often very difficult for a charity to be reimbursed for the indirect costs associated with programming, such as utilities.  At the end of last year, the Office of Management and Budget recently issued a “super circular” addressing indirect cost reimbursement, clarifying issues regarding the applicability of these rules to all federally-funded grants and contracts, and reiterinat that it is not appropriate for governmental agencies to request waivers of these rights. 

Of course OMB directives can only govern grants and contracts using federal funds – clearly, all federal contracts, but also state and local contracts to the extent they utilize federal funding.   Strictly state-funded (or local-funded) grants, however, are not covered by the OMB guidelines.   Thus, LA County’s adoption of the standards is a big deal for local nonprofits, and hopefully sets a trend for other state and local jurisdictions.

H/t to Jennifer Chandler at the National Council of Nonprofits, which has been active in this area.

EWW