I was leading grant management training in Jackson, Mississippi, and was pleasantly surprised to have some people in the room who are involved with proposal development for federal awards.

Now it wasn’t just professional courtesy that made me so happy to see them, but because some changes baked into the grant regulation 2 CFR Part 200 (aka the Uniform Guidance) are important to both grant writers and grant managers.

In particular, the Administrative Requirements section includes some opportunities to make your proposal more attractive to federal funding agencies but only if the grant writers and grant managers collaborate early enough.

Let’s look at the brave new world of federal grants since the updated regulations took effect.

Federal Funders Want the Focus on Well-Spent Direct Costs

You may not realize this if you are a grant writer, but the federal grant regulations make it clear:

• Federal funders want to minimize indirect costs so that the bulk of spending is spent directly by the project or program being funded.

And they added new ways to accomplish this, but only if you know the rules in 2 CFR Part 200.

Next, federal agencies are required to evaluate applicants in new ways to ensure that those direct costs they fund will not be wasted…or worse!

That is why a risk assessment is included in the federal funding agency’s review for applicants to minimize the chance that waste, fraud and abuse will occur with federal programs.

More about that in just a minute…

Secret #1: Help Your Organization Have Some of Your Indirect Costs Covered

Maybe you are helping a small nonprofit or local government that has never had its indirect costs covered as part of its federal grants before.

Or maybe, they were intimidated by the daunting task of creating and negotiating an indirect cost rate.

Now there is an “easy, peasy” way for the federal government to cover some of their fair share of support services for the federal award.

The Uniform Guidance regulations provide a 10% de minimis indirect cost rate for organizations that never had a negotiated indirect cost rate or don’t currently have a negotiated indirect cost rate agreement (NICRA) in effect.

This simplified low-rate option makes funding agencies happy because it keeps indirect costs from spiraling out of control.

And it and makes non-federal entities happy because it’s an easy method to get some of their costs covered without all the work of negotiating an indirect cost rate with its cognizant agency for indirect costs.

• This simplified method also saves Finance and Legal departments time, potentially keeping indirect costs even lower.

With this method, your organization can be reimbursed for indirect costs at the rate of ten percent of your Modified Total Direct Costs (MTDC) with no indirect cost proposal necessary.

• Bonus alert: It can be used indefinitely.

But don’t forget it’s only available if you haven’t had a negotiated indirect cost rate before or you don’t currently have a NICRA in effect.

Secret #2: How to Have Your Program Get More Support

The next little gem hidden in the federal grant regulations is that the door has opened wider for the grant to pay for people who directly support the federally sponsored program.

In the past, a little thing called the “consistency of cost” treatment limited direct costs for a federally sponsored project or program.

This rule was often interpreted to mean that if you had an administrative support person or analyst supporting indirect areas such as the Finance department or President’s office, you couldn’t have someone with the same job title working directly on the program.

In fact, § 200.412 Classification of costs states that costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs.

Fortunately, the Uniform Guidance recognizes that most programs need administrative support, and program analysts ensure the program works as efficiently as possible.

There’s just one catch…

You may be out of luck if you don’t plan for them at the proposal development stage.

Think about this as the “You snooze, you lose” rule.

Everyone legitimately supporting the federal sponsored program may be included (i.e., paid for) as part of the program rather than having to be recovered as an indirect cost.

How sweet would that be?

Here is where the grant writers and developers come in.

This cost treatment needs to be planned into the program budget.

Here’s how:

The rules for this winning strategy is contained in this valuable nugget of § 200.413 Direct costs:

(c) Administrative and clerical staff should normally be treated as indirect (F&A) costs.

BUT direct charging may be appropriate if ALL the following conditions are met:

(1) Services are integral to a project

(2) Individuals can be specifically identified with the project or activity;

(3) Such costs are explicitly included in the budget or have the prior written approval

(4) Not recovered in indirect costs

Do you see how you can get the program the support it needs and make your funders happy because you have just reduced indirect costs and put more of the costs directly into the federally sponsored program?

It’s a win-win situation…but only if you plan for it from the beginning.

Secret #3: Uncle Sam Wants the Low-Risk Grantee

I shared how federal agencies want to keep indirect support costs as low as possible.

And I don’t see that trend reversing anytime soon, especially with the publically available database of grant recipient’s indirect cost rates coming online.

• (Take notes for those of you with high indirect cost rates!)

But another area you may not be aware of is the push toward making grant recipients more accountable for their spending and program performance.

In other words, federal agencies want responsible grant recipients who are ACCOUNTABLE for what happens in their programs.

One way they do this is to perform a risk assessment of grant applicants before awarding funding.

• Funders want the low-risk applicant to do the work-one that won’t end up on 60 Minutes or in front of a Senate sub-committee.

You may be wondering what this requirement has to do with grant writers.

Here’s the thing…

Grant writers and developers can make it easy for the funding agencies to say “yes” to the proposal if they understand what the agencies seek.

So please don’t make your funding agency have to hunt for the things that tell them you are a good bet to do the hard work with the federal funds.

A well-written grant application is not like the Highlights magazine of childhood dentist trips where you found the umbrella and cat in the drawing of the tree!

With the risk framework laid out in § 200.206 Federal awarding agency review of risk posed by applicants, you can assure your funding agency that you understand your responsibilities and that you are a good bet for the funding agency.

Talk about the organizations:

• Financial stability
• Quality of management systems
• History of performance
• Previous audit reports and findings
• Ability to effectively implement the program objectives

Being upfront in the proposal about why you are the LOW-RISK choice can help your Program Officer sleep at night and demonstrate that you understand your duties as a grant recipient from the beginning of the process to the end.

Ready to Deepen Your Understanding of Federal Funding?

Would you like to be a better grant writer or manager?

Deepen your understanding of procurement and the single audit for federal grants?

We have another grant training seminar coming soon.

Click here to get all the details!

Hope to see you there!

Rachel Werner, MPA, GPC, PMP

MyFedTrainer Principal, Compliance Champion