My organization wants to use the 10 percent de minimis indirect rate in our next 523 TA grant proposal. Can we do that?


Indirectly Confused

Dear Indirectly Confused:

If your organization has never had a negotiated indirect cost rate agreement (NICRA) and you certify that you will apply the rate to all of your federal awards (if not all of your programs), you can submit a letter on letterhead to USDA RD to advise them that you are implementing the 10 percent de minimis rate. You would then calculate all of your direct 523 technical assistance (TA) costs (there are some exclusions for this rate but generally the TA grant does not contain any of those line items) and then add 10 percent to that number to get to your total grant amount.

Here are some critical things to remember if you decide to use that rate:

  1. Your total 523 TA grant amount can still not exceed the Method A and Method B calculations for TA cost per unit. You don’t get to add 10 percent above and beyond that!
  2. Make sure that you are not charging the grant both the 10 percent indirect fee and the normal expenses that are included in the indirect pool, which is funded by charging the 10 percent fee to your other programs. The typical indirect costs often include the cost of the annual audit, general accounting fees, the payroll processing costs , corporate liability insurance, directors and officers insurance, and some percentage of the executive director’s salary and fringe benefits. Your annual audit should include a review of these charges to ensure that you are not double charging for these kinds of expenses by prorating them as well as collecting the 10 percent indirect fee.
  3. The 10 percent de minimis indirect rate is a fixed rate that you would apply each month to your direct expenses. But make sure you calculate your actual indirect rate at the end of each fiscal year to ensure that 10 percent is adequate. You may want to negotiate a rate with your cognizant agency to get a higher rate if the 10 percent is not enough.

Sincerely, Sher


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