Do Your Part to Support Full-Cost Funding

Funders realize that inadequate grant support for the indirect costs associated with implementing grant-funded programs weakens the infrastructure of nonprofits and there’s a ripple effect. As nonprofits become less able boots-on-the-ground, communities suffer too. This is a critical issue that affects the health of nonprofits and their ability to fulfill their missions. It’s encouraging that grantmakers are elevating the discussion and working towards change.

Unfortunately, I recently read  that when exploring how to improve this problem, grantmakers are finding that some nonprofits don’t understand their organization’s indirect costs. Indirect costs are generally calculated as a percentage of direct costs (through one formula or another) and funders are saying that some nonprofits don’t know what percentage they should request in order to cover the full costs of a grant-funded program. 

If your nonprofit doesn’t have a handle on indirect costs, now is the time to put your house in order. Unless you understand your organization’s indirect costs, you can’t hammer out full-cost program budgets or advocate effectively for realistic indirect support. Here are some ways you can do your part to support the full-cost funding movement.  

  •  Figure out your organization’s indirect costs. If your financial staff doesn’t have the expertise for the task, hire a competent consultant. You can’t request full-cost funding if you don’t know what your full costs are.
  • Not every nonprofit will need to apply for a negotiated federal indirect cost rate. But If you deal with federal funding and you haven’t done that work, please get started. The 10% de minimis rate most grant applicants can request from the federal government is better than nothing, but is far short of the real cost associated with implementing federal grant-funded programs.
  • Become informed. Read articles and reports published on the topic and talk to knowledgeable colleagues. This will prepare you to make a case for adequate program support when applying for grants.
  • When requesting grants, clearly articulate the necessity for full-cost funding. Advocate as much as possible with the foundations and government agencies with which you work.

When you understand your organization's full costs and are well versed in this discussion, your strong, well-reasoned voices can help move this change forward. 

About the Author

Barbara Floersch

Barbara Floersch, Chief of Training & Curriculum for The Grantsmanship Center, has more than 35 years of experience in nonprofit management, grant proposal writing, grants administration, and nonprofit consulting. She has secured tens of millions of dollars in federal, state, and foundation grants; taught hundreds of seminars and classes at conferences, at colleges, and for nonprofit organizations; testified before the United States Congress on the reauthorization of the National Endowment for the Arts; published numerous articles on grant proposal writing and other, related topics; and served as an expert reviewer in many federal grant competitions for the Department of Education, the Substance Abuse and Mental Health Services Administration, and the Family and Youth Services Bureau Barbara is author of Grantsmanship: Program Planning & Proposal Writing, the updated version of Norton Kiritz's seminal work which has guided grantseekers for nearly 50 years. She is also a regular contributor to The Nonprofit Times. Barbara has been a senior trainer for The Grantsmanship Center since 2000 and has delivered training programs throughout the United States and internationally.

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