Question: What expenses can we directly charge to programs? Also, can we charge that de minimus 10% to all direct costs?
John Heveron: The 10% indirect cost rate does not apply that to all direct costs. You apply the rate to Modified Total Direct Cost which includes all direct salaries and wages, along with payroll taxes and fringe benefits, and to materials and supplies, services, travel, and up to $25,000 of each sub award. It excludes equipment purchases rental costs, participant support costs and some other categories that generally apply to educational organizations.
You cannot directly charge facilities used for administrative purposes or other administration.
Uniform Guidance and the related HHS regulations (45 CFR 75.414) say that facilities costs include depreciation on buildings and equipment, interest on facilities debt, and building operations and maintenance. Administration is defined as management of the organization (usually a large part of the executive director’s responsibility, accounting, human resources, general office costs and any other costs that benefit all programs uniformly.
Uniform Guidance (2 CFR 20) and HHS (45 CFR 75) regulations both have an appendix IV with additional information and clarification about indirect cost identification and assignment, and rate determination for nonprofit organizations.