Facilities & Administrative Costs

Three Methods of Computing F&A Rates for Nonprofits:

• Simplified Method: used when all major functions of the organization benefit from the indirect cost incurred to approximately the same degree.
• Direct Allocation Mathod: more appropriately used when all join costs are prorated using bases which accurately measures benefits derived.
• Multiple Allocation Base Method: used when an agency has several major functions which benefit from indirect cost in varying amounts. Multiple allocation method is seldom used by Non Profit Organizations.

Methods of Computing F&A Rates for Colleges and Universities:

• Simplified Method: available to universities with direct funding under $10,000,000 & should be used when all major functions of the organizations benefit from indirect costs to approximately the same degree, should not be used when it produces results that appear inequitable to the Federal Government or the grantee.
• F&A Cost Rate Proposal Method: required for grantees that receive > $10,000,000 of Federal funding in a fiscal year.  Discrete allocations of facilities & administrative cost pools are required in developing F&A cost rates.  Administrative components of the rate are limited to 26% of the total rate.  A 3.6% allowance is added to the rate for faculty performing administrative functions. 

F&A Costs: Types of F&A Rates:

• Predetermined: rate established for period; no carry forward provision
• Fixed: rate established for period; under-over-recovery adjusted during next negotiation
• Provisional: estimated rat used until actual rate is determined
• Final: rate applicable to a specified past period with no adjustments