For many USDA* NIFA* awards, indirect costs are limited by federal legislation. Because of this federal mandate, NIFA applicants must follow all indirect cost limitations listed in the NIFA Request for Applications (RFAs).
The most common NIFA indirect cost limitation is a maximum indirect cost cap of 30% of Total Federal Funds Awarded (TFFA). NIFA can only accept the lesser of an institution’s negotiated rate or 30% of TFFA awarded.
In some cases, determining the lower of the two rates (the institution’s negotiated rate or 30% TFFA) is relatively simple.
Total Direct Costs including $30,000 in capital equipment | $200,000 |
52% F&A On-campus Research MTDC (base: $170,000) | $88,400 |
30% TFFA (~42.857% TDC) | $85,714 |
In the above example, 30% TFFA ($85,714) must be used because it is less than the institution’s calculated indirect cost rate ($88,400).
More challenging situations occur when there are subawards and cost-sharing involved. In both of these cases, the prime awardee is responsible for ensuring that the maximum indirect cost allowable is not exceeded when combining the Federal portion (prime and subawardees) and any applicable cost-sharing.
Because the calculation of 30% TFFA can be confusing when subawards and cost-sharing are involved, NIFA has published a list of Frequently Asked Questions (FAQs) which includes budget scenarios and guidance for calculating indirect costs under each scenario. Below is an example of determining which indirect cost amount to use when a subaward is involved.
Total Direct Costs including a single subaward of $120,000 | $200,000 |
Prime awardee: 52% F&A On-campus Research MTDC (base: $105,000) | $54,600 |
30% TFFA | $85,714 |
In this example, the amount of the institution’s negotiated indirect cost rate is less than 30% of TFFA. However, we must also account for the amount of F&A the subrecipient is requesting. If the combined amount requested by the prime awardee and subrecipient puts the request over 30% TFFA, then only 30% TFFA can be requested. Add to that, the subrecipient is subject to the same 30% TFFA cap as the prime awardee.
When we take the subrecipient’s F&A into account, we find that combined we are over the 30% TFFA.
Total Direct Costs including a single subaward of $120,000 | $200,000 |
Prime awardee 52% F&A ($54,600) + Subawardee 30% TFFA ($51,428) | $106,028 |
30% TFFA | $85,714 |
In this updated example, the combined amount of prime awardee and subrecipient F&A is greater than the TFFA.
In situations where the combined prime and subawardee indirect costs amounts are greater than 30% TFFA, the prime and subrecipient must agree on an allocation of indirect costs that makes sense. In these situations, communicating NIFA’s limitation on indirect costs is vitally important. Also, subawardess, just like prime awardees, must apply the lower of their negotiated rate or the 30% TFFA.
CSU Internal Processes – Assistance is Available!
For administrators needing assistance determining which indirect cost rate to use on a NIFA proposal, the Office of Sponsored Programs has a calculation tool available. Just contact us.
If your proposal includes subrecipient(s), make certain they are aware of the 30% TFFA requirement and request final budgets well before the proposal due date.
If you must use the 30% TFFA rate, be certain to change the KR PD record accordingly. If it turns out that 30% TFFA is lesser than CSU’s negotiated indirect cost rate, no IDC waiver is required.
For more on NIFA’s indirect cost provision, see the references listed below.
*USDA- United States Department of Agriculture
*NIFA- National Institute of Food and Agriculture
References
About NIFA (USDA webpage): https://nifa.usda.gov/about-nifa
NIFA-19-010 2018 Farm Bill Indirect Costs (USDA FAQ pdf): https://nifa.usda.gov/sites/default/files/resource/NIFA-19-010-FAQs-Farm-Bill-Indirect-Costs.pdf
NIFA-19-010 2018 Farm Bill Indirect Cost Provision (USDA webpage): https://nifa.usda.gov/resource/2018-farm-bill-indirect-cost-provision
NIFA Federal Assistance Program Indirect Cost Guidance (pdf) https://nifa.usda.gov/sites/default/files/resource/NIFA-19-009-nifa-indirect-cost-chart.pdf
Blog post by Tricia Callahan and Catherine Douras, Office of Sponsored Programs, Colorado State University and Hollie Schreiber, Division of Agricultural Sciences and Natural Resources, Oklahoma State University.