Jeanne Tedrow, President and CEO, of North Carolina Center for Nonprofits.
Imagine a customer walking into a pizza shop to order a pizza, then only wanting to pay for the ingredients – flour, sauce, toppings, cheese. (See Pizza and a Laugh ‒ A Reminder about Your Nonprofit Financial Stress Level, Nonprofit Quarterly, December 18, 2018.)
The OMB Uniform Guidance establishes important rights for nonprofits: "Governments at all levels – local, state, and federal – that hire nonprofits to deliver services are now required to reimburse nonprofits for the reasonable indirect costs (sometimes called “overhead” or “administrative” costs) they incur on behalf of governments when federal dollars are part of the funding stream. The new mandate is embedded in grantmaking rules that the federal Office of Management and Budget (OMB) put into effect at the end of 2014.
Overhead. Administrative costs. Indirect costs. Whatever term you use, the perception of these costs by the public and by donors is one of the greatest sources of frustration for nonprofit professionals. But there is hope on the horizon, as explained in this article from the N.C. Center for Nonprofits' Common Ground publication.
As board members, we have twin responsibilities: to ensure that our organization is making efficient, appropriate use of funds and to ensure that we are reporting our overhead correctly. This article provides eight key ideas to know about overhead. (Blue Avocado)
A Board Member's Guide to Nonprofit Overhead
Four Things Every Nonprofit Contracting with Government Should Do - "The White House Office of Management and Budget (OMB) rules known as the Uniform Guidance went into effect at the end of 2014, streamlining the rules governing administrative requirements, cost principles, and audit requirements on federal awards, removing inconsistencies in the old circulars.
Investing for Impact: Indirect Costs Are Essential for Success addresses how governments that hire charitable nonprofits to deliver services and then reimburse them for less than reasonable indirect costs undermine the ability of nonprofits to deliver high quality services. (National Council of Nonprofits)