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Cost Allocation Plan and Indirect Cost Rate Preparation Services

Cherry Bekaert provides cost allocation plan consulting, indirect cost rate calculation and negotiation, as well as cost recovery services to state, local and nonprofit organizations.

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Understanding the Need for Cost Allocation Plan and Indirect Cost Rate Preparation Services

State, local, tribal and nonprofit organizations share the same challenge: figuring out how to assign organization-wide shared costs, or indirect costs, to the final product line or service received.

Indirect costs are those costs not readily identified with a specific project or organizational activity but incurred for the joint benefit of both projects and other activities. Indirect costs can often average around 30% to 40% for government entities. Allocating indirect cost can become burdensome, as it is not a one-size-fits-all calculation or strategy, and organizations are already spread thin when it comes to staffing and resources.

Many organizations find it difficult to prioritize calculating and allocating indirect costs. Consequently, taxpayer dollars from the General Fund must cover the unrecognized overhead cost to support all the programs an organization supports. Indirect cost allocation plays a critical role in an organization’s fiscal health, which is why Cherry Bekaert’s Government and Public Sector Advisory team provides full cost allocation and 2 CFR Part 200-compliant cost allocation plans, indirect cost rate calculation and negotiation, and cost recovery.

We have strategically built a team of professionals and subject matter experts with experience working within the government and nonprofit industries. Having walked in your shoes and experienced similar challenges firsthand, our team is equipped to provide unique perspectives and solutions to help you overcome obstacles. We can assist with:

  • Full Cost Allocation Plan
  • 2 CFR Part 200 Cost Plan
  • Indirect Cost Rate Proposals
  • Indirect Cost Rate Proposal Negotiation
  • Indirect Cost Recovery

Uncover Insights To Plan for a Sustainable Economic Future

Cherry Bekaert understands your true cost and will assist you in recovering any unspent dollars on those programs by leveraging your indirect cost rate to capture any available dollars and maximize reimbursements from outside agencies. 

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Indirect Cost Recovery and Cost Allocation Plan Services That Support Your Organization

Creating an Updated Cost Allocation Plan

According to the Government Finance Officers Association, the cost of tracking every individual indirect costs far outweighs the benefits. Therein lies the criticality of being able to develop a plan that estimates the allocation of indirect costs to programs and, ultimately, provides the full cost. Updated plans are important so that new cost centers, new funds, changes in grant requirements, etc. are all taken account.

Navigating the Complexities of Establishing a Negotiated Indirect Cost Rate Agreement (NICRA)

The Office of Management and Budget (OMB) guidelines have changed over the past several years, resulting in a lack of awareness of current allowability of indirect costs. Additionally, many organizations are too busy obligating the State and Local Fiscal Recovery Funds program provided by the American Rescue Plan Act, leaving little time to comprehend their indirect cost being incurred by those programs, much less to obtain a Negotiated Indirect Cost Rate Agreement (NICRA) to claim indirect cost associated with federal and state grant funding.

Understanding Your Organization’s True Cost of Services

There is a common concern and hesitation toward claiming indirect cost against programs, with a perception that funding will be taken away from the program. Indirect cost is inevitable, whether it is recognized at the program level or not. Awareness and knowledge of the true cost of services, to include both the direct cost and indirect cost, will put you on track to program sustainability and fiscal health.

Making Informed Budget and Strategic Planning Decisions

When looking only at direct costs incurred within an organization, a large piece of the pie is missing, therefore misleading budgets and strategic planning.

Maintaining Transparency

Transparency and accountability in government is the focus of many leaders. Governments are successfully increasing civic engagement and support through demonstrating transparency and accountability. However, when there is a lack of awareness of indirect cost, and a resulting general fund subsidy that covers that cost, taxpayer dollars are being spent on programs outside of the public purview.

Maximizing Grant Funding Through Indirect Cost Recovery

By obtaining a NICRA, organizations can apply that rate to federal and state funding received. Often, due to a lack of resources or timing challenges, not all awards can be spent, leaving valuable funding, or revenue, on the table.

Cherry Bekaert can help you leverage your NICRA to drawdown unexpended funds which can be brought into your general fund with no restrictions. These funds can then be used towards innovation such as new systems, workforce upskilling and training, new projects and more.

Creating an Updated Cost Allocation Plan

According to the Government Finance Officers Association, the cost of tracking every individual indirect costs far outweighs the benefits. Therein lies the criticality of being able to develop a plan that estimates the allocation of indirect costs to programs and, ultimately, provides the full cost. Updated plans are important so that new cost centers, new funds, changes in grant requirements, etc. are all taken account.

Navigating the Complexities of Establishing a Negotiated Indirect Cost Rate Agreement (NICRA)

The Office of Management and Budget (OMB) guidelines have changed over the past several years, resulting in a lack of awareness of current allowability of indirect costs. Additionally, many organizations are too busy obligating the State and Local Fiscal Recovery Funds program provided by the American Rescue Plan Act, leaving little time to comprehend their indirect cost being incurred by those programs, much less to obtain a Negotiated Indirect Cost Rate Agreement (NICRA) to claim indirect cost associated with federal and state grant funding.

Understanding Your Organization’s True Cost of Services

There is a common concern and hesitation toward claiming indirect cost against programs, with a perception that funding will be taken away from the program. Indirect cost is inevitable, whether it is recognized at the program level or not. Awareness and knowledge of the true cost of services, to include both the direct cost and indirect cost, will put you on track to program sustainability and fiscal health.

Making Informed Budget and Strategic Planning Decisions

When looking only at direct costs incurred within an organization, a large piece of the pie is missing, therefore misleading budgets and strategic planning.

Maintaining Transparency

Transparency and accountability in government is the focus of many leaders. Governments are successfully increasing civic engagement and support through demonstrating transparency and accountability. However, when there is a lack of awareness of indirect cost, and a resulting general fund subsidy that covers that cost, taxpayer dollars are being spent on programs outside of the public purview.

Maximizing Grant Funding Through Indirect Cost Recovery

By obtaining a NICRA, organizations can apply that rate to federal and state funding received. Often, due to a lack of resources or timing challenges, not all awards can be spent, leaving valuable funding, or revenue, on the table.

Cherry Bekaert can help you leverage your NICRA to drawdown unexpended funds which can be brought into your general fund with no restrictions. These funds can then be used towards innovation such as new systems, workforce upskilling and training, new projects and more.

Our Professionals

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Nicolie (Nicky) Lettini

Cost Allocation Plan & Indirect Cost Leader

Director, Cherry Bekaert Advisory LLC

Christian Fuellgraf

Government & Public Sector Industry Leader

Partner, Cherry Bekaert Advisory LLC

Denise Lippuner

Government & Public Sector Advisory Services

Partner, Cherry Bekaert Advisory LLC

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