10 De Minimis Rule

Q: Does a non-federal corporation that uses the de minimis de minimis rate for 10% indirect costs have to provide documentation proving that its indirect costs represent at least 10% of its organization`s total modified direct costs? The de minimis indirect cost rate of 10% is a state-approved rate that non-federal enterprises can use to cover indirect costs eligible for grants or cooperation agreements. Requirements for the use of the 10% de minimis quota The organisation must include the 10% de minimis amount in its application and keep documentation of the costs included in its amended total direct costs. It must be used consistently in all USG prices. It is allowed to be used indefinitely. The NRP will want to ensure that the direct costs of the federal subsidy when using the de minimis rate do not already include the coverage of indirect costs (double burden). This type of problem is more common when the federal NRP grant supports a large majority, if not all, of the NRP`s activities. However, this could also occur if the NRP has in the past covered the indirect costs of federal grants through what is defined in the Uniform Guidelines as a direct allocation method. The NRP must also be consistent in how direct and indirect costs are charged to federal grants. A: No, the de minimis rate of 10% can only be used to pay for overhead costs that are not directly charged to federal premiums.

If all costs are deducted directly from the federal price (e.B. Space, ancillary and administrative costs), the beneficiary should not also charge the de minimis rate of 10 %. As described in 200.403 CFR, costs must be calculated consistently as indirect or direct costs, but must not be calculated twice or inconsistently as both. National focal points may be able to automate the calculation of de minimis recovery in their accounting systems to reduce the risk of error. Alternatively, the PNR could develop a form to document the calculation of de minimis recovery. This form would ensure that the creator of the statement of subsidy takes into account all deductions received by the MTDC. This would also allow a simple review of the de minimis calculation prior to the submission of the subsidy declaration. (1 MB) Infographic: When can an organization use the 10% de minimis rate for indirect costs? Q: Our organization previously had a negotiated indirect cost rate. However, all federal allocations have expired, resulting in a breakdown in our relationship with the federal government.

During the breakdown of the relationship, our negotiated indirect cost rate expired. Our organization has now received a new federal award. Are we entitled to the de minimis rate of 10%? Well, good news. This condition has now been removed from the Uniform Guidelines. As long as the PNR does not have an active indirect cost rate negotiated by the Confederation, the de minimis rate may be used. There is no universal rule for classifying certain costs as direct or indirect (Q&A) in an accounting system. Costs may be directly related to a particular service or function, but indirect to the federal allocation or other final cost target. Therefore, it is important that each cost element incurred for the same purpose be treated consistently in the same circumstances as direct or indirect (Q&A) costs in order to avoid a potential double burden on federal grants. Guidelines for determining direct and indirect (Q&A) costs charged to federal scholarships are included in this subsection. Previously, the uniform guidelines contained a provision that the PNR could not have previously had the Confederation negotiate an indirect cost rate to use the de minimis rate.

This has been particularly difficult for NFPs, who may have had an indirect cost rate negotiated by the federal government years ago and then let it expire because they were no longer receiving direct federal compensation. Q: Can an intermediary company that paid actual or negotiated indirect costs to a partial beneficiary prior to the Uniform Guidelines now impose the 10% de minimis rate on the same sub-beneficiary? Q: Can a non-federal entity that performs a single function funded primarily by federal grants decide to charge the 10% de minimis rate if it currently charges all costs as direct costs for federal programs? What are indirect costs? For the purposes of the de minimis rate of 10 %, indirect costs are costs incurred for common purposes that take too long/cost too much to be allocated to a specific cost target. Examples of indirect costs are office space rental, ancillary costs, and office and executive salaries. To the extent that indirect costs are reasonable, eligible, and transferable, they are legitimate business-related costs payable under a U.S. Government Support Premium. A: Yes. The provision of the de minimis rate for indirect costs of 10% is subject to the condition that the non-federal undertaking meets the requirements set out in paragraph 200 414(f). This includes limiting availability to organizations that have never received negotiated indirect cost rates, with the exception of those described in paragraph (D)(1)(b) of Schedule VII of Part 200: “A unit of a government department or agency receiving more than $35 million in direct federal funding shall submit its proposal for indirect costs. State and local government agencies that have never negotiated indirect cost rates with the federal government and receive less than $35 million in direct federal funding per year can use the 10% de minimis indirect cost rate and must keep documentation of this decision on file. State-approved Native American tribes that have never negotiated an indirect cost rate with the federal government can also use the 10% and must keep documentation of that decision on file. A: No.

Organizations that experience an interruption in the federal relationship are not eligible to receive the 10% de minimis rate upon receipt of a new reward. The availability of the de minimis rate is specifically limited to a non-federal enterprise that has never received a negotiated indirect cost rate (200,414(f)). .