Every organization is in search of new revenues to support its mission. It might be tempting to see federal and state grants as a cost-free source of those revenues. Before you go chasing those new grants, you should be aware that they can come with a heavy administrative burden. Here are a few of those burdens to keep in mind:
So, given these additional burdens discussed above, a question you may be asking is “how much does that realistically cost me”? While there is no widely available data indicating that cost, the federal government does allow, as part of its Uniform Grant Guidance, that a 10 percent administrative indirect cost rate can be charged to the federal government. While this is really meant to defray the indirect costs of administering the grant, I have always thought of this as a way of funding the administrative burden that the grantor imposes. That rate represents a floor, not a ceiling, though, in terms of administrative burden. My experience is that the compliance costs can generally run up to 25 percent of the grant funding received.
In closing, be wary of the allure of this “easy money”. It can come with many strings attached, imposing extra burdens that must be managed, and, if not managed well, can lead to a risk of having to repay that money. However, if well monitored and managed, grant monies can be a great new source of funding supporting your mission.
You're Invited! Annual Not-For-Profit Accounting Update
Thursday, September 26, 2019
Hosted at Detroit Historical Museum
Save The Date!
Middle Market Manufacturing Outlook
Wednesday, October 23
Hosted at the Detriot Athletic Club
7:30 AM - 11:30 AM