Dear Colleagues,
NIFA's competitive grant programs indirect cost limitations were impacted by the 2018 Farm Bill. Indirect costs (otherwise known as facilities and administrative costs) may be limited by legislation authorizing a specific NIFA program.
NIFA has two types of competitive grant programs: mandatory and discretionary. The 2018 Farm Bill increased the indirect cost cap for many of NIFA's mandatory programs from 22% of total federal funds awarded (TFFA) to 30% of TFFA and applies the cap to the total of the prime (lead applicant) as well as sub-recipient (sub-awardee) indirect costs, so that the total of all indirect costs charged against the total federal funds awarded does not exceed the specified cap. Amounts exceeding the maximum allowable indirect cost is considered unallowable.
For many of NIFA's discretionary programs, the cap remained at 30% of TFFA and, like the mandatory programs, applies the cap to the total of the prime as well as subs indirect costs.
The maximum indirect cost rate allowed is determined by calculating the amount of indirect costs using:
- the sum of an institution's negotiated indirect cost rate and the indirect cost rate charged by sub-awardees, if any; OR
- 30 percent of total federal funds awarded
For FY 2019, depending on the authorizing legislation, programs may allow full negotiated rates, require that no indirect costs are allowed, or cap costs not to exceed a specific cap. Applicants can determine if a grant program is subject to an indirect cost cap in several ways:
- Review the applicable legislation which will identify any indirect cost limitations. NIFA references each program's applicable legislation in the Request for Application (RFA) under a section entitled, Legislative Authority and Background.
- NIFA specifically identifies any indirect cost limitation in a section of the RFA entitled, “Funding Restrictions”.
- NIFA maintains an Indirect Cost Chart that identifies indirect limitations for each program located at: https://nifa.usda.gov/resource/indirect-cost-chart
For applicable programs, these requirements are effective for new awards issued after Dec. 20, 2018, regardless of whether grants are Fiscal Year 2018 or 2019 funds. Where grants were awarded after Dec. 20, 2018, grantees will be contacted by the Awards Management Division regarding application of the new indirect cost provisions. For impacted RFAs that have closed, NIFA will work with entities recommended for funding, prior to award, to make any necessary changes to comply with the new provision. All impacted open RFAs have been modified to include the new provision. Future RFAs will include the new provision, as applicable.
Please consult with Contracts and Grants staff for guidance on calculating indirect costs based on the new limitations.
Thank you.
Kathleen Nolan, Director, ANR Office of Contracts & Grants (OCG)