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Why Full Lifecycle Grants Management Needs Cost Allocation

by James Ha on April 30, 2018
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What does cost allocation have to do with grants management? The answer is everything. Cost allocation allows for accurate calculation of indirect costs, which is critical to ensuring that resources are available to carry out the purpose of the grant. Getting this number wrong leads to unspent grant dollars and financial instability. In some cases it leads to bankruptcy.

Not Knowing Your Indirect Costs Is a Big Risk

Here's an example to illustrate the point. Nonprofits deliver many of the services required by federal grant programs as subrecipients of state and local government. The inability to identify and reimburse nonprofits for appropriate indirect costs is causing financial instability across this sector, sometimes leading to bankruptcy. Losing these key community partners reduces the capacity to achieve the program outcomes required by federal grant awards. This is just once example contributing to unspent funds in state and local government today. The Urban Institute provides excellent research on this topic. Learn more.

Cost Allocation Software

Recently, eCivis acquired CostTree, the only SaaS cost allocation software for the public sector and nonprofits. As part of eCivis, CostTree will help organizations maximize their indirect cost reimbursements, better understand their true cost of service, and run scenarios to determine what cost structure provides the greatest organizational impact. Additional features include comprehensive audit tools for cognizant and reviewing agencies and their recipients; a dynamic Indirect Cost Rate Proposal framework that removes the frustration and complexity from your rate submission and review processes; and powerful transfer pricing and cost analysis tools that put full control at the fingertips of the end user. CostTree has been deployed in nearly 100 state and local governments, including the Maryland Department of Education; Glendale, CA; and El Paso County, CO. If you are interested in learning how to mitigate loss of funds and maximize your funding, contact us today to learn more about cost allocation software.

More On This Topic

A recent article from the Lincoln Institute of Land Policy that discusses why cities aren’t fully spending their federal grants and leaving money on the table: Download Paper.

A recent article on demystifying indirect costs covers the basics with links to further resources: Learn more.

Free 2 CFR 200 (UGG) Training Videos

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Topics: Grants Management Articles, Indirect Costs