The Office of Management and Budget said it considered higher rates, but that it picked a “conservative” amount “to protect the federal government from excessive over reimbursement.”
Before the new budget office rule, charities were “getting bupkis” for their overhead costs from the government, said David Thompson, vice president of public policy at the National Council of Nonprofits, an umbrella group for charities.
Mr. Thompson said that while he thinks the change is needed, the 10-percent rate is still well below the overhead rate at many nonprofits. A more “rational” level, he said, would be between 20 and 40 percent.
Ms. Hughes is in what Delia Coleman called a “double vise,” struggling to serve the needy with fewer federal dollars while facing debilitating “overhead constraints.” But Ms. Coleman, director of public policy at Donors Forum, an Illinois nonprofit advocacy group, added that the new rule “eases the strain somewhat” on nonprofits.