Before you renew that grant/contract...

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As nonprofits look ahead to July, remember that it isn’t just the season for fireworks and barbecues. It’s also the time when many nonprofits will enter new or renewed contracts and grant agreements with governments. If your nonprofit is one of the thousands delivering services in your community with funding through a grant or contract with any level of government, don’t forget to take the following important developments into account before signing on the dotted line.

Your nonprofit’s right to payment for its indirect costs.

Nonprofits with grant or contract agreements with local, state, tribal, or federal governments or even another nonprofit are now entitled to be reimbursed for their indirect costs under the new OMB Uniform Guidance when those entities pay your nonprofit using federal funds. If your nonprofit already has a federally approved indirect cost rate, then the other entities must pay using that same rate. For those nonprofits that don’t have a federally approved indirect cost rate (which is most of us), your organization can review the “Tools You Can Use” (below) to determine your best course of action. Because the OMB Uniform Guidance is still fairly new (it became effective Dec. 2014), it’s important to remember your new rights when entering or renewing grants and contracts.


Your nonprofit’s duty to pay employees overtime

Beginning on December 1, 2016, many employers (including nonprofits) will be required to pay overtime to employees earning less than $47,500 per year. Many nonprofits feel moral support for raising wages, but mixed with operational anxiety as they try to figure out where they will get the extra money to pay higher amounts. The anxiety is particularly acute and reasonable for nonprofits with fixed reimbursement rates and performance requirements in government grants and contracts. As you negotiate grant and contract renewals, be sure that they pay for the increased expenses that will likely occur during the new grant/contract period. If you can’t secure more revenue to cover these expenses, be sure you are transparent with the entity offering the grant or contract about the consequences that these higher costs will have on the ability of your nonprofit to deliver the level of contracted services and the resulting impact it will have on individuals whom you have been serving.



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