Effective December 26, 2014 for all HOPWA award FY14 and later, the new Omni-Circular issued by the Office of Management and Budget
offers all non-federal entities, including non-profits, the opportunity to charge 10% of their total direct costs as additional indirect costs.
This is intended to give non-federal entities greater flexibility in recovering indirect costs under federal contracts.
Most non-profits do not have the resources nor the capacity to put together an application for an indirect rate for their cognizant federal agency.
At the same time, many of these same organizations have indirect costs that are not classifiable as administrative costs.
In many cases, therefore, organizations have not had the means to charge and recover eligible indirect costs from the federal government.
For this reason, OMB now allows for indirect charges of up to 10% of the total of modified direct costs. This will likely also
include administrative costs - capped by the HOPWA at 7% for project sponsors - but this gives non-profits greater opportunity to recover indirect costs.
The use of this 10% indirect rate charge does not require approval by the federal government or by pass-through entities
such as HOPWA grantees administering its funds. As this guidance is new, grantees and sponsors should exercise caution in implementing it
and should consult with the local HUD Field Office for guidance.