In keeping with the topic from two weeks ago (“Hip Hip Hooray for New F&A“), we’d like to highlight the importance of correctly calculating your indirect costs using the new rates. Remember:
- Each year of your project is going to have differently applicable F&A rates
- Each year of your project may have more than one applicable F&A rate, and should be proportionately weighted
If, for example, you have a project that begins on September 1, 2014, a 52% F&A rate will apply to the first month of your project, but the new 52.5% will apply to the remaining 11 months in that first project year. On the second year of the project, 52.5% will apply to the first month, but the new 53% will apply to the remaining 11 months of that project period (and so on, and so forth).
The importance of calculating out each year correctly comes down to safeguarding against leaving money on the table. Using a single F&A rate for all project years means leaving tens of thousands of dollars on the table when submitting your proposal budget. On a five-year/modular project, for example, calculating the correct and proportional indirect costs based on the rate agreement will generate over $18,000 more in qualified project dollars than using a flat, single rate.
For help determining your multi-rate F&A calculation, check out the spreadsheet we developed; it will calculate your proportional F&A costs and highlight what needs to go into your SF424 (see the example tab for a visual explanation). Feel free to contact us with any questions!