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Uniform Guidance for Nonprofits: Personal Services and Fringe Benefits
Nonprofit organizations applying for and receiving federal grants and cooperative agreements are in for some significant reforms that promise to increase competition for grant funds, add new administrative processes, change long-established principles, and impact the audits of organizations receiving federal funding.
White Paper: Uniform Grant Guidance for Nonprofits: Personal Services and Fringe Benefits Download Now
The Office of Management and Budget’s (OMB) 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, commonly known as the Uniform Guidance (UG, formerly referred to as Omni Circular, Super Circular, and Uniform Grant Guidance) will apply to new awards, and to additional funding (or funding increments) to existing awards made after December 26, 2014.
At more than 100 pages long, the new Uniform Guidance includes sweeping changes to the processes of applying for, managing, and auditing federal grants and cooperative agreements.
“It is critical that nonprofit organizations review these changes to stay in compliance,” advises Rebecca Field, a nonprofit manager for CliftonLarsonAllen. “Our professionals have burrowed deep into the guidance to find the issues that concern you most, and developed methods for implementing change.”
Personal services and fringe benefits
One area of high interest to nonprofits is compensation for personal services and fringe benefits. The current guidance in OMB Circular A-122, Cost Principles for Nonprofit Organizations, governs how these specific costs can be treated by organizations that are charging a portion of the costs to a grant, contract, or other agreement with the federal government.
The guidance includes some significant changes in time and effort reporting. Under Circular A-122, employees who work on federal programs are required to report an after-the-fact determination of their activity. Budget estimates do not qualify as support for charges to awards, and each report must account for the total activity for which employees are compensated.
Under the UG, budget estimates may be used for interim accounting purposes, as long as they are in place and include processes to review after-the-fact interim charges made to a federal award based on those budget estimates and appropriate adjustments are made.
Clarified and expanded rules
In addition, the OMB has clarified and expanded guidance in multiple areas, including professional activities outside the entity and post-retirement health plans.
The new guidance also allows federal agencies to approve alternative accounting methods for salaries and wages based on the achievement of performance outcomes. This includes areas that blend funding from multiple programs to attain a more efficient combined outcome.
How we can help
CliftonLarsonAllen has prepared a white paper, Uniform Grant Guidance for Nonprofits: Personal Services and Fringe Benefits, that compares the requirements under the UG to OMB Circular A-122 in the area of compensation for personal services and fringe benefits, and offers insight into what the changes will mean for nonprofits.
We have also prepared a Uniform Guidance Checklist to help you plan the implementation of UG in your organization.