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U.S. DEPARTMENT OF AGRICULTURE National Institute of Food and Agriculture

U.S. DEPARTMENT OF AGRICULTURE National Institute of Food and Agriculture. Nonprofit Indirect Cost Training – Two Rate Method. Similarities to the One Rate Method:. Same 3 definitions relevant to ICRs + fringe benefits

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U.S. DEPARTMENT OF AGRICULTURE National Institute of Food and Agriculture

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  1. U.S. DEPARTMENT OF AGRICULTURENational Institute of Food and Agriculture Nonprofit Indirect Cost Training – Two Rate Method

  2. Similarities to the One Rate Method: • Same 3 definitions relevant to ICRs +fringe benefits • Same 3 steps to calculate an ICR (1obtain expenses, 2classify expenses, 3calculate rates (F/B rate and ICR), but 3rd step is now done in 3 parts • Same 3 ways to check the grant budget

  3. Differences from the One Rate Method: • Two rates instead of one rate (indirect cost rate and a fringe benefit rate) • Fringe benefits (employee benefits) are not included in the ICR, but rather broken out separately in their own rate • Fringe benefits can now appear as a direct cost in the grant budget • Step 3 is done in 3 parts: 3a calculate F/B rate; 3b assign F/B’s to indirect and direct columns; 3c calculate ICR

  4. What are Fringe Benefits (F/B)? • Allowances and services that employers provide to employees • Paid absences (vacation, sick, holiday) – are typically part of S&W at nonprofits, colleges and state/local govts. • Payroll taxes • Pension plan costs • Group insurance (health, life, disability)

  5. How to Calculate a Fringe Benefit Rate • Pool (numerator) = fringe benefits (paid abs, payroll taxes, pension and insurance) • Base (denominator) = total salaries (direct and indirect) • Do a sample two rate method (ICR and fringe benefit rate) and check your answer • Review the grantees proposed budget (and check your answer

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