Reimbursements to nonprofits

The Government Accountability Office (GAO) published a report on how nonprofits are reimbursed by federal, state, and local governments for indirect costs. Recognizing that nonprofits are "key partners in delivering federal services yet reportedly often struggle to cover their indirect costs," GAO reviewed six grants from the Depts. of Health and Human Services (HHS) and Housing and Urban Development (HUD) and 17 nonprofits in Louisiana, Maryland, and Wisconsin, which receive at least one of the six grants, for this study. GAO discussed the following:

• Inconsistencies in terminology lead to challenges in cost classification, which can result in uneven treatment of costs
• Nonprofits’ reimbursement for indirect costs largely depends on federal, state, and local government practices
• When nonprofits report differences between indirect costs incurred and reimbursed, they take a variety of steps to bridge gaps

NONPROFIT SECTOR: Treatment and Reimbursement of Indirect Costs Vary among Grants, and Depend Significantly on Federal, State, and Local Government Practices, GAO-10-477 (pdf, 32pp/298kB), May 18, 2010