Indirect Cost Allocation: Methods and Best Practices
Originally published on October 23, 2024
In this edition of Kickin’ It With Corinne, she explores the essential strategies for indirect cost allocation in nonprofit accounting. Learn how to effectively distribute overhead costs like shared services, administration, and facilities across your organization’s projects and funding sources. We’ll break down two key approaches: creating a cost allocation plan tailored to your nonprofit’s unique needs and negotiating an indirect cost rate with federal agencies or other funders. With practical best practices for documenting your methodology, reviewing allocation plans, and ensuring compliance with guidelines, this guide will help your nonprofit maintain financial transparency, credibility with donors, and sustainability.
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