Open Forum

Greetings! 

I am seeking information on how museums calculate their overhead/ indirect cost rates. I've found information that pertains to non-profits overall but nothing related to museums specifically. It seems many places arbitrarily choose the 10% rate offered by OMB. Are there models that you can point me to, or any general guidance, for accurately calculating these costs?

Thanks for your help!


------------------------------
Anjuli Grantham
Curator of Statewide Services
Alaska State Museum
Juneau, Alaska
------------------------------

I recommend an excellent article in the online Nonprofit Quarterly:  Why Funding Overhead is Not the Real Issue: the Case to Cover Full Costs.

Regards,

Steve

------------------------------
Steven Miller
Executive Director Ret.

Boscobel House and Gardens
Garrison NY
------------------------------

Original Message:
Sent: 11-27-2018 04:02 PM
From: Anjuli Grantham
Subject: overhead cost calculations

Greetings! 

I am seeking information on how museums calculate their overhead/ indirect cost rates. I've found information that pertains to non-profits overall but nothing related to museums specifically. It seems many places arbitrarily choose the 10% rate offered by OMB. Are there models that you can point me to, or any general guidance, for accurately calculating these costs?

Thanks for your help!


------------------------------
Anjuli Grantham
Curator of Statewide Services
Alaska State Museum
Juneau, Alaska
------------------------------

Anjuli,

NSF, IMLS and other fed granting orgs are all helpful on their websites. Try this to start:  Indirect Cost Rates | NSF - National Science Foundation
The page has several reference documents:

Resources and References

• Indirect Cost Rate Fact Sheet

• Checklist for Preparing an Indirect Cost Rate Proposal

• Indirect Cost Rate Proposal Submission Procedures

• Federal Requirements

You will be hard pressed to find museum-specific guidelines in detail, but accounting procedures should be generally the same for museums as other nfps. Unfortunately, it is not one size fits all and every organization has to sort out and calculate its own specific allocation of direct and indirect costs for each of its cost centers or accounts. Googling terms like: museum, calculating indirect cost rates, policies, samples will yeild some links and pdfs that might be of interest to you. I see some sample forms and policies from museums.

Negotiating a customized indirect rate usually occurs after notice of a grant and it is a process that can take some time and effort. It is worth a call to a federal or state program officer, who has handled past grants to your org, to talk through the process and/or get a referral to someone who can provide detail and guidance.

Good luck,
Paul

------------------------------
Paul Pearson
Johns Hopkins University Advanced Academic Programs
Brooklyn NY
------------------------------

Original Message:
Sent: 11-27-2018 04:02 PM
From: Anjuli Grantham
Subject: overhead cost calculations

Greetings! 

I am seeking information on how museums calculate their overhead/ indirect cost rates. I've found information that pertains to non-profits overall but nothing related to museums specifically. It seems many places arbitrarily choose the 10% rate offered by OMB. Are there models that you can point me to, or any general guidance, for accurately calculating these costs?

Thanks for your help!


------------------------------
Anjuli Grantham
Curator of Statewide Services
Alaska State Museum
Juneau, Alaska
------------------------------

Original Message------

Anjuli,

NSF, IMLS and other fed granting orgs are all helpful on their websites. Try this to start:  Indirect Cost Rates | NSF - National Science Foundation
The page has several reference documents:

Resources and References

• Indirect Cost Rate Fact Sheet

• Checklist for Preparing an Indirect Cost Rate Proposal

• Indirect Cost Rate Proposal Submission Procedures

• Federal Requirements

You will be hard pressed to find museum-specific guidelines in detail, but accounting procedures should be generally the same for museums as other nfps. Unfortunately, it is not one size fits all and every organization has to sort out and calculate its own specific allocation of direct and indirect costs for each of its cost centers or accounts. Googling terms like: museum, calculating indirect cost rates, policies, samples will yeild some links and pdfs that might be of interest to you. I see some sample forms and policies from museums.

Negotiating a customized indirect rate usually occurs after notice of a grant and it is a process that can take some time and effort. It is worth a call to a federal or state program officer, who has handled past grants to your org, to talk through the process and/or get a referral to someone who can provide detail and guidance.

Good luck,
Paul

------------------------------
Paul Pearson
Johns Hopkins University Advanced Academic Programs
Brooklyn NY
------------------------------

Thanks for your feedback, all!

Part of the challenge for many non-profits is clearly the fear that donors will perceive that their investments go towards administration of programs rather than delivery of programs if an organization's overhead rate is "high." But it seems that foundations and the federal government are both turning towards sharing the costs of overhead in the recognition that they need to share those expenses to ensure the effective delivery of programs. 

It would be helpful for the museum sector to publish a white paper on this topic, for museums to use as they both create their budgets and justify their budgets to funders and the public. Perhaps an AASLH technical bulletin, as well?

------------------------------
Anjuli Grantham
Curator of Statewide Services
Alaska State Museum
Juneau, Alaska
------------------------------

Original Message:
Sent: 11-29-2018 07:18 AM
From: Vivian Zoë
Subject: overhead cost calculations

Dear Anjuli and Paul -  I must say, this reveals how different the cultural and science worlds are!  In my experience, the more sophisticated funders understand that without staff and facilities, there are no programs.  Ten percent seems extremely low.  For example, the Hartford (CT) Foundation for Public Giving allows 25%.  I know it is different for different institutions and mission factors into the metric.  For example, how directly does the desired program (and therefor the desired grant) match the organization's mission?  Is it experimental?  New? Ongoing?  One time?, etc., etc.  Obviously, the overhead for a new (and experimental) program will be higher than that for one where the institution has experience.

In the world of arts & culture - the overhead percentage is definitely NOT calculated AFTER the grant is awarded!  It must be declared.  If you have an accountant on your board s/he should be able to to assist you in determining the overhead.

Vivian F. Zoë, Director
Slater Memorial Museum
108 Crescent Street, Norwich CT 06360
860-425-5560 vox
860-885-0379 fax

"Inspiration is for amateurs - the rest of us just show up and get to work," Chuck Close, 2003

Please note:  The information contained in this e-mail and any attachments hereto is intended only for the personal and confidential use of the designated recipients.  If the reader/recipient of this message is not the intended recipient, you are hereby notified that you have received this e-mail and all attachments hereto in error and that any review, dissemination, distribution or copying of this e-mail or any of its attachments is strictly prohibited.  If you have received this communication in error, please notify the sender immediately by e-mail and destroy the original message received.  Thank You.

Original Message------

Anjuli,

NSF, IMLS and other fed granting orgs are all helpful on their websites. Try this to start:  Indirect Cost Rates | NSF - National Science Foundation
The page has several reference documents:

Resources and References

• Indirect Cost Rate Fact Sheet

• Checklist for Preparing an Indirect Cost Rate Proposal

• Indirect Cost Rate Proposal Submission Procedures

• Federal Requirements

You will be hard pressed to find museum-specific guidelines in detail, but accounting procedures should be generally the same for museums as other nfps. Unfortunately, it is not one size fits all and every organization has to sort out and calculate its own specific allocation of direct and indirect costs for each of its cost centers or accounts. Googling terms like: museum, calculating indirect cost rates, policies, samples will yeild some links and pdfs that might be of interest to you. I see some sample forms and policies from museums.

Negotiating a customized indirect rate usually occurs after notice of a grant and it is a process that can take some time and effort. It is worth a call to a federal or state program officer, who has handled past grants to your org, to talk through the process and/or get a referral to someone who can provide detail and guidance.

Good luck,
Paul

------------------------------
Paul Pearson
Johns Hopkins University Advanced Academic Programs
Brooklyn NY
------------------------------