Indirect Cost Rate Initiative

In February 2019, the City of New York adopted the Health and Human Services (HHS) Cost Policies and Procedures Manual (Cost Manual) to standardize cost allocation practices for HHS contracts and Indirect Cost Rate (ICR) calculations. The Cost Manual is intended to be a living document that is updated from time to time.

The Fiscal Year 2020 Adopted Budget established an ICR Funding Initiative based on the Cost Manual, managed by the Office of Management and Budget and Mayor’s Office of Contract Services through the City Implementation Team (CIT). The initiative is intended to make it easier for nonprofits to do business with the City, as it acknowledges and pays for critical indirect costs to deliver human services. New York City was the first big city in the country to make this investment. Today, providers can receive an Accepted Indirect Cost Rate from the City of New York based on a 10% De Minimis policy, a Federal Negotiated Indirect Cost Rate Agreement (NICRA) or an Independent Accountant’s Report that validates an ICR greater than 10%. Details can be found in the Cost Manual.

The CIT established a Provider Work Group, with participation from City Council Finance, to advise on the rollout and implementation of the Funding Initiative. The details of the ICR Funding Initiative were announced on October 7, 2019, with claiming for indirect cost rates and funding opening on November 18, 2019, and closing on December 31, 2020. To provide greater access for smaller nonprofits, the Provider Work Group set forth a Conditional ICR option that offered organizations with ICRs greater than 10% more time to work towards an established ICR on the condition that they submit their documentation by the Initiative closing date.

The CIT kept the sector informed of Initiative updates through regular communications, which are contained in the Archive of Email Communications section below. The Archive of Resources also contains information and job aids that the CIT shared with the sector for assistance in completing important milestones. Among these resources is the Delta Template, which served as a basis for providers to calculate the additional ICR funding for each of their contracts. In total, 361 organizations successfully completed the process for ICR funding to receive Accepted ICRs and annual baselined funding of $94 million.

Providers that did not apply for or receive an Accepted ICR from the City by December 31, 2020 defaulted to an Accepted ICR of 10% de minimis. This default rate is effective beginning Fiscal Year 2021 and valid through Fiscal Year 2023. Organizations should continue to consult the Cost Manual to ensure that their human services cost allocations align with City guidelines.

ICR Application in FY23

The Fiscal Year 2023 Indirect Cost Rate Application Process opened on March 15, 2022 for eligible providers. Fiscal Year 2023 eligible providers are organizations that either (i) have an FY20 Accepted ICR that will be expiring on June 30, 2022, or (ii) do not yet have an Accepted ICR because the organization entered City contracting after December 31, 2020.

If your organization has an expiring Fiscal Year 2020 ICR, you will receive an email from the CIT providing next steps and more information. If you are a provider that entered City contracting after December 31, 2020 and do not have an Accepted ICR, please email us at CIT@mocs.nyc.gov for next steps.

Organizations have three possible entryways:

• Independent Accountant’s Report: Organizations choosing to pursue a rate higher than 10% through an Independent Accountant’s Report should provide their Certified Public Accountant (CPA) with a Schedule of ICR based on their most recent available schedule of functional expenses. The City offers an ICR worksheet to support providers in the development of a Schedule of ICR (see final tab in the linked worksheet). The City of New York wishes to acknowledge The New York State Society of Certified Public Accountants' Not-for-Profit Organizations Committee for its feedback on the Independent Accountant’s Report.
• Negotiated Indirect Cost Rate Agreement (NICRA)
• 10% de minimis

The Fiscal Year 2023 ICR Application Process will be available through September 1, 2022. Information about additional funding will come upon close of the application period.

The Fiscal Year 2023 Application Process is designed to establish an Accepted ICR that will be valid for three years (I.e., through Fiscal Year 2025). The Fiscal Year 2023 Accepted ICR can be used beginning July 1, 2022 for proposals and to reallocate funds for Fiscal Year 2023 budgets, in coordination with the contracting agencies.

If your organization is eligible to apply for a Fiscal Year 2023 Accepted ICR and chooses not to submit an application, it will default to a 10% De Minimis Indirect Cost Rate, effective July 1, 2022.

Providers that received an Accepted ICR in Fiscal Year 2021 have an ICR valid through Fiscal Year 2023 (June 30, 2023). The City will continue the ICR application process each year for expiring ICRs and new providers. For future fiscal years, the application process will open every January and close April 1, to align with the contract budgeting process.

FY20 and FY21 ICR Funding Amendments

For providers with Delta Templates approved in Fiscal Years 2020 or 2021, the City is issuing ICR Amendments through PASSPort, the City’s Procurement and Sourcing Solutions Portal. Additional funding through an ICR Amendment may only be used by a provider for indirect costs. Providers may contact their contracting agency for questions about their amendment.  Submit an inquiry to the MOCS Service Desk for questions about PASSPort.

Using an Accepted ICR and Budget Modifications

We have received a number of questions regarding the use of budget modifications to fund Accepted ICRs. We offer the following tips and information:

• A provider may use its Accepted ICR to develop its HHS contract budget(s) pursuant to the Accepted ICR validity dates provided above.
• For budgets where providers have surplus funding in their direct costs, they may request a budget modification to reallocate funds to their indirect costs, up to their Accepted ICR.
• Providers do not need to wait for registration of their ICR Amendment in order to request a budget modification within its existing budget.
• In exercising a budget modification request, providers may use the HHS Accelerator Financials automatic budget modification, which allows for expedited budget modifications up to 10% (cumulative) of the total contract value without preapprovals or delays in invoicing.
• Budget Modifications may be made between categories of Personnel Services (PS) and Other Than Personnel Services (OTPS), maximizing budget

Please see the following instructional materials on budget modifications:

• HHS Accelerator Provider Guide to Managing Budgets
  provides step-by-step guidance on completing budget modifications in HHS Accelerator
• HHS Accelerator Budget Modification FAQs – updated version coming soon
  answers questions received from providers regarding budget modifications
• Video on Budget Modifications and Accepted ICRs
  provides technical assistance on the budget modification process and guidance on cost allocations pursuant to the Cost Manual, as well as the difference between a budget modification and an ICR Amendment

Using an Accepted ICR in RFP Proposals

Effective immediately, providers with an Accepted Indirect Cost Rate (ICR), as defined by The City of New York’s Health and Human Service Cost Policies and Procedures Manual (Cost Manual), may use their Accepted ICRs in RFP proposals. The following language will now be standard in future Health and Human Services RFPs, and released status RFPs in PASSPort will be amended to include this new language. If an RFP is missing this language, please notify the designated agency contact.

“All price and budget proposals should be prepared in accordance with The City of New York’s Health and Human Service Cost Policies and Procedures Manual (Cost Manual). For the purpose of responding to this solicitation, proposers may budget up to an Accepted Indirect Cost Rate or use the 10% de minimis Indirect Cost Rate.”

Please contact the solicitation’s issuing agency with questions about content included in the RFP or your organization's proposal.

Need help or have a question about PASSPort? Submit an inquiry to the MOCS Service Desk!

Archive of Resources