National Head Start Association 44 th Annual Head Start Conference and Expo April 7 10, 2017 Nashville, TN Hyatt Regency Chicago Non-Federal Share, Match, In-Kind No Matter the Name You Need It! Monday, April 10, 2017 9:00 am 10:30 am Presented by: Tammy T. Jelinek, MBA, Senior Manager NONPROFIT AND GOVERNMENT PRACTICE www.wipfli.com/ngp 888.876.4992 Reproduction or use of any training materials in this manual, except within a participant s agency without express written permission is prohibited by copyright law.
Non-Federal Share, Match, In-Kind No Matter the Name You Need It! Trainer: Tammy T. Jelinek, MBA, Senior Manager 1 Materials/Disclaimer Please note that these materials are incomplete without the accompanying oral comments by the trainer(s). These materials are informational and educational in nature and represent the speakers' own views. These materials are for the purchasing agency s use only and not for distribution outside of the agency or publishing on a public website. 2 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 1
Introductions 3 Regulations 4 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 2
Sec. 640(b) Allotment of Funds Community Involvement a.k.a. In-Kind a.k.a. Non-Federal Match 5 Acceptable In-Kind HEAD START PROGRAM GRANT NO., State SCHEDULE E - QUESTIONED COSTS For the Year Ended August 31, 1983 Ref. Program Category Amount Reason Questioned (1) Full-Year, Part-Day Nonfederal Other $35,620 This amount represents 52 grave plots donated to the grantee. The Grave plots, which were valued at $685 each, do not appear to be of benefi to the Head Start Program. Also, the grantee does not have independent third party appraisals to support the value claimed for the grave plots. 6 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 3
Reasons for Non-Federal In-Kind Community Participation Regulations 7 General Basics Reasonable and necessary In accordance with an approved application and component plans Disclosed sources in your application No different than costs charged to the Federal share 8 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 4
45 CFR Part 75.2: Definitions Cost sharing or matching means the portion of project costs not paid by Federal funds (unless otherwise authorized by Federal statute). This may include the value of allowable third party in-kind contributions, as well as expenditures by the recipient. See also Sec. 75.306. 9 45 CFR Part 75.2: Definitions Third-party in-kind contributions means the value of non-cash contributions (i.e., property or services) that: (1) Benefit a federally assisted project or program; and (2) Are contributed by non-federal third parties, without charge, to a non- Federal entity under a Federal award. 10 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 5
45 CFR Part 75.306(b)(1-4): Cost Sharing/Matching YES Verifiable from the entity s records YES Not included as contributions to any other Federal award YES Necessary and reasonable for accomplishment of project/program objectives YES Allowable under Subpart E (cost principles) 11 45 CFR Part 75.306(b)(5-7): Cost Sharing/Matching YES Not paid by Federal Government under another Federal award, unless authorized by Federal statute (* 2 exceptions) YES Provided for in the approved component plan/budget YES Confirm to other provisions of this part, as applicable 12 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 6
Federal funds from other programs are allowable match for an ACF program. These determinations are based on specific requirements of ACF programs and language in applicable statutes. Specifically: 1. Bureau of Indian Affairs Indian Self-Determination and Education Assistance Act (P.L. 93-638, as amended). The Act authorizes the use of funds for matching purposes as long as the identified use is specifically related to the approved grant activities. 2. Development Act of 1974, P.L. 93-383 may count as allowable match for a Head Start program for renovation of a building. The determination is dependent on whether or not the Head Start grant is included as part of the "Community Development Program," as required by the Housing and Community Development Act. 13 Unrecovered Indirect Costs Unrecovered indirect costs may be included as part of cost sharing or matching only with prior approval Unrecovered indirect cost means the difference between the amount charged to the Federal award and the amount which could have been charged to the Federal award under the approved negotiated indirect cost rate (45 CFR Part 75.306(c) Cost Sharing or Matching) 14 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 7
3 rd Party Furnished Volunteers Counted if service is an integral & necessary part of an approved project or program Rates consistent with similar work in the recipient s organization Not found in the recipient s organization, rates shall be consistent with those paid for similar work in the labor market Fringe benefits consistent with those paid that are reasonable, allowable and allocable may be included in the valuation (45 CFR Part 75.306(e) & (f) Cost Sharing or Matching) 15 Space = Appraisals The value of donated space must not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privatelyowned building in the same locality (45 CFR Part 75.306(i)(3) Cost Sharing or Matching) 16 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 8
Fund raising Costs of organized fund raising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred to raise capital or obtain contributions are unallowable Fund raising costs for the purposes of meeting the Federal program objectives are allowable with prior written approval (45 CFR Part 75.442 Fundraising/Investment Management Costs ) 17 45 CFR Part 1302.94 Volunteers (a) A program must ensure regular volunteers have been screened for appropriate communicable diseases in accordance with state, tribal or local laws. In the absence of state, tribal or local law, the Health Services Advisory Committee must be consulted regarding the need for such screenings. (b) A program must ensure children are never left alone with volunteers. 18 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 9
Ask yourself Would your agency pay out of Federal funds for those items that you are claiming as non-federal share? Would you pay the amount in cash that you are claiming as non-federal share? 19 Math = Yuck Computing Federal $ s = $1,000,000 = 80% Non-Federal = $ 250,000 = 20% Total Funding = $1,250,000 = 100% 20% of Total Funding OR 25% of Federal Funding 20 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 10
Easy Equation For every $1 you spend of Federal Funds, you must have $.25 non-federal match 21 Account for All In-Kind Match additional funding Replace questioned / disallowed $ What else? 22 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 11
Consequences Repayment of Federal funds Reduction in funding Inability to qualify for 1-time funding 23 General Not Meeting In-Kind Calculation Failure to meet the non-federal share requirement without an approved waiver can have a severe impact on the grantee agency. An example of the impact of a disallowance of non-federal share follows: Funded Actual Federal share: $800,000 Federal share expended: $ 800,000 Required non-federal share: 200,000 Allowable non-federal share: 180,000 Total grant award: $1,000,000 Actual grant amount: $ 980,000 Recalculated maximum Federal share: $980,000 x 80% = $784,000 (80% of Actual grant amount) Amount of disallowance: $800,000 - $784,000 = $16,000 24 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 12
The amount of disallowance must be repaid by the grantee agency from AGENCY funds. Federal funds may not be used to repay the disallowance. 25 Space 26 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 13
Question Landlord tells you the square footage value of the space you are occupying is $2,000 per month but is only going to charge you $1,200 per month. An agency can record $800 per month in space in-kind. True or False? 27 Space Arms Length Transaction Fair market value Appraisal Include everything being donated If part donated/part paid Required by regulations Utilities Document part of space donated Usually update every 3-5 years Maintenance Playground Lunchroom Etc. 28 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 14
Space You Own The Building Cannot be purchased with Federal Funds Calculate a depreciation Calculation Donated land for a Head Start building No more use allowance Adjust for square footage occupied by the EHS/HS program Amortize over the useful life of the building 29 Volunteers 30 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 15
Question At what rate would you value an attorney who donates 16 hours of time painting walls in a Head Start classroom? A. Attorney s rate of $200/hr B. Union painter s rate of $40/hr C. Lowest rate from the agency s pay schedule or unskilled labor rate D. None of the above 31 Volunteers Requirements Services provided Qualifications Rate comparable to paid employees Fringe benefits Documentation **Responsibility should be on all staff, not fiscal** 32 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 16
Volunteers Example from a Head Start Program Total Classrooms = 32 Total Volunteer Hours (One month) = 1,805 Average Hours Per Classroom = 56 Average Hours Per Day (20 days/month) = 2.8 Lowest Hours (4 classrooms) = 0 Most Hours (1 classroom) (12 hrs/day) = 238 Dollar Value of In-Kind (Rate + Fringe = $8) = $14,400 33 Volunteers 1 Volunteer/Day (4 hrs. x 20 days x 32 classrooms x $8) = $20,500 2 Volunteers/Day (4 hrs. x 20 days x 32 classrooms x $8 x 2) = $41,000 3 Volunteers/Day (4 hrs. x 20 days x 32 classrooms x $8 x 3) = $61,500 34 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 17
Classroom Volunteers Worksheet 1 Volunteer/Day (4 hrs. x 20 days x classrooms x $ ) = $ 2 Volunteers/Day (4 hrs. x 20 days x classrooms x $ x 2) = $ 3 Volunteers/Day (4 hrs. x 20 days x classrooms x $ x 3) = $ 35 Documenting Volunteer Time Volunteer s name The dates the volunteer provided services, including the year The duration of time of services the volunteer provided to the program The volunteer s supervisor s signature The volunteer s signature The volunteer activity The rate applied to this activity Total valuation for the time period Source: Head Start Fiscal Assistant 36 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 18
Summary of Volunteer Services Sample Form 37 Volunteer Rate Calculation Basic Calculation Base Rate $10.00 X 2,080 = $20,800 Fringe Rate 25% X $20,800 = $5,200 Total Compensation = $26,000 Rate per Hour $26,000/2,080 = $12.50 38 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 19
Volunteer Rate Calculation Do your employees have holiday, vacation and sick time benefits? Adjust your rate accordingly!!! Total hours per year (40 hours, 52 weeks) = 2,080 Average holiday, vacation and sick hours used during the year = 216 Actual hours working (2080-216) = 1,864 Adjusted rate per hour - $26,000/1,864 = $13.95 39 Volunteer Rate Summary Base rate $10.00 per hour 3 rd party benefits $ 2.50 Internal benefits $ 1.45 Total volunteer rate $13.95 per hour 40 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 20
Other In-kind 41 Supplies Fair market value Used in the program (i.e., not sent home) 42 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 21
Cash Contributions In-kind when spent on an allowable cost that is part of an approved Head Start activity 43 Problems 44 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 22
Common Findings BENEFIT VALUE 45 Common Findings Insufficient in-kind Lack of documentation Overvaluation of volunteer time Lack of appraisals for donated use of third party space Unallowable costs Improper valuation of space owned by grantee Sources of in-kind not included in application & approved grant award 46 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 23
Solutions 47 Head Start Act Sec. 640 Waivers (1) the lack of resources available in the community that may prevent the Head Start agency from providing all or a portion of the non-federal contribution that may be required under this subsection; (2) the impact of the cost the Head Start agency may incur in initial years it carries out such program; (3) the impact of an unanticipated increase in the cost the Head Start agency may incur to carry out such program; (4) whether the Head Start agency is located in a community adversely affected by a major disaster; and (5) the impact on the community that would result if the Head Start agency ceased to carry out such program. 48 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 24
Head Start Act Sec. 640 Waivers Grantee must provide ACF Regional Office written documentation of need. Request may be submitted with the grant proposal document or during the budget period if a situation arises that will make it impossible to meet the requirement. Approval of the waiver cannot be assumed by the grantee without written notice from the ACF Regional Office. 49 Adoption 50 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 25
Solutions Solving In-Kind Problems Monitor monthly Treat non-federal in-kind as a real cost Document all non-federal in-kind Assign responsibility for non-federal in-kind, and train staff on in-kind Include in job descriptions Include in-kind in staff evaluation criteria 51 In-Kind Rap We will, we will Learn In-Kind We will, we will Prove Benefit We will, we will Prove Value We will, we will Prove Allowable We will, we will Document We will, we will Provide Training We will, we will Learn In-Kind 52 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 26
In Review Why is In-Kind Important? 53 www.wipfli.com/ngp Connect with me: www.linkedin.com/in/tammyjelinek www.facebook.com/wipflingp @TammyJelinek Bring Wipfli to You: Tammy T. Jelinek tjelinek@wipfli.com 608.270.2954 My Wipfli Access to our experts: Regulation questions Audit Process Human Resource Technology Leadership www.wipfli.com/mywipfli 54 Non-Federal Share, Match, In-Kind No Matter the Name You Need It! 27