Indirect Cost Toolkit for CoC and ESG Programs Page 7
internet and phone systems, and furniture that are shared by both
administrative and direct program functions. Finally, the facility may have
only a single account for services such as electricity, internet and phone
service, and security.
Given the complexity of sorting out direct and indirect costs and determining
how to categorize personnel and overhead costs into administrative and
facilities categories, organizations can easily make common errors of
conflating different types of costs. This may unnecessarily limit their
opportunities to have legitimate program costs reimbursed as part of a CoC
or ESG award. Consider, for example, a program that provides ESG rental
assistance in the form of rent payments to property owners. The
organization rents a single office building for its administration and direct
program staff. There are frontline persons who work with participating
households, determine program eligibility and levels of assistance, and
approve units for rental assistance. There is also a program director who
supervises the staff and manages the budget and reporting, and finance
personnel who handle payroll and manage payments to vendors and
landlords. There are supplies, utilities, and equipment that are purchased or
leased to support the entire operation. Finally, the organization has Housing
Opportunities for Persons With AIDS (HOPWA) funding to perform similar
activities, and the same staff manage that program.
Which expenses are direct? Which are indirect? The organization buys
equipment (e.g., desks, chairs, phones, binders) in bulk and office cleaning
services that are shared by all parts of the organization. According to the
definition of facilities costs above, these would all be facilities costs and thus
likely are indirect costs. They are all not easily assigned to a single function
at the organization (such as administration, HOPWA, or ESG only). Since all
indirect costs are either administrative or facilities costs, does that mean
that the organization must cover these costs under the 7.5 percent ESG
admin cap (or the similar 7 percent HOPWA admin cap)? Similarly, for the
program director, do all of his or her costs fall under administration? How
about the shared cost of leasing the building?
Unfortunately, many organizations conflate all shared or indirect costs with
administrative costs and try to shoehorn costs that may be shared (including
personnel, like the program director, or facilities costs, like office rental and