By Henry Berman, Exponent Philanthropy
It’s January in Washington, DC, and there is no shortage of pundits, politicians, and pollsters with wisdom as to what the 114th Congress and President Obama will do, or try to do, in the coming year. As philanthropists faced with funding opportunities today, we are likely better served by looking back and taking notice of a real change in regulations that took effect last month. The change could – and should – have a significant impact on all of us who make grants.
The federal Office of Management and Budget (OMB) issued new regulations that rewrite the book on federal grantmaking in ways that will transform the relationship between nonprofits and governments at all levels – federal, state, and local.
The new rules mandate that nonprofits hired by government to provide services must be paid for the indirect costs they incur in doing so. In simple terms, OMB is declaring that nonprofits have overhead and administrative costs that should be paid. Kudos to OMB for recognizing the need to cover these costs that many of us as funders are called upon to help cover, effectively subsidizing what governments have, until now, refused to pay.
