Dear Sir,
I attended your Webinar session and it was very good and you clarify many of queries. I still have some specific query it will be great if you can reply to me.
- In the staffing cost of our project budget we budget admin and finance position for 1 person 100% and sometime 2 person but 50%:50%. These staff work 100% for project related finance work in the project, so can we treat them as under project direct cost as they are exclusive for the project and if project stop they will also go.
- In our project budget we have position call project director and their partially time allocation is budgeted in the budget but in organization they are working as ED or lead of the organization. Actually they are very much working in the project and doing most of the project related work. So can we treat them under project direct cost in case we have their proper job description, CV and their project related deliverable as supporting document.
I will be grateful for your reply
Thanks and regards
Asha
However where the trustees who are themselves are scientists engaged in the program research for which they are paid remuneration as scientists and not as trustees, is it possible to take a view that since these are directly related to project costs, such expenses should be charged as project expenditure only.
My considered view in this issue is that in many small NPOs, the Trustees or Core Committee members themselves take up some positions in the projects they get, to earn for their livelihood. In such cases, the FCRA Act and Rules should be interpreted in such a way, clearly demarcating their role as the office bearer of the NGO and the project staff. If the Trust deed permits reimbursement of the expenses they incur for conducting the affairs of the Trust, it should be brought under administrative expenses of the organisation. If it is from their local fund, that need not be reflected in FC return. If the donor permits certain portion of the grant for organisational improvement and if that portion is spent in the organisational infrastructure or other expenses, then should also be brought under admin expenses. Normally, no donor will give more than 10% of their grant for admin expenses. So, that will not affect any NPO, because of the recent amendments to FCRA Act.
All the payments made to an office bearer for the work he does for a particular project have to be booked under program expenses, provided that has the approval of the donor who gave the grant. If there is any administrative expenses within the project grant received, that could be restricted to 20% and the remaining 80% should be project implementation related expenses.
Very frankly there are several interpretations of the Admin rules. You will need to use your own logic, while deciding. In my view,
All organisations, charge there senior CEO & Accounts team costs to projects only. However as far as I see Rule 5(ii) is very clear. All expenses towards hiring of personnel ‘for management’ of the activities of person (person here clearly means the NPO) and salaries, wages or any kind of remuneration paid, including cost of travel. Hence any remuneration paid to ED most likely should be treated as Admin.
Similarly Rule 5(iv) states, cost of accounting & administering funds. Hence I would suggest cost of all accounting personnel should be treated as Admin only.
If you have a robust Time Sheet Management System to substantiate cost of a staff been “consistently” charged to project because of the role definition in the Job Description, it could make your case worth consideration by the MHA. But before that your auditors should be satisfied with that cost allocation arrangement.
If you frequently keep changing the time allocation rate to consume the funding and satisfy the burn rate, it would reflect bad on how you are using the money.
So, develop a system of cost allocation, show that as Noted to Accounts in your financials so that your auditors are also safeguarded while signing a non qualified report.
As far as the Board is concerned, I do not think there is an option to treat them as Program Cost at all. others may pitch in and share their experiences.
Best wishes.