Mayor's Office of Contract Services311Search all NYC.gov websites
Indirect Cost Rate Initiative
NYC's Indirect Cost Rate Initiative supports human services providers by acknowledging and funding critical indirect costs and standardizing cost allocation practices.
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 (FY) 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.
Please see the Background section below for a history of the Initiative. The CIT kept the sector informed of Initiative updates through regular communications, which are contained in the Archive of Email Communications section. The Archive of Resources also contains information and job aids that the CIT shared with the sector for assistance in completing important milestones.
ICR Application for FY26
The FY 2026 ICR Application Process will tentatively open January 2025 for eligible providers. FY 2026 eligible providers will be organizations that either:
- have an FY23 Accepted ICR that will be expiring on June 30, 2025, or
- do not yet have an Accepted ICR because the organization entered City human services contracting after the last open application period
If your organization falls under condition (i), has an expiring FY23 ICR, you will receive an email from the CIT providing next steps and more information. If your organization does not have an Accepted ICR and falls under condition (ii), you may email the CIT at CIT@mocs.nyc.gov during the application period to confirm eligibility and next steps. Please note that this inbox is not monitored outside of application periods.
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): Subject to additional review, the rate listed on the submitted NICRA will be the organization's City Accepted ICR for the three-year validity period. If you anticipate that your organization's NICRA will deviate significantly from the active or provisional rate after application, consider applying with a recent Independent Accountant's Report.
- 10% de minimis
If your organization was eligible to apply for a City Accepted ICR during an open application window and did not apply or receive one by the deadline, it will have defaulted to a 10% De Minimis ICR.
The FY 2025 ICR Application Process was available from February through April 2024. The CIT extended expiring FY22 Accepted ICRs for an additional fiscal year through FY25. As such, providers with rates expiring June 30, 2024 may continue to use their FY22 Accepted ICRs through June 30, 2025. Providers with extended FY22 Accepted ICRs will be eligible to apply for a new rate during the FY26 ICR Application Process.
The City will regularly roll out the ICR application process for expiring ICRs and new providers. Unless communicated otherwise, the application period will open in January and close in April, to align with the forthcoming fiscal year's contract budgeting process.
Viewing Accepted ICRs in PASSPort
Upon application approval, the CIT will upload confirmation of the Accepted ICR to your organization's PASSPort profile. Providers can see their Accepted ICR in PASSPort by visiting their Vendor Profile and clicking Documentation, then scrolling down to Miscellaneous Documents. The "document type" label will reflect your organization's ICR entryway. Clicking the document will allow your organization to see your Accepted ICR, your verification documentation, and the ICR validity date. Please note that if your organization defaulted to a 10% De Minimis ICR, there will be no available documentation.
Submit an inquiry to the MOCS Service Desk for questions about PASSPort.
Using an Accepted ICR in PASSPort Budgets
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 PASSPort contract budget(s) pursuant to the Accepted ICR validity dates.
- Purchase Orders in PASSPort now feature an Indirect Cost tab, which includes a table displaying the budgeted ICR. This table will automatically refresh as new budget lines are added. Budget preparers should ensure appropriate selection of Item Category per line and compare the budgeted ICR to their organization's Accepted ICR.
- City contracting agencies will use allowance funding to cover increases in Accepted ICRs. Where appropriate, agencies will process a budget modification in lieu of a contract amendment to move this unallocated funding into the budget for invoicing.
- For budgets where providers have surplus funding in their direct costs, providers may request a budget modification to reallocate funds to their indirect costs, up to their Accepted ICR.
- In exercising a budget modification request, providers may use the PASSPort 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. Please note that adding new budget line(s) or changing line-item categorization will trigger agency review regardless of percentage allocation.
- As budget modifications do not allow for invoice submission, the CIT recommends that providers and agencies coordinate modifications that entail allowance allocation at fiscal year budget approval or as a reconciliation activity at the end of the fiscal year.
- Providers should not expect allowance allocation for indirect costs if their actual allowable expenses are less than their Accepted ICR, or there are surplus direct costs. Any request to reallocate surplus indirect costs to direct costs is at the discretion of the contracting agency.
- Questions related to budget modification guidance and reviews should be directed to contracting agencies.
Please see the following instructional materials on budget modifications:
- How to Create and Modify Budgets in PASSPort
- PASSPort Financials includes learning resources and answers to FAQs on budgets, invoices, purchase orders, and more.
- Submitting Budget Modifications in PASSPort Video
Using an Accepted ICR in RFP Proposals
Effective immediately, providers with an Accepted ICR, as defined by the 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!
Background
New York City was the first big city in the country to make this investment. Today, providers can receive an Accepted ICR from the City of New York based on a 10% De Minimis policy, a federal 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.
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. For providers with Delta Templates approved in Fiscal Years 2020 or 2021, the City issued ICR amendments through PASSPort, the City's Procurement and Sourcing Solutions Portal.