*Use the following model Cost Allocation Plan (CAP) as guidance for
Non-profit organizations. The CAP should be tailored to fit the specific
policies of each organization. If your organization's policies are
different in any of the categories, please specifically identify the
methodology used. Although there are different methodologies available
for allocating costs, the methodology used should result in an equitable
distribution of costs to programs. Recipients must have a system in
place to equitably charge costs. Additionally, as required by Office of
Management and Budget Circular A-122, time distribution records must
reflect an after-the-fact determination of the actual activity of each
employee. Considerations in determining an appropriate base for
allocating costs include the relative benefits received, the materiality
of the cost, and the amount of time and cost to perform the allocation.*

**XYZ COMPANY**

**COST ALLOCATION PLAN**

+-----------------------------------------------------------------------+
| # Purpose/General Statements                                          |
+-----------------------------------------------------------------------+

# 

The purpose of this cost allocation plan is to summarize, in writing,
the methods and procedures that this organization will use to allocate
costs to various programs, grants, contracts and agreements.

OMB Circular A-122, "Cost Principles for Non-Profit Organizations,"
establishes the principles for determining costs of grants, contracts
and other agreements with the Federal Government. *XYZ Organization's*
Cost Allocation Plan is based on the Direct Allocation method described
in OMB Circular A-122. The Direct Allocation Method treats all costs as
direct costs except general administration and general expenses.

Direct costs are those that can be identified specifically with a
particular final cost objective. Indirect costs are those that have been
incurred for common or joint objectives and cannot be readily identified
with a particular final cost objective.

Only costs that are allowable, in accordance with the cost principles,
will be allocated to benefiting programs by *XYZ Organization*.

+-----------------------------------------------------------------------+
| # General Approach                                                    |
+-----------------------------------------------------------------------+

The general approach of *XYZ Organization* in allocating costs to
particular grants and contracts is as follows:

A.  All allowable direct costs are charged directly to programs, grants,
    activity, etc.

B.  Allowable direct costs that can be identified to more than one
    program are prorated individually as direct costs using a base most
    appropriate to the particular cost being prorated.

C.  All other allowable general and administrative costs (costs that
    benefit all programs and cannot be identified to a specific program)
    are allocated to programs, grants, etc. using a base that results in
    an equitable distribution.

+-----------------------------------------------------------------------+
| ### ALLOCATION OF COSTS                                               |
+-----------------------------------------------------------------------+

The following information summarizes the procedures that will be used by
*XYZ Organization* beginning *Month/Day/Year:*

> A. Compensation for Personal Services - Documented with timesheets
> showing time distribution for all employees and allocated based on
> time spent on each program or grant. Salaries and wages are charged
> directly to the program for which work has been done. Costs that
> benefit more than one program will be allocated to those programs
> based on the ratio of each program's salaries to the total of such
> salaries (see Example 1). Costs that benefit all programs will be
> allocated based on the ratio of each program's salaries to total
> salaries (see example 2).

1.  Fringe benefits (FICA, UC, and Worker's Compensation) are allocated
    in the same manner as salaries and wages. Health insurance, dental
    insurance, life & disability and other fringe benefits are also
    allocated in the same manner as salaries and wages.

2.  Vacation, holiday, and sick pay are allocated in the same manner as
    salaries and wages.

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B.  Travel Costs - Allocated based on purpose of travel. All travel
    costs (local and out-of-town) are charged directly to the program
    for which the travel was incurred. Travel costs that benefit more
    than one program will be allocated to those programs based on the
    ratio of each program's salaries to the total of such salaries (see
    Example 1). Travel costs that benefit all programs will be allocated
    based on the ratio of each program's salaries to total salaries (see
    Example 2).

C.  Professional Services Costs (such as consultants, accounting and
    auditing services) - Allocated to the program benefiting from the
    service. All professional service costs are charged directly to the
    program for which the service was incurred. Costs that benefit more
    than one program will be allocated to those programs based on the
    ratio of each program's expenses to the total of such expenses (see
    Example 3). Costs that benefit all programs will be allocated based
    on the ratio of each program's expenses to total expenses (see
    Example 4).

D.  Office Expense and Supplies (including office supplies and
    postage) - Allocated based on usage. Expenses used for a specific
    program will be charged directly to that program. Postage expenses
    are charged directly to programs to the extent possible. Costs that
    benefit more than one program will be allocated to those programs
    based on the ratio of each program's expenses to the total of such
    expenses (see Example 3). Costs that benefit all programs will be
    allocated based on the ratio of each program's expenses to total
    expenses (see Example 4).

E.  Equipment - *XYZ Organization* depreciates equipment when the
    initial acquisition cost exceeds \$x,xxx. Items below \$x,xxx are
    reflected in the supplies category and expensed in the current year.
    Unless allowed by the awarding agency, equipment purchases are
    recovered through depreciation. Depreciation costs for allowable
    equipment used solely by one program are charged directly to the
    program using the equipment. If more than one program uses the
    equipment, then an allocation of the depreciation costs will be
    based on the ratio of each program's expenses to the total of such
    expenses (see example 3). Costs that benefit all programs will be
    allocated based on the ratio of each program's expenses to total
    expenses (see example 4).

F.  Printing (including supplies, maintenance and repair) - Expenses are
    charged directly to programs that benefit from the service. Expenses
    that benefit more than one program are allocated based the ratio of
    the costs to total expenses. Costs that benefit more than one
    program will be allocated to those programs based on the ratio of
    each program's expenses to the total of such expenses (see example
    3). Costs that benefit all programs will be allocated based on the
    ratio of each program's expenses to total expenses (see example 4).

G.  Insurance - Insurance needed for a particular program is charged
    directly to the program requiring the coverage. Other insurance
    coverage that benefits all programs is allocated based on the ratio
    of each program's expenses to total expenses (see example 4).

H.  Telephone/Communications - Long distance and local calls are charged
    to programs if readily identifiable. Other telephone or
    communications expenses that benefit more than one program will be
    allocated to those programs based on the ratio of each program's
    expenses to the total of such expenses (see example 3). Costs that
    benefit all programs will be allocated based on the ratio of each
    program's expenses to total expenses (see example 4).

I.  Facilities Expenses - Allocated based upon usable square footage.
    The ratio of total square footage used by all personnel to total
    square footage is calculated. Facilities costs related to general
    and administrative activities are allocated to program based on the
    ratio of program square footage to total square footage (see example
    5).

J.  Training/Conferences/Seminars -- Allocated to the program benefiting
    from the training, conferences or seminars. Costs that benefit more
    than one program will be allocated to those programs based on the
    ratio of each program's salaries to the total of such salaries (see
    Example 1). Costs that benefit all programs will be allocated based
    on the ratio of each program's salaries to total salaries (see
    Example 2).

    K. Other Costs (including dues, licenses, fees, etc.) - Other joint
    costs will be allocated on a basis determined to be appropriate to
    the particular costs. *(Grantee should describe methodology for
    applicable costs).*

    L. Unallowable Costs -- Costs that are unallowable in accordance
    with OMB Circular A-122, including alcoholic beverages, bad debts,
    advertising (other than help-wanted ads), contributions,
    entertainment, fines and penalties. Lobbying and fundraising costs
    are unallowable, however, are treated as direct costs and allocated
    their share of general and administrative expenses.

+-----------------------------------------------------------------------+
| ##### Examples of Allocation Methodology                              |
+-----------------------------------------------------------------------+

###### Example 1 

> Expense Amount = \$5,000

Costs that benefit two or more specific programs, but not all programs,
are allocated to those programs based on the ratio of each program's
personnel costs (salaries & applicable benefits) to the total of such
personnel costs, as follows:

  ----------- ----------------------- --------- --------------------------
  **Grant**   **Personnel Costs**     **%**     **Amount Allocated**

  A           \$ 20,000               20%       \$1,000

  C           \$ 30,000               30%       \$1,500

  E           \$ 50,000               50%       \$2,500

                                                

  Total       \$100,000               100%      \$5,000
  ----------- ----------------------- --------- --------------------------

###### Example 2

> Expense Amount = \$10,000

Costs that benefit **[all]{.underline}** programs are allocated based on
a ratio of each program's personnel costs (salaries & applicable
benefits) to total personnel costs as follows:

  ----------- ----------------------- --------- --------------------------
  **Grant**   **Personnel Costs**     **%**     **Amount Allocated**

  A           \$ 20,000               13%       \$1,300

  B           \$ 10,000               7%        \$ 700

  C           \$ 30,000               20%       \$2,000

  D           \$ 40,000               27%       \$2,700

  E           \$ 50,000               33%       \$3,300

                                                

  Total       \$150,000               100%      \$10,000
  ----------- ----------------------- --------- --------------------------

###### Example 3 

> Expense Amount = \$4,000

Costs that benefit two or more specific programs, but not all programs,
are allocated to those programs based on the ratio of each program's
expenses (direct costs other than salaries & benefits) to the total of
such expenses, as follows:

  ----------- ------------------------- --------- ------------------------
  **Grant**   **Program Expenses**      **%**     **Amount Allocated**

  A           \$ 120,000                30%       \$1,200

  C           \$ 130,000                33%       \$1,320

  E           \$ 150,000                37%       \$1,480

                                                  

  Total       \$ 400,000                100%      \$4,000
  ----------- ------------------------- --------- ------------------------

###### 

###### Example 4

> Expense Amount = \$8,000

Costs that benefit **[all]{.underline}** programs will be allocated
based on a ratio of each program's salaries to total salaries as
follows:

  ----------- ------------------------ --------- -------------------------
  **Grant**   **Program Expenses**     **%**     **Amount Allocated**

  A           \$ 120,000               18%       \$1,440

  B           \$ 110,000               17%       \$1,360

  C           \$ 130,000               20%       \$1,600

  D           \$ 140,000               22%       \$1,760

  E           \$ 150,000               23%       \$1,840

                                                 

  Total       \$650,000                100%      \$8,000
  ----------- ------------------------ --------- -------------------------

###### Example 5

> Facilities Expense Amount = \$10,000

Facilities costs are allocated based on square footage. Square footage
for each program and general and administrative activity is considered
in the analysis. General and administrative facilities costs are
[further]{.underline} allocated to each program based on the square
footage of each grant program to the total square footage of all grant
programs. The calculation is as follows:

+------+----------+--------+---------------+-----------+-------------+
| # G  | **Square | **%**  | **Amount      | ##        | **Total     |
| rant | F        |        | Allocated**   | ##### G&A | Amount**    |
|      | ootage** |        |               |           |             |
|      |          |        |               | #######   | ######      |
|      |          |        |               | Allocated | # Allocated |
+------+----------+--------+---------------+-----------+-------------+
| A    | 300      | 30%    | \$ 3,000      | \$ 340    | \$ 3,340    |
+------+----------+--------+---------------+-----------+-------------+
| B    | 100      | 10%    | \$ 1,000      | \$ 110    | \$ 1,110    |
+------+----------+--------+---------------+-----------+-------------+
| C    | 200      | 20%    | \$ 2,000      | \$ 220    | \$ 2,220    |
+------+----------+--------+---------------+-----------+-------------+
| D    | 200      | 20%    | \$ 2,000      | \$ 220    | \$ 2,220    |
+------+----------+--------+---------------+-----------+-------------+
| E    | 100      | 10%    | \$ 1,000      | \$ 110    | \$ 1,110    |
+------+----------+--------+---------------+-----------+-------------+
| G&A  | 100      | 10%    | \$ 1,000      | 0         | 0           |
+------+----------+--------+---------------+-----------+-------------+
|      |          |        |               |           |             |
+------+----------+--------+---------------+-----------+-------------+
| T    | 1,000    | 100%   | \$10,000      | \$1,000   | \$10,000    |
| otal |          |        |               |           |             |
+------+----------+--------+---------------+-----------+-------------+