Tips & Tricks - Volume 2 - Issue #2
Soft Match
Soft match refers to donations, volunteer efforts and in-kind contributions to a grant project. One of the difficulties in utilizing “soft match” is calculating its value. There are a number of reasons why it is important to place an accurate dollar value on “soft match.”
First,
the value of your match may influence a funding entity’s grant making
decisions. All things being equal, match may become
a tiebreaker for a grant-maker’s allocation of limited resources.
Second, match pricing may be required to meet tax codes.
This is especially true for those organizations utilizing the tax code
as and incentive for getting donations.
Third, “soft match” pricing can help organizations measure their productivity and effectiveness.
So with that in mind here
are some rules for pricing match:
1) Check your Grant-Maker’s Guidelines - Regardless
of what market conditions may dictate, funding entities have the right
to set their own rates for calculating match. In some cases the grant-makers
may allow you to credit your soft match at the same rates used by their
organization. For example, if a grant-maker reimburses their employees
$.75 a mile for travel, they may allow you to credit mileage at that rate
even though the your actual travel cost may be less.
2) Seek
Advice from Attorneys and Accountants – There may
be laws, special rules or bylaws that dictate how your organization accounts
for donations and “soft match.”
3) Consult
Federal and State Tax Laws – This is especially important
for organizations wishing to use “tax incentives” as part of
their pitch for donated goods and services. While the allowable deduction
rates for items like mileage often lag behind market costs, tax deduction
rates are easy to document and will seldom generate any arguments.
4) Keep
Detailed Records – Need I say more? Time sheets should
be maintained for each volunteer or piece of equipment used. The time
sheet should contain dates, hours worked, location and worked performed.
Bids, price quotes, catalogs and rate quotes should also be kept in the
file for donations involving goods or equipment use.
5) Volunteer Labor –
a) Minimum
Wage – At the very least few if any grant-makers will
object to the use of the federal minimum wage as the basis for valuing
volunteer services.
b) Davis Bacon Rates - The US Department
of Labor issues prevailing wage, or Davis-Bacon wage rates, for a wide
array of construction trades. A word of caution in utilizing these rates.
First, not all trades or activities are covered by these rates. Second,
they are based on the assumption that formally trained and/or licensed
people are conducting the work. So if your volunteer is or was a licensed
electrician, it is probably okay to use a Davis-Bacon rate for performing
electrical work. If your volunteer electrician is a doctor or lawyer by
trade, your grant-maker may have a problem with crediting the work at
the Davis-Bacon electrician rate. To keep things simple my advice is to
stick with the Davis-Bacon rate for “general labor.” This rate
is usually higher than the minimum wage and presumes that the person providing
the service has little formal training.
c) Professional Services
– For donated professional services (architects, accountants, lawyers
etc.), consult the respective profession’s society or association.
Many professional associations have standard rates that they use for pricing
“pro-bona” work. Also check with nearby government entities.
Sometimes government entities adopt standard hourly rates using outside
professional services.
6) Goods and Materials –
Catalogs are a good source for figuring the price of donated goods and
materials. Catalogs demonstrate that the value assigned to a good or material
is realistic and not over inflated. For those items not covered by catalogs,
get price quotes. The key idea here is to have something in writing to
back up the value you assign to a donation.
7) Equipment – My advice
here is to contact the local equipment rental store and use their rental
rates. And don’t forget to throw in the cost of the fuel as part
of the donation. If you are working with an engineer, they will be able
to give you an hourly price based on something called “Dodge Rates.”
Generally, the value of office equipment cannot be counted as match unless
the equipment is used exclusively for the grant project.
8) Force Account/In-kind
– First a quick refresher. Force Account, or In-Kind, refers to the
“in-house” resources your organization invests in a grant project.
Now check with the grant-maker to determine their methodology for counting
force account. Most funding entities will limit your force account to
only those employee hours directly engaged in the project. The hourly
rate allowed for force account is limited to the hourly rate (or equivalent)
paid to the employees as part of their regular pay. Equipment should be
accounted for in the method described for donated equipment time. Another
method for calculating force account match is called an indirect cost
plan. Indirect cost plans are complicated, and I am not sure I understand
them enough to offer an explanation.
©
2004 Idaho Department of Lands
Last modified:
June 12, 2004
Please direct any questions or comments regarding this web site to: sterry@idl.state.id.us