Shasta County supervisors were set to consider an ordinance that would cap nonprofit administrative costs at 18% for county funding or support, according to a June 16 staff report that recommends introducing the measure and waiving the first reading.
The proposal follows earlier board discussion about setting a nonprofit administrative-cost threshold. The staff report says the ordinance would apply to nonprofits seeking county funding or support and would move forward on a simple majority vote. It also says the item would not create an additional General Fund impact and that drafting costs were already included in the Fiscal Year 2025-26 budget.
But the item also carries an internal warning. In a separate response, Auditor-Controller Nolda Short wrote that a blanket 18% cap could conflict with federal indirect-cost rules in cases involving federal money. She said nonprofits with federally negotiated indirect-cost rates are generally entitled to recover costs at that approved rate, and eligible organizations without a negotiated rate may use the federal de minimis rate. Short warned that a countywide cap could lead to audit findings, disallowed costs, repayment obligations and grant compliance problems.
Short suggested the county distinguish between federal pass-through contracts governed by Uniform Guidance (2 CFR Part 200) and other contracts funded by state or local dollars. She also said County Counsel, HHSA and the Auditor-Controller’s Office should review any blanket cap before adoption.
The retrieved material does not show the board’s final vote on June 16.
