Some sponsored projects require that the University participate to some extent in the total cost of the project. Cost sharing or matching represents the use of institutional funds to supplement project costs not borne by the sponsoring agency. Matching is usually a specific mandated amount/percentage of the total project costs that is predetermined by the sponsoring agency. Cost sharing, on the other hand, may or may not be required by the sponsoring agency and is negotiable. If cost sharing is proposed in the budget or in the proposal narrative, it should be documented and may or may not be reported to the sponsor; however, departments are required to maintain records for mandatory and non-mandatory cost sharing.
Cost sharing may be met from the following sources:
- University funds provided for the benefit of the specific project.
- Non-funded or waived facilities and administrative costs — This must be approved by the sponsor and the VP for Research.
- Another sponsored project account — This is rare and allowable only if approved by both sponsors. Note that federal funds may not be used as cost sharing on other federal projects.
- Third-party contributions. This is support from a non-University source.
OMB Circular A-110 provides the following information concerning cost sharing:
All cost sharing must meet all of the following criteria:
- costs are verifiable in the University’s official records;
- costs are not used as cost sharing for any other sponsored program;
- costs are necessary and reasonable for proper and efficient accomplishment of project or program objectives;
- costs are allowable under the applicable cost principles (OMB Circular A-21);
- costs are not paid by the federal government under another award, except where authorized;
- costs are itemized in the approved budget when required by the sponsor;
- costs are incurred during the effective dates of the grant or contract.
Unrecovered facilities and administrative costs may be included as part of cost sharing only with the prior approval of the sponsor.
Values for University contributions of services and property shall be established in accordance with the applicable cost principles. If a federal awarding agency authorizes recipients to donate buildings or land for construction/facilities acquisition projects or long-term use, the value of the donated property for cost sharing or matching shall be the lesser of (1) or (2).
- The certified value of the remaining life of the property recorded in the University's accounting records at the time of donation.
- The current fair market value. However, when there is sufficient justification, the federal awarding agency may approve the use of the current fair market value of the donated property, even if it exceeds the certified value at the time of donation to the project.
Volunteer services furnished by professional and technical personnel, consultants and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the University. In those instances in which the required skills are not found in the University, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable and allocable may be included in the valuation.
When an employer other than the University furnishes the services of an employee, these services shall be valued at the employee’s regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable and allocable but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.
Donated supplies may include such items as expendable equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing or matching share shall be reasonable and shall not exceed the fair market value of the property at the time of the donation.
The method used for determining cost sharing or matching for donated equipment, buildings and land for which title passes to the University may differ according to the purpose of the award, if (1) or (2) apply.
- If the purpose of the award is to assist the University in the acquisition of equipment, buildings or land, the total value of the donated property may be claimed as cost sharing or matching.
- If the purpose of the award is to support activities that require the use of equipment, buildings or land, normally only depreciation or use charges for equipment and buildings may be made. However, the full value of equipment or other capital assets and fair rental charges for land may be allowed, provided that the federal awarding agency has approved the charges.
The value of donated property shall be determined in accordance with the usual accounting policies of the University, with the following qualifications:
- The value of donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient.
- The value of donated equipment shall not exceed the fair market value of equipment of the same age and condition at the time of donation.
- The value of donated space shall not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately owned building in the same locality.
- The value of loaned equipment shall not exceed its fair rental value.
- The following requirements pertain to the recipient's supporting records for in-kind contributions from third parties.
- Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the University for its own employees.
- The basis for determining the valuation for personal service, material, equipment, buildings and land shall be documented.
- Each department must maintain adequate cost sharing records in accordance with the sponsor’s fiscal requirements as stated in the agreement. Grants and Contracts Administration requires all departments to establish cost sharing accounts in the University’s accounting information system to the fullest extent possible. The department or college must prepare a budget amendment that decreases a departmental account and increases the cost sharing account by equal amounts.
- Cost sharing accounts will be setup and used to document proposed cost share to the fullest extent possible; however, if a separate cost sharing account is used, the department must query on the account and submit the portion that pertains as cost share for the project to Grants and Contracts Administration. All certifications and related records must still be available for audit purposes. Cost sharing above the proposed amount should be documented and recorded for the life of the project.
- When cost sharing is certified using departmental accounts, the effort must be the same as the sponsored project. In other words, if the sponsored project is research, the certified account should be a research account. When using this method to document cost sharing, field 2 of the cost sharing account must be the same as the project account.
- It is very important that the departments/colleges provide cost sharing information to Grants and Contracts Administration as quickly as possible since delays in reporting costs to the sponsor cause delays in receiving payments from the sponsor. Required information should be sent no later than the 20th of the month following the close of the reporting period.
- The department must provide all cost sharing information to Grants and Contracts Administration if cost sharing was proposed to the sponsor. In addition, the department must furnish all cost sharing documentation upon request by Grants and Contracts Administration and/or the sponsor.
- NIH has an annual salary cap of $171,900 per individual for an allowable direct cost salary charge. The amount paid in excess of the $171,900 rate should be recorded as cost sharing.
DEPARTMENTS/COLLEGES DO NOT NEED TO REPORT COST SHARING IF:
- Cost sharing is only facilities and administrative costs. The correct amount of facilities and administrative costs for the period will be calculated by Grants and Contracts Administration.
- All cost sharing is accomplished using a "109" or "159" account. All cost sharing records should be retained with the grant documents for audit purposes.
- Cost sharing is accomplished through a companion Fund 20 account.