- Federal Definition of Cost Sharing, Matching
- Federal Requirements for Cost Sharing, Matching
- Distinguishing Mandatory, Committed, and Voluntary Cost Sharing
- Including Cost Sharing in Proposals
- Accounting for Cost Sharing after Award Acceptance
- UI Cost Sharing Programs: Equipment and Non-Equipment
OMB Circular A-110 defines cost sharing or matching funds as a portion of the project or program costs not borne by the federal government, and therefore covered by some other source. Although the two terms are often used interchangeably, the term matching is actually a specific type of cost sharing, typically used when a sponsor requires the grantee to "match" the sponsor funding according to a specified ratio.
Some sponsors require universities to reflect their commitment to a project by sharing in its costs. Most sponsors, however, do not require cost sharing, and some don't even allow it. It is not necessary or desirable to engage in cost-sharing, except when:
- Mandated by the sponsor; or
- Needed to accurately reflect the level of effort required for the project.
Federal funding agencies define and acknowledge various types of cost sharing or matching funds, including:
- Mandatory Cost Sharing -- required by a sponsor as a condition for making an award and usually refers to an overall percentage of total projects costs to be contributed by a source other than the sponsor.
- Committed Cost Sharing -- not required by the sponsor yet reflected in the proposal budget, usually in the form of effort that will be contributed by the principal investigator or other project staff and paid from University or non-federal funds.
- Voluntary Cost Sharing -- not required by the sponsor or shown on the proposal budget, but usually reported, in addition to mandatory or committed cost sharing, as cost share through the University's effort reporting system.
- In-Kind Contribution -- the value of non-cash contributions provided by the University or non-federal third-party participants. Such contributions may be in the form of real property, equipment, supplies/other expendable property, and the value of goods and services directly benefiting and specifically identifiable to the project or program.
Because mandatory cost sharing is established and required by the sponsor as a condition of the award, it is more rigid than committed or voluntary cost sharing. The sponsor generally indicates any mandatory cost sharing on the notice of award and permits no decrease in the amount without prior approval.
If cost sharing is required, it should, whenever possible, take the form of investigator and/or other project staff effort contributions, including personnel salary and fringe benefits as well as the associated institutional F&A costs. In general, UI faculty and staff should refrain from budgeting nonpersonnel-related cost sharing whenever possible, unless it can be easily documented in the accounting system. Cost sharing is expensive to document and adversely affects the University's F&A rate, so should therefore be kept to a minimum.
If an applicant includes cost sharing in a proposal and the University subsequently accepts this as a condition of the award, the University must maintain accurate records to verify these funds have been provided, as promised, to meet the project's objectives. Note that institutional cost sharing may also enter into the calculation when the University negotiates its federal F&A Cost Rates, reducing the institution's F&A cost-reimbursement rates if entered into excessively or unnecessarily. Therefore, cost sharing should follow these guidelines:
- Salaries and their associated fringe benefits and F&A costs should be verifiable in accordance with the guidelines provided for the institution's Personnel Activity Reporting (PAR) System.
- Non-salary items such as supplies and equipment must be identified through an appropriate account or reflected in other documentation as costs to the project. Before any non-salary items are used for cost sharing or matching, DSP must be consulted to determine proper documentation.
- When department heads, deans, provosts or vice presidents allocate specific hard dollars for a project, a separate Master File Key (account) must be established or other means identified to track and account for the cost-shared expenses.
The Office of the Vice President for Research and Economic Development manages two programs designed to cover institutional cost sharing, considering requests for (1) Equipment Cost Sharing and (2) Non-Equipment Cost Sharing.
To request a cost-share contribution, the applicant must complete and submit the Equipment Cost Sharing Request Form and/or the Non-Equipment Cost Sharing Request Form, as applicable, at least two weeks in advance of the external grant application deadline. In considering requests, priority is given to proposals responding to a sponsor's specific written guidelines requiring cost sharing, where it is mandatory that the University share in the costs of the project as a condition for accepting an award.
If the cost share request is approved and the application funded, the UI Grant Accounting Office will assign a Master File Key (an account) specifically for the cost sharing, to ensure that the funds are allocated for the cost sharing portion and to document to the sponsor that the funds were allocated and spent accordingly.