Cost Sharing
Uniform Guidance defines cost sharing as the portion of project costs not paid by Federal funds. This share of cost may include the value of allowable third party in-kind contributions, as well as expenditures by the recipient. Cost sharing is sometimes referred to as cost matching, and can be required on both Federal and non-Federal projects.
The department must meet or exceed any cost sharing amount it has committed to. If the department does not meet its cost sharing commitments, the sponsor can reduce funding corresponding to the amount of cost sharing that was not provided. If the shortfall is serious enough, the sponsor can terminate the grant and ask that the grant funds be returned.
Departments are required to submit to Contracts and Grants Accounting (CGA) a signed cost sharing report for each budget year of the award, and every time the fund number changes for continuation award.
Types of Cost Sharing
There are two types of cost sharing:
- Mandatory Cost Sharing is required by the sponsor as a condition of award. It must be monitored and documented.
- Voluntary Cost Sharing is not required as a condition of the award, and cannot be used as a factor in the merit review of applications or proposals.
- Voluntary Committed Cost Sharing is quantified in the proposal budget or budget justification, and becomes a binding condition of the award. It must be tracked and may have specific reporting requirements.
- Voluntary Uncommitted Cost Sharing is not specifically identified in the budget or budget justification, and it doesn’t require tracking or financial reporting.
Cost Sharing Requirements
For Federal funding, cost sharing must meet the following requirements:
- Verifiable in the accounting records of the grantee
- Not counted as cost sharing on any other Federal award
- Necessary and reasonable for the award
- Allowable on the award
- Not paid for from another Federal award, except when authorized by Federal statute
Unrecovered indirect costs may be included as part of cost sharing only with a prior approval of the Federal awarding agency.
Examples of Expenses Allowed and Not Allowed for Cost Sharing
Costs typically included as cost sharing:
- Effort of faculty or staff specifically devoted to the project, but not charged to the grant
- The portion of the cost of equipment or instrumentation that is not paid by the sponsor, e.g., the grantee will pay a portion of the purchase price for a piece of large equipment required for the project
- Supplies and materials
- Cost-sharing by a subrecipient or other third party
Expenses that cannot be cost shared:
- Any expense that does not provide direct support to the project
- Any expense that has already been shared
- Any cost that is unallowable under policy, or the terms and conditions of the award
- Expenses charged to another sponsored award
For non-Federal awards, departments are required to review the sponsor’s guidelines to determine which costs can be used as cost sharing.