OSP > Grant Management > Cost Sharing Guidelines
Grant Management
COST SHARING GUIDELINES
Definitions
Some funding agencies require the grantee institution to demonstrate its financial commitment to the project, or the commitment of other funding sources, by sharing in a project’s costs.
- Cost sharing is defined as project costs not borne by the sponsor.
Cost sharing funds may come from an outside source in the form of cash contributions, volunteer services, or donated property; from the University’s own funds (e.g., personnel effort without salary recovery); or from shared resources or facilities. If the award is federal, only acceptable non-federal costs qualify as cost sharing. - Matching funds, if required by the funding agency, are raised from non-federal outside sources to increase the level of support provided by the funding agency. Such funds must be identified by the donor or funding source for use as matching funds.
- In-kind contributions represent the value of non-cash contributions provided by the University or non-federal third parties to a sponsored project when such contributions directly benefit that project and are generally counted as cost sharing.
- Direct-cost cost sharing is the provision of faculty and staff time and related fringe benefits, tuition and other resources as direct support for the project, as well as their related indirect costs (if applicable). Commitments made by departments, colleges, or other units must be detailed in the proposal and appropriate approvals must be provided.
- Indirect (F&A) cost sharing occurs any time the University agrees to recover less than the federally negotiated indirect cost rate. Approval from the Office of Research Administration/Vice President for Research is required if an indirect cost rate is lower than the university’s approved rate. The appropriate F&A rate can also be applied to direct-cost contributions.
- Mandatory cost sharing is required by the sponsor as a condition of the award. Ordinarily this requirement will be indicated in the program announcement.
- Voluntary cost sharing is not required by the sponsor but is nevertheless offered in the proposal by the investigator. Often this is in the form of contributed effort. Cost sharing that is proposed voluntarily by the investigator becomes mandatory (also known as 'voluntary committed' cost sharing) once the award is made.
- Committed Cost Sharing is a contribution of effort or other costs that are quantified in the proposal narrative, budget, budget justification, or in the award document. Committed cost sharing may be either mandatory or voluntary.
Investigator Responsibilities
Committed cost sharing represents a binding commitment by the University to a sponsor and, as such, is subject to audit under federal and other sponsor regulations. Any quantifiable cost offered in the proposal becomes a legally binding and accountable commitment of the University upon award. Cost sharing must be documented in the same way as other charges. Once a cost sharing commitment is made, the principal investigator is required to measure, track, record, and be prepared to report the commitment.
Unfulfilled cost sharing commitments or lack of documentation may result in a reduction of costs allowed against the sponsored project and a return of funds to the agency. Also, the cost sharing commitment is not automatically reduced when an award is reduced. Should the awarded amount be reduced from the proposed amount, the committed cost sharing may need to be adjusted accordingly, particularly if the awarded budget requires a change in the scope of work.
Cautionary Guidance
Cost sharing is normally stated in the budget. However, cost sharing commitments can be stated in the budget explanation or justification or in the text of the narrative. No matter where cost sharing commitments are found within the proposal, statements of cost sharing commitment are legally binding on the institution should the proposal be funded, even when not required by the sponsor.
By using language in proposals that cites percentage of time, salaries, or specific levels of support, principal investigators can commit to cost sharing, often unintentionally. In all instances where cost sharing is specified and quantified, the principal investigator and University are obligated to account for and track these commitments along with funds awarded by the sponsor.