Cost sharing is any project cost that are not reimbursed by the sponsor to support the scope of the work defined by the federal or non-federal sponsored award. The most common example of cost sharing is for an external sponsor to provide most of the funds, and the university to provide the remainder of the project funds. Matching is a form of cost sharing which typically defines a ratio of sponsor and university dollars. This type of cost share is usually an eligibility requirement stated in the sponsor’s solicitation and is most often provided from university resources. The terms cost sharing and matching are often used interchangeable (2 CFR 200.29 and 2 CFR 200.306).
Cost share only when specifically required by a sponsor. Typical cost share items are PI salary and fringe and related facilities and administrative cost. These costs are easily identifiable and documented. However, the effect of cost sharing is that it lowers the university’s federally negotiated F&A rate.
Cost sharing expenditures must adhere to the same requirements as direct cost expenditures (2 CFR 200.413 and 2 CFR 200.405) and must comply with:
Most Common Contributions of Cost Share
In-kind contributions (2 CFR 200.96 and 2 CFR 200.434) are when no actual cash is transacted in securing the good or service comprising the contribution however it can be readily determined, verified and justified. When applicable, an estimated value of the in-kind cost sharing should be determined and documented based on the fair market value at the time of the accepting award. Examples include volunteer time valued at a reasonable rate had the volunteer been compensated for time or donation of non-university space where such space would normally carry a feed for purposes other than supporting this participation project. In-kind cost sharing must be tracked manually by the department/local unit managing the award.
Cash contributions (2 CFR 200.434) are when an actual cash transaction occurs and can be documented in the accounting system. Examples include the allocation of compensated faculty and staff time to projects and purchasing equipment for the benefit of the project requiring cost sharing.
Mandatory vs. Voluntary Cost Sharing
Mandatory Cost Sharing is required by sponsor as a condition of obtaining an award. It must be included or a proposal will receive no consideration by the sponsor.
Voluntary Committed Cost Sharing means not mandated by the sponsor. However, cost sharing amounts were included in the proposal and/or budget that were provided to and approved by the sponsor with the intention of the receipt providing funding for these costs. Voluntary committed cost sharing amounts and documentation will be reported and submitted to the sponsor.
Note: If cost sharing is in the proposal, it is deemed committed a cost share obligation. The cost share obligations must be met within the project period. Projects not meeting costs sharing obligations may be subject to reduction by the sponsor.
Voluntary Uncommitted Cost Sharing occurs during the life of the award and were not offered in the proposal and/or budget provided to the sponsor. Voluntary uncommitted cost sharing amounts and documentation are not reported to the sponsor. These documents should be kept in case of audit.