Handling Cost Sharing (including Matching and In-Kind Contributions) After Award Acceptance
The terms "cost sharing," "matching," and "in-kind" refer to that portion of the total project costs not borne by the sponsor. These terms are often used interchangeably. Attention should be given to sponsor definitions of these terms as well as this policy’s definitions.
1. Receive the Award and Adjust Cost Sharing if Appropriate
If the project was awarded as proposed:
No adjustments to the direct or cost sharing budget are necessary.
If the project was awarded less funding than proposed:
If the proposal included the recommended statement that cost sharing committed in the proposal will be reduced proportionately to any reductions in the amount of the award, then the level of required cost sharing will be adjusted proportionately. Cost sharing over that required level is voluntary uncommitted cost sharing.
If the award is reduced and the recommended statement was not included, cost sharing must remain at the level listed in the award document. Sponsor approval is required to decrease the cost share commitment.
If the decreased award results in a need to cost share some of the project costs to accomplish the project workscope, then the resulting cost sharing is considered voluntary uncommitted.
2. Communicate Cost Sharing Documentation Requirements
If the cost sharing question on the Proposal Routing Form was checked 'Yes,' the Notice of Grant/Contract Award (NOGA) will indicate that a cost sharing commitment was made. The grant administrator in SPA is responsible for indicating on the NOGA the nature of the commitment (e.g., dollar amount or percent effort) and whether it is reportable to the sponsor.
Committed Cost Sharing Contributions:
If the proposal budget, budget justification or award specifically pledges cost sharing, it is considered committed, regardless of whether at proposal time it was mandatory (required by the sponsor), or voluntary (offered by the Principal Investigator (PI).
Voluntary Uncommitted Cost Sharing Contributions:
If a PI decides to donate additional departmental resources (equipment or staff time) to the project, it is a decision that should be made with the consent of the department head. These additional resources are considered "voluntary uncommitted cost sharing."
Note: If the NOGA does not reflect cost sharing but should, the PI is still responsible for meeting the commitment and the department administrator must notify the grant administrator in SPA so that the NOGA can be corrected.
3. Document the Cost Sharing Commitments
The department must maintain accurate records in accordance with the University's record retention obligations for the award. Cost sharing records must be kept in the departmental project files for the same length of time as other award documents.
- Salary or wages: These expenses should be charged to established cost share chart-strings and documented through certification of Effort Statements.
- Voluntary uncommitted effort should not be certified on an effort statement as effort devoted to the benefitting sponsored project. Instead, that time should be certified as general University paid time. If, however, an investigator decides to use that effort to meet the effort levels promised to the sponsor, then that effort changes from being "voluntary uncommitted" to "voluntary committed" effort. Like all other voluntary committed effort, it must be tracked on a cost share chart-string and certified in the effort system as effort associated with the sponsored project.
- Third party labor contributions: The organization must document the time commitments through its own financial system and this documentation must be retained by that organization for audit purposes. If this cost sharing must be reported to the sponsor, the organization must also send a letter or report to the PI that identifies the time and the value of that time. The PI must then forward the letter to SFR for reporting purposes.
- The value of the cost sharing may not exceed the actual cost to the third party labor contributor, including salary, fringe benefits, and indirect costs at the federally approved F&A rate of the third party contributor (if any). Estimates cannot be accepted and documentation cannot be provided until after the time has been contributed.
- Non-salary items: These expenses should be charged to established cost share chart-strings and approved as necessary by Certified Approvers.
- Non-salary items contributed by a third party: The cost or value of these items must be certified by the organization using the rules outlined in 2 CFR 200.306, and then documentation of the value must be provided to the PI. The PI must also share that documentation with SFR if the cost sharing must be reported to the sponsor.
Note: Both the organization and the department must retain documentation of cost sharing for audit purposes.
4. During the Project Period, Adjust Cost Sharing if necessary
Mandatory Committed or Voluntary Committed Cost Sharing:
If the PI determines they need to adjust cost sharing, they should check the terms and conditions on the NOGA, the sponsor’s award document, and the sponsor's policies. Sponsors generally require prior approval for decreases in levels of committed cost sharing, and some sponsors require prior approval for changes in how the cost sharing will be provided or who is providing that cost sharing.
How to obtain prior sponsor approval:
- The PI must generate a letter that explains why the change is necessary, obtain the department head and college (if applicable) endorsement, and route the letter through the appropriate grant administrator in SPA.
- The grant administrator will review and have the letter endorsed on behalf of SPA and forward it to the sponsor.
- Upon approval by the sponsor, the grant administrator in SPA will issue a revised NOGA reflecting the updated obligation.
If prior sponsor approval is not necessary, the PI must document the reasons for the changes, send copies to SPA and SFR, and keep this documentation with the department's project files. Cost sharing is often checked by auditors and this information will be necessary in case of an audit.
Because uncommitted cost sharing does not need to be documented, these adjustments can be made without providing documentation.
5. Report Cost Sharing
If required by the sponsor, SFR, with the assistance of the department, reports committed cost sharing. The terms and conditions of the award or the sponsor's policies will indicate whether the cost sharing is reportable. If the sponsor is silent, SFR will not report it, and departments must maintain supporting documentation.