1. Cost sharing and matching funds must be verifiable from the University's records.

2. In-kind, third party contributions offered as cost sharing, require a commitment letter on company letterhead signed by an individual who is in a position to commit the in-kind contribution. After the fact reporting to the University will be necessary.

3. Commitments must not be included as contributions for any other project or program.
4. Commitments are necessary and reasonable for proper and efficient accomplishment of project or program objectives.

5. Commitments are allowable and allocable under the applicable cost principles.

6. Cost sharing commitments may not be from other funds supported by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching.

7. Costs are described in the approved budget and/or terms of the sponsored agreement when required by the awarding agency.

8. Cost sharing provisions of OMB Circular A-110 are met.

2. General Information

Cost sharing is a term that describes circumstances whereby the University is not reimbursed for allowable costs of performing a project because the requested or approved budget does not cover the full costs associated with the specific project. Therefore, cost sharing (also known as matching, or in-kind contributions) represents that portion of the project costs not paid for by the sponsor.

Matching funds may be cash or in-kind contributions. They may include a dollar-for-dollar match to purchase equipment or renovate a facility.

In-kind contributions may be donated time, space, equipment, etc.

Caution: (The value of a third party in-kind contribution must be established and verified at the time of proposal submission and documented at the post award stages. For example when the contribution is in the form of personal services, the contributor must certify that the amount being provided as in-kind is comparable to the individual's regular rate of compensation. When in-kind contributions are other than personal services, the fair market value of the item must be established, consistent with OMB A-110 procedures).

Cost sharing may be mandatory, voluntary committed or voluntary uncommitted.

Mandatory cost sharing is either required by statute or may be a condition of a specific solicitation. It will normally appear in the award document from the agency. Mandatory cost sharing expenses must be reported back to the sponsoring agency in a Financial Report.

Voluntary committed cost sharing is created if a proposal included cost sharing when none was required. Even if that cost sharing is not in the budget awarded by the agency, the PI and the University are "committed" to providing the project with the indicated support. Voluntary committed cost sharing expenses are not reported back to the sponsoring agency; however, it is still required that the University track and document these costs as they are subject to audit.

Voluntary uncommitted cost sharing is cost sharing that is neither mandatory nor committed. It represents contributions to a sponsored project that do not come from the awarding agency. Voluntary uncommitted cost sharing expenses are not reported back to the sponsoring agency, however they will still be recorded through the Effort Systems or through manual cost sharing entries.

When the University accepts an award with mandatory or voluntary committed cost sharing, the University is making an agreement with the sponsor that is subject to audit. The University is committing to provide the stated cost sharing during the period of performance of the sponsored project.

Caution:(Voluntary committed cost sharing offered in a proposal may be accepted by the sponsoring agency and become a condition of the award, thereby making it mandatory cost sharing.)

Cost sharing must be an allowable cost. This means that grants and contract costs must be allowable under OMB Circular A-21, A-110 and University policies. Any cost that would be unallowable on the grant or contract will be unallowable as cost sharing for that grant or contract. For example, administrative support is not normally allowed as a direct charge to a Federal grant, therefore it is an unallowable cost regardless of the source of support and cannot be used for cost sharing purposes. Sponsoring agencies may have various guidelines with regard to cost sharing. For example, the U.S. Department of Education may allow 8% TDC on a training grant. The difference between 44.5% and 8% cannot be used as cost sharing without prior approval of the Secretary of the U.S. Department of Education.

Cost sharing must be identifiable and verifiable. The college research office (IFAS, Engineering, College of Medicine) or business unit will be responsible for identifying and verifying mandatory and voluntary committed cost sharing by obtaining the required documentation for cost sharing at the time of proposal submission and sending the information with the proposal to the Division of Sponsored Research. The responsibility for entering cost sharing that was met during the project into the University's effort reporting system is at the department level. The respective Contracts & Grants accounting offices (in IFAS, Engineering or Contracts & Grants-Tigert) are responsible for entering, from data provided by the departments, any cost sharing other than that reported through the effort reporting system, into the University's cost sharing system.

The Contracts & Grants Accounting Office in Finance and Accounting, located at Tigert Hall, will track all cost sharing in the University's accounting system and provide official reporting for such cost sharing. It will be the responsibility of the Principal Investigator and the Units to ensure that the cost sharing commitment is met on a grant or contract and to provide the appropriate Contracts & Grants accounting office the documentation necessary to track cost sharing commitments.

3. The Impact of Cost Sharing on the University's Federal Facilities & Administrative Rate

Cost sharing dollars in aggregate have a negative impact on the University's Facilities and Administrative cost rate (indirect cost rate). As cost sharing dollars from various units throughout the University accrue in the accounting system, the total amount is incorporated into formula used in the negotiation of the University's indirect cost rate. As the denominator increases, the percent rate decreases, resulting in a lower Facilities and Administrative rate (indirect cost rate).

4. Cost Sharing Does Not Include (revised 11/06/02):

a) Percent effort of personnel listed in the Current and Pending Support Section of a proposal, unless specifically identified as cost sharing, and for the current proposal being submitted as long as funds have been requested from the Sponsor for the effort listed.

Caution: Any percent effort of personnel identified within the current proposal being submitted for which no funding is requested from the Sponsor is considered cost sharing and appropriate approvals are required in accordance with the University's cost sharing policy.

b) Voluntary uncommitted cost sharing.

For Example: The Principal Investigator or Project Director of a grant funded project may chose to work at a level of 25% effort rather than the 20% effort as budgeted for in the proposal being funded. This additional 5% effort is defined as voluntary uncommitted cost sharing and such effort should be accurately reported in the University's Time and Effort Reporting System, but not accounted for in the University's cost sharing system.

Available References

- NSF Policy Statement on Cost Sharing (99-92) & NSF Grant Proposal Guideline (page 12)
- Grants Management Advisory Service (February 1995, pages 27-31)
- OMB A110 (Section 23. Cost Sharing or Matching)
- HHS Transmittal Letter 99.05
- OMB A-21
- OMB Clarification on Voluntary Uncommitted Cost Sharing (January 5, 2001)