Cost Sharing Overview

Background

Definitions

Cost sharing - Cost sharing is the portion of project or program cost not borne by the sponsor. It is the University's share of the cost of research. Cost sharing occurs when either a sponsor requires or the University commits funds beyond those awarded by the sponsoring agency to support a particular grant or contract. Cost sharing is primarily required by federal sponsors, and the obligation must be met using non-federal funds. Only charges that would be allowable as direct costs to the recipient grant are allowable as cost sharing. Federal flow through funds may not be used as a cost sharing source unless prior written approval has been received from both the federal sponsor and the flow through sponsor.

The "cost share" pledge may be either a fixed amount of money or a percentage of the project costs. The term "cost matching" often refers to cost sharing where the amount from the sponsor is equal to the amount from the cost share partner. This is also known as dollar for dollar cost sharing or cost matching.

There are three types of cost sharing:

  • Mandatory(M): Cost sharing that the sponsor (typically a federal sponsor) requires as a condition of the award.
    • For example, if the total cost of a project is $150,000, the sponsor might award $100,000 and require that the University provide (or find an outside source to provide) the additional $50,000 from non-federal funding sources.
    • The sponsor may require the University to provide either a fixed amount of money or a percentage of the project costs as cost sharing.
    • The sponsor and the University agree on the terms of the mandatory cost sharing during the initial negotiation of the grant or contract and the conditions are written into the award.
  • Committed(R): Cost sharing that the PI promises in the project proposal budget or the budget justification that is not required by the sponsor.
    • The University discourages cost sharing commitments when not required by the sponsor.
  • Salary Cap(C): Cost sharing required of faculty who exceed the salary cap.
    • Salary Cap cost sharing is required by:
      • National Institute of Health (NIH)
      • Substance Abuse and Mental Health Services Administration (SAMHSA)
      • Agency for Healthcare Research and Quality (AHRQ)

Contribution Sources

Circular A-110, Uniform Administrative Requirements for Grant Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations, defines appropriate sources of cost sharing. According to A-110, all contributions, including cash and third party in-kind, shall be accepted as part of the recipient's cost sharing or matching when such contributions meet all of the following criteria:

  • Are verifiable from the recipient's records;
  • Are not included as contributions for any other federally-assisted project or program;
  • Are necessary and reasonable for proper and efficient accomplishment of project or program objectives;
  • Are allowable under the applicable cost principles;
  • Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching;
  • Are provided for in the approved budget when required by the Federal awarding agency; and
  • Conform to other provisions of Circular A-110, as applicable.

The University typically may commit as cost sharing the following non-federal expenditures:

Process Overview

The following outlines the different stages of an award and the special steps taken when an award includes cost sharing.

  • PI--the principal investigator and/or a staff member with delegated authority
  • Sponsor--the organization or person providing the grant/contract
  • GCS--Grant and Contract Services
  • GCA--Grant and Contract Accounting
  • MAA--Management Accounting and Analysis
  • NEA--Notice to Establish Account
When? Who? What?
Proposal Phase PI Prepares the cost share pledge by:
  • clearly documenting cost sharing on the proposal budget page or in the proposal budget justification.
  • leaving any discussion of cost sharing out of any other proposal text.
  • completing the GC1 Addendum listing cost share committments and sources.
  • attaching signed documentation from each source promising to contribute. If the contribution is from:
    • the University, a signed letter from a provost, dean, or chair is acceptable.
    • a third party (not University or the sponsor), the letter must be on the contributor's letterhead. Information on what should be included in the letter can be found on the Third-Party Cost Share Contributions page.

and submits it with the rest of the proposal package to GCS.
GCS Makes sure all cost share contributions are allowable and (when everything else is ready) submits the proposal package to the sponsor.
GCS Negotiates with the sponsor.
Approval Sponsor Approves the proposal, including cost share information, and notifies GCS.
GCS Prepares the Notice to Establish Account (NEA), which lists all cost share commitments and amounts, and sends it to GCA.
GCA Sets up the budget, including all the cost share commitments, in the Financial Accounting System (FAS). Cost share commitments are recorded in the Faculty Effort Certification System (BGT driver).
Throughout
Life of Grant		 PI Submits and documents (on a quarterly basis) cost share contribution reports:
Reviews Faculty Effort Certification System (BGT driver) to double-check that all cost share contributions are captured correctly and ensures that all cost sharing obligations are met in a timely manner.
GCA Updates the budget driver to reflect all allowable:
Works with the PI to ensure the cost share pledge is met.
MAA Updates the budget driver to reflect the faculty effort cost share contribution that the PI reports on the FEC.
Works with PI to ensure the cost share pledge is met.
Closing GCA Closes budget.
Reports to the sponsor as required.

PI/Staff Procedure/s

  • Prepare and document the cost share pledge:
  • When the budget is established, review the cost share pledge on the budget driver printouts that are sent to the department by GCA. If no changes are necessary, the printout should be retained for department records.
    • It is the Principal Investigator's responsibility to ensure that the cost sharing pledge on the grant or contract is correct and that it is met on schedule.
  • On an ongoing basis, at least quarterly, during the life of the grant, review cost share activity using the Faculty Effort Certification System (BGT driver).
    • Viewing the Pledge:
      • in Administrative Applications open BGT.
      • choose option 6 (Faculty Effort Certification).
      • then, choose option 3 (Cost Share Inquiry Screen).
    • For individual faculty members:
      • place 9s in the date box.
      • insert the faculty member's ID number in the "ID" field.
      • enter the budget number to view activity on one budget, or
      • leave it blank to view all activity for this faculty member.
    • By budget (for budgets with multiple faculty and non-faculty, or with only non-faculty cost share):
      • place 9s in the date box.
      • leave the ID section blank.
      • insert the budget number.
  • Report and document cost sharing on a quarterly basis:
  • Request a reduction or change in your cost share pledge:
    • Grant and Contract Accounting can change cost sharing information without an NEA only in the following situations:
      • when the effort of one faculty member is substituted for that of another faculty member and the overall dollar amount of effort is not reduced,
      • when a cost sharing pledge must be moved to a continuation budget (generally SNAP awards),
      • at expiration, if total amount of cost sharing pledged is based on a percentage of total expenditures and actual cost sharing funds equal that calculated amount,
      • when a faculty member wants to perform cost sharing in another quarter than that listed in the budget driver, if that quarter is within the grant period, or
      • when changes to a committed cost share pledge are requested. (However, reductions in overall mandatory cost share must be approved by Office of Sponsored Programs.)
    • Most changes to mandatory cost sharing pledges must be reviewed and approved by Grant and Contract Services. This includes increases or decreases to the percentage of funds pledged or to dollar amounts pledged. In addition, changes in overall anticipated effort by faculty must also be reviewed and approved by Grant and Contract Services.
    • After Grant and Contract Services reviews and approves a change to a cost sharing pledge, a revised NEA is issued with the revised cost sharing information and sent to Grant and Contract Accounting. Grant and Contract Accounting will update information in the Faculty Effort Certification System (BGT driver) based on the information included on the NEA.

References/Regulations

Contacts

If you:

  • are preparing your proposal or waiting to hear about a submitted proposal, contact Grant and Contract Services (GCS) via:
  • have cost share questions on your award, contact Grant and Contract Accounting (GCA) via:
  • have faculty effort questions on your award, contact Management Accounting and Analysis (MAA) via:
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