Cost Sharing and Matching Costs on Sponsored Programs Policy

Template for Cost-Share Transfer of Funds

Scope and Purpose

The following document comprises the University's policy on cost sharing and the procedures for monitoring project-by-project cost sharing and reporting such cost sharing to sponsoring agencies. The policy is effective for proposals submitted and awards received on or after October 1, 1996. Policy revised December 13, 2006.

The policy was developed for the following purposes:

1. To provide guidance regarding the circumstances in which cost sharing is permitted by the University; including what kind of services, expenditures, or assets may be cost shared.
2. To provide information to the University community regarding the contractual, financial, and administrative implications that result from the commitment to cost share.
3. To establish procedures which give the University the ability to provide information to sponsoring agencies which demonstrates that the University has fulfilled any cost sharing commitments it has made as a condition of obtaining external sponsorship.


Cost Sharing - That portion of a project or program costs that is not borne by the sponsor. Cost sharing consists of two types: mandatory cost sharing and voluntary cost sharing.

Mandatory Cost Sharing - Cost sharing contractually required by the sponsoring agency.

Types of Mandatory Cost Sharing - Mandatory cost sharing includes: a) costs funded by the University from non-sponsored accounts, and certain non-federal sponsor accounts, and not included as cost sharing for any other sponsor project; b) cash and third party cash contributions that are verifiable in the University's accounting system and are not included as contributions for any other federally assisted project or program; c) in-kind contribution including volunteer services provided by professional and technical personnel, consultants and other skilled and unskilled labor if the services are an integral and necessary part of an approved project or program and are required by the award; and d) grant related income included in the approved project/program budget.

Project or Program Costs - All allowable cost incurred by the University, both directly and indirectly, in accomplishing the objectives of the grant or other agreement during the project or program period. Project costs include mandatory cost sharing, which can be direct or indirect costs.

Voluntary Cost Sharing - Cost sharing provided by the University in excess of mandatory cost sharing requirements.

Allowable Costs - Costs are considered allowable if they meet the following tests: a) they must be reasonable; b) they must be allocable to sponsored agreements, that is, they are incurred solely to benefit the sponsored project; c) they must be given consistent treatment; and d) they must conform to any limitations or exclusions set forth in the Office of Management and Budget, Circular A-21 and in the sponsored agreement.

In-Kind Contributions - Represents the value of non-cash contributions, which may be in the form of charges for real property and nonexpendable personal property, provided by the University and third parties, and the value of goods and services directly benefiting and specifically identifiable to the project or program.

Basic Requirements

1. The University will maintain accounting records on all project-by-project mandatory cost sharing. Project-by-project mandatory cost sharing is identified as an amount or percentage in the award agreement received from the awarding agency.
2. Mandatory cost sharing or matching costs recognized by the University include those costs that are allowable under applicable federal cost principles, that originate from nonfederal sources, that are not applied to more than one federal cost sharing or matching project, that are provided for in the approved budget when required by the agency, and that are verifiable from University accounting records.
3. Cost sharing includes the following: a) salaries and fringes; b) other direct costs; c) facilities and administrative costs (previously known as indirect costs).
4. Cost sharing of salary and wage costs is considered direct salary cost, and included on the PAF as part of the individual's 100 percent effort.
5. It is essential that all claims for mandatory cost sharing be accounted for by actual charges to the contract or grant involved. The related accounting procedures for recording the cost sharing commitments required by the award document are an integral part of the accounting system of the University.

Implementation--Mandatory Cost Sharing (excluding In-kind & Third Party Cost Sharing)

1. A companion (cost sharing) account will be established for each sponsored project and/or research account incorporating mandatory cost sharing/matching provisions. The companion account will be set up as a companion account and will be mapped to the department/center that initiates the contract. All cost sharing expenses will be recorded in this companion account. Companion accounts will be budgeted and administered identically to research accounts.
2. The Principal Investigator for a project or program is responsible for the allowability and recording of costs funded by a sponsor as well as for the cost sharing expenses accumulated and reported under the award.
3. On receipt of an award document, the Office of Sponsored Programs will budget the sponsored account as awarded; determine the required cost sharing/matching from the award and the proposal and provide this information to the Contracts and Grants Accounting and the department/center responsible for administering the account. All accounts will be established by the Office of Sponsored Programs.
4. The department/center will prepare and submit a budget amendment to move money to the companion account. The related research account established will be frozen until the budgeted money for the current fiscal year has been moved to the companion account. For subsequent years, if the budgeted money is not moved to the companion account, the related research account will be frozen one month after the start of each fiscal year (November). Companion account overruns will be the responsibility of the Dean/Director of the department/center responsible for the account. Overruns will not be carried over between fiscal years unless a risk memo is filed with Contracts and Grants Accounting and/or an encumbrance is made to the next fiscal year's budget. If either one of these actions is not taken, overruns will then be closed out to the department's/center's fund balance at the end of the fiscal year. Fund balances in the companion accounts will be carried over to the next fiscal year if the contract is not closed out.
5. The Office of Sponsored Programs will approve all PAFs, purchase orders and budget changes relating to the companion accounts (the companion accounts will be held to the same approval process the research accounts are under). No facilities and administrative costs will be budgeted or recorded in the companion account.
6. Generally, funds from the sponsoring agency and cost sharing funds should be spent at about the same rate throughout the project, for example, when 10% of sponsoring agency funds have been spent, 10% of cost sharing funds should have also been spent. This provides even support by both parties throughout the project and prevents problems at the end of the project. This may not be possible if cost sharing funds are for equipment.
7. It is emphasized that the amount of University cost sharing should generally be limited to the amount specifically required by the funding agency. All required cost sharing plus any voluntary cost sharing in excess of the requirements must either be specifically identified in the proposal or by a separate form accompanying the proposal during internal routing and approvals.
8. If the fiscally responsible department/center does not provide the cost sharing amounts required in the agreement, a proportionate reduction will normally be made in the sponsoring agency's research account budget.
9. In accordance with our close-out procedures, sponsored research awards are final billed 90 days after the end of the period of performance unless an extension has been granted or a risk memo has been submitted pending an extension. After all receivables are collected on the final bills, any remaining funds in the companion account will be returned to the department/center funding the cost sharing.

In-Kind Cost Sharing

In-kind cost sharing will be approved by the University only in rare circumstances.

In-kind cost sharing must be clearly identified on the Certification on In-kind Cost Sharing Form (AFR796). This form must be signed by the principal investigator and the dean/director of the department/center. See attached instructions for information on this form.

The department which is responsible for the project should keep detailed, auditable records for in-kind cost sharing throughout the project. The completed form should be sent to Contracts and Grants Accounting quarterly or at periods set forth in the agreement. Contracts and Grants Accounting will compute applicable indirect costs and include them in the cost sharing report.

In-kind Cost Sharing includes depreciation expense on previously purchased equipment and interest on bond principal.

Third-Party Cost Sharing

Third-party cost sharing may be cash or non-cash. Non-cash contributions are the value of contributed goods and services directly benefiting the project. Cash contributions should normally be processed through a separate research account to be counted as cost sharing for the sponsor project. All non-cash contributions

must be verifiable.

The written agreement should include information on any third-party non-cash contributions. Complete information (such as names, dates, hours worked) on such contributions should be submitted to Contracts and Grants Accounting quarterly or in the intervals required in the agreement.

Cost Sharing On Sponsored Projects (Revised Procedure April 11, 2000)