“Cost sharing” refers to the portion of the total sponsored project costs that are not paid by the sponsoring agency. “Matching” is another commonly used term. There are primarily three types of cost sharing that may occur on sponsored projects: mandatory cost sharing; voluntary committed cost sharing; and voluntary uncommitted cost sharing.
Types of Cost Sharing
Mandatory Cost Sharing
Cost sharing is required by the terms of the sponsored program and must be included and budgeted for as part of the sponsored award. It is explicitly required by the notice of funding opportunity and must be included in the proposal for consideration by the sponsor.
Voluntary Committed Cost Sharing
Cost sharing is not required by the terms of the sponsored program but is included and budgeted for as part of the sponsored award. It is not expected by the sponsor in the proposal and cannot be considered as a factor of merit review by the sponsor unless criteria for consideration are explicitly described in the notice of funding opportunity.
Voluntary Uncommitted Cost Sharing
Cost sharing is not required by the terms of the sponsored program and is not included or budgeted for as part of the sponsored program. It is neither proposed nor expected but may occur during program administration.
Sources of Cost Sharing
- Salaries and Wages
- Other Direct Costs
- Unrecovered Indirect Costs (F&A) – see below
- Other Sponsored Programs
- External Partners (In-Kind) – see below
This is the computed value of any services and/or resources provided by a university or a third party in support of a sponsored project. Third-party in-kind contributions may be in the form of real property, equipment, supplies, or other goods and services directly benefiting and specifically designated for NC State University’s project or program. 2 CFR 200.306 dictates the terms by which in-kind contributions are valued for the purpose of fulfilling cost sharing obligations.
Cash contributions differ from in-kind contributions in that an actual cash transaction occurs and can be documented in the accounting system. This includes allocation of compensated faculty and staff time to projects. Although it is easy to mistake the allocation of compensated faculty/staff time as a donation or as in-kind because the faculty or staff member would be compensated regardless of the advent of the sponsored project, the value is the result of a cash transaction and should be treated as a cash contribution. Other examples of a cash contribution include the purchasing of equipment by the institution or other eligible sponsor for the benefit of the project requiring cost sharing.
Cost share as a percentage or dollar equivalency relative to the agency-provided budget.
For example, if your total award budget is $100:
- A 1:1 match would require the University to contribute $50 as a match to the $50 received from the sponsor.
- A 30% match would require the University to contribute $30 as a match to the $70 received from the sponsor.
Unrecovered Indirect Costs (F&A)
Unrecovered indirect costs — aka facilities and administrative F&A costs — equates to the difference between the amount charged to the federal award and the amount which could have been charged to the federal award under the nonfederal entity’s approved negotiated indirect costs rate.
Reportable Cost Sharing
Mandatory or voluntary committed cost share that must be documented by the department and reported to the sponsor by Contracts and Grants.
Nonreportable Cost Sharing
Voluntary uncommitted cost sharing that must be documented by the department and is not reported to the sponsor. While this type of cost sharing is not reported, it is subject to audit.
Things to Consider
- Cost sharing should be proposed only when mandated by sponsoring agency.
- Committed cost share that is quantified in a federal proposal is auditable.
- Cost sharing must occur during the period of performance.
- Costs contributed as cost share must be considered “allowable” by the sponsor.
- Costs must be allocable to the project.
- Sponsor must approve the use of unrecovered indirect costs (F&A) as cost sharing.
- Sponsor must approve the use of costs associated with other sponsored programs as cost sharing.
- Lab (or any NC State) space should not be shown as an NC State contribution.
- Be sure you are not committing a person’s time beyond 100% effort. If a person is being paid 100% on other projects and that situation will not be changing, do not commit them to this project.