Calculating Cost Sharing
Step 1
Determine the minimum amount of cost sharing or cost matching required by the sponsor.
Step 2
Determine what kinds of cost sharing or cost matching the sponsor wants to see. For example, it is often requested that equipment be matched 1:1 (i.e., for every dollar provided by the sponsor, a dollar must be provided by the institution). Other programs often have requirements such as contributing 20% of the total request or 50% of the total project costs. Note the specific wording used to describe these various requirements.
- When the sponsor requires a 1:1 cash match or a 100% commitment, cost match or cost share obligation, you must determine the total cost of your project, divide it in half and request one half from the sponsor and one half from the institution.
- Similarly, if the sponsor requires 50% of the total project costs to be provided as cost sharing or matching then you need to come up with an equal share of funding from the institution as you are requesting from the sponsor.
- However, if the sponsor requires, for example, a 20% match of the total grant amount, this usually means the sponsor wants to see a commitment from the institution equal to 20% of the total amount funded by the sponsor.
In practice, you need to know how much money the sponsor is ultimately willing to provide throughout the life of the award. Here are some examples of how to calculate this figure.
Example:
Sponsor requires a 20% match. You need $75,000 in direct costs (assume $5,000 of that is equipment) and the sponsor pay the full indirect costs (F&A) rate. Your cost sharing calculations look like the following:
First, calculate the total direct plus indirect cost needed from the sponsor.
| Cost Category | Amount (example) |
|---|---|
| Salaries | 50,000 |
| Fringe | 12,500 |
| Supplies | 4,500 |
| Travel | 3,000 |
| Equipment | 5,000 |
| Direct Cost | 75,000 |
| F&A (52% of MTDC, excluding equipment) | 36,400 |
| Total Project Costs | 111,400 |
| X .20 | |
| Cost share (20% Match on Total Project) | 22,280 |
| Request from Sponsor (80% of Total Project) | 89,120 |
You can and should use the indirect costs associated with the applicable direct cost share items. In the example above using non-equipment items as cost share, back out the indirect costs rate (we’re using 52% here). To do this, divide the total cost share obligation by 1.52. (22,280 / 1.52 = 14,658 TDC). This means you will need to identify $14,658 in personnel or other direct costs that the department will pay for if an award is received.
Under-recovery of Indirect Costs (F&A) as Cost Share
Foregone or under-recovery of indirect costs — aka facilities and administrative (F&A) costs — on the sponsored portion of a project may, with prior approval by the sponsor or if explicitly noted in the sponsor-approved budget, be claimed as cost sharing. If indirect costs are defined as unallowable by the sponsor, then such costs are also unallowable as cost share; however, unallowability must be determined by statutory regulations for all federal agencies. Please contact SPARCS for assistance interpreting whether indirect costs are allowable for a particular award opportunity. Under-recovery of indirect costs may only be used as cost sharing if indirect costs are considered unreimbursed, rather than unallowable, costs. The calculation of under-recovered indirect costs is described below:
Step 1:
Calculate (or re-calculate) the indirect costs on the sponsored share using the appropriate, federally negotiated rate and base (i.e., for on-campus research use 52%) on modified total direct costs (MTDC).
Full Federally Negotiated Rate
| Cost Category | Amount (example) |
|---|---|
| Salaries | 50,000 |
| Fringe | 12,500 |
| Supplies | 4,500 |
| Travel | 3,000 |
| Equipment | 5,000 |
| Direct Cost | 75,000 |
| Indirect Cost 52% MTDC | 36,400 |
| Total Project Costs | 111,400 |
Sponsor Limits Indirect Costs (F&A) to 20% Total Direct Costs (TDC)
| Cost Category | Amount (example) |
|---|---|
| Salaries | 50,000 |
| Fringe | 12,500 |
| Supplies | 4,500 |
| Travel | 3,000 |
| Equipment | 5,000 |
| Direct Cost | 75,000 |
| Indirect Cost 20%TDC | 15,000 |
| Total Award | 90,000 |
Step 2:
Subtract the indirect costs allowable by the sponsor.
| Cost Category | Amount (example) |
|---|---|
| Full F&A | 36,400 |
| Reduced F&A | 15,000 |
| Difference to be used as match | 21,400 |
This figure is your under-recovery of indirect costs (sometimes referred to as a “waiver” of F&A).
For specific guidance on this matter call SPARCS at 919.515.2444 or email sps@ncsu.edu.