Cost Sharing or Matching Guidelines
In some cases, Tennessee Technological University (TTU) is required either by Federal statute or program guidelines to share in the total cost of conducting a research project, or otherwise performing or participating on a contract or grant. The portion of the project or program cost not borne by the sponsor is cost share. The cost share commitment may be either a specified level of personnel effort, equipment, facilities, services, or a fixed amount of money, depending on the particular funding agency, and whether the project is solicited or unsolicited.
The term "cost matching" often refers to cost sharing where the amount required as cost share is equal to the amount received from the sponsor. This is also known as dollar-for-dollar cost sharing or matching. Cost sharing or matching is either mandatory (involuntary) or voluntary (optional).
Mandatory (involuntary) cost sharing is mandated by the funding agency as a requirement for the consideration of an award.
Note: Voluntary cost sharing (committed or uncommitted) is strongly discouraged.
Voluntary (optional) cost sharing is not explicitly stated or required in the proposal solicitation, but described as a quantifiable amount of contribution to the project by Tennessee Tech. Voluntary cost sharing can be either committed or uncommitted.
Voluntary Committed Cost Sharing:
Cost sharing specifically pledged on a voluntary basis in the proposal’s budget/budget justification or the federal award on the part of Tennessee Tech that becomes a binding agreement of the award. Therefore, it must be documented, tracked and reported. Under federal research proposals, voluntary committed cost sharing is not expected. It cannot be used as a factor during the merit review of applications or proposals, but may be considered if it is both in accordance with federal awarding agency regulations and specified in a notice of funding opportunity (2 CFR 200.306).
Voluntary Uncommitted Cost Sharing:
Any effort or resources contributed to a project beyond what is committed and budgeted for in a sponsored agreement. Voluntary uncommitted cost sharing is not included in the budget or proposal narrative.
Voluntary cost sharing must satisfy all the conditions detailed below and must be kept to a minimum if used.
The following conditions must be satisfied for either mandatory or voluntary cost sharing:
- Persuasive evidence that cost share is mandatory or necessary;
- Cost share is reasonable (2 CFR 200.404) and allocable (2 CFR 200.405) to the project;
- Source of cost share is allowable (2 CFR 200.403) under funding agency policies and guidelines;
- Cost share can be verified from Tennessee Tech’s records;
- Cost share is not paid by the federal government under another award, without authorization from the federal agency and the flow-through entity.\
- Cost share will occur during the period of performance of the project or program;\
- Cost share has been approved by the federal awarding agency or individuals and units contributing to it; and
- Third-party contributions have been documented and approved by each organization’s authorized representative.
Types of cost share:
1. Cash Contribution: Actual cash transactions that can be documented in the accounting system. These can come from an allowable non-sponsored source including appropriated, discretionary, foundation, or gift funds. Examples of cash cost sharing are as follows:
Effort cost sharing is commonly provided through a portion of the salary (plus associated benefits and F&A costs) of faculty and/or staff members involved in the project. Any salary, stipend, and associated fringe benefits for graduate students can also be cost shared. Tuition provided to support graduate students is eligible as well, if the appointment is made with non-sponsored funds.
b. Unrecovered Indirect (F&A) Costs
Unrecovered indirect cost, as defined in 2 CFR §200.434, is the difference between the amount charged to the federal award and the amount that could have been charged to the federal award under the non-federal entity’s approved negotiated indirect cost rate. Unrecovered indirect cost can be cost shared on any grant or contract if all of the following apply:
(a) Sponsor’s allowed F&A rate is less than Tennessee Tech’s approved rate;
(b) There is a cost share commitment on the award or sponsor approval; and
(b) The award or sponsor’s policy accepts unrecovered F&A costs as a valid cost share contribution.
Unrecovered indirect (F&A) costs are real costs associated with conducting sponsored activity. Tennessee Tech does not recover these funds when direct costs are cost shared or when the allowed F&A rate is less than the negotiated indirect cost rate. Since unrecovered indirect costs are significant, quantifiable losses, they should always be cost shared when allowed by the sponsor. Refer to funding agency solicitation to determine whether unrecovered F&A cost is an allowable cost share.
2. In-kind contribution: Contributions with a value that can be readily determined, verified, and justified, but are not actual cash transacted between the non-federal third party and the non-federal entity applying for the award. Common examples of in-kind contributions include property or services. Equipment acquisition can be used as cost share if it is purchased during the period of the award and it is dedicated to, and used in the project that resulted in the award. In-kind contributions usually come from a third party.
Internal In-Kind Forms:
Cash or in-kind contributions given to a specific grant or contract by an individual or group from outside Tennessee Tech and the sponsoring agency. These contributions do not include Tennessee Tech’s F&A rate. Third-party contributions may include subrecipient’s cost share, provision of goods and services, facilities and/or equipment usage, volunteer time, or non-compensated employee effort. The value of the third-party cost share must be presented to Tennessee Tech based on federal standards for valuing third-party contributions, when such standards are available. Volunteer services furnished by third-party professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for third-party volunteer services must be consistent with those paid for similar work by the non-Federal entity. In those instances in which the required skills are not found in the non-Federal entity, rates must be consistent with those paid for similar work in the labor market in which the non-Federal entity competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, necessary, allocable, and otherwise allowable may be included in the valuation (refer 2 CFR 200.306 (e)).
The following support documentation is required for third-party donations/contributions used as cost share on a project:
- Name of the organization/group/individual providing the donation/contribution on its letterhead stationery;
- The date of the donation or contribution;
- The nature of the donation (equipment, personnel support, services, facilities, etc.);
- Title/name of the project for which a contribution or donation is made;
- The dollar value of the donation or contribution;
- How much of the donation or contribution is direct cost;
- How much, if any, of the contribution is Facilities & Administration (F&A) costs;
- The time period of the contribution or donation;
- The signature and title of the official authorized to make the contribution/donation.
Unallowable Cost sharing
1) Use charges for equipment, computers, or networks that already exist, except when those costs are in an approved University recharge fee.
2) Use charges for land or buildings owned by Tennessee Tech.
3) Salary and fringe benefits of administrative/clerical personnel, unless otherwise approved during the proposal process.
4) Costs incurred from federally-funded sources, unless the federal agencies and flow-through entities agree.
5) Expenditures that have been previously reported as cost share on another federal project.
Investigator Responsibilities Regarding Cost Sharing or Matching
Committed cost sharing in a proposal to a funding agency represents a binding commitment by the University at the award stage, and is subject to audit under federal and sponsor regulations. Cost share commitments must be documented, tracked, and reported to the sponsor by the PI in the same way as other charges. If the anticipated award amount is reduced from the proposed amount, the cost sharing commitment made at the proposal stage should be adjusted accordingly, with the sponsor’s approval.