Costshare and Matching Funds

Definitions

For UO purposes, costsharing is a contribution, either mandatory (required by statute, regulation or written policy) or voluntary, of cash or services provided by the grantee institution or a third party to the overall costs of a sponsored project. If cost sharing is required by the funding agency, the level and type of contributed support are generally specified in program guidelines or application instructions.

Some federal and non-federal programs require a contribution by the applicant or third-parties to total project costs. This is referred to as mandatory costshare. Certain programs require a percentage of the total project costs in hard dollars as a match, such as 1:1 match on equipment grants. This type of mandatory costshare is called matching funds. (Ex: applicant must provide an amount equal to the sponsor's funds to purchase equipment -- a 50-50 match; or, applicant must provide 20% of total project costs).

Contributions included in a proposal that are not required by the program, sponsor policy, or statute is called voluntary costshare. The UO discourages voluntary costshare contributions as a matter of principle. Voluntary costshare has a negative impact on the institution as a whole:

1. scarce institutional resources (cash and in-kind) must be reallocated to a sponsored project; and
2. the University's F&A rate may ultimately be reduced.

Costsharing of direct expenses may be considered a part of the research base when calculating the F&A rate and thus inflate the base on which the indirect pool of expenses are allocated, with a resultant reduction in the negotiated rate and recovery by the institution of F&A costs. It is therefore important not to volunteer funds or resources when the sponsor does not require them and when the project can be completed without them.

In-kind contributions can include both UO and third-party contributions of services or goods; cash contributions can come from UO sources (non-federal) or third-party cash contributions (gifts or grants earmarked for and under control of the PI for use on the project). For example, faculty salaries and benefits plus associated F&A costs equivalent to the time and effort devoted to a project would be in-kind contributions if paid by a department account, but $500 from a supplies budget dedicated to the project and spent as needed on project activities would be a cash contribution. Matching funds are usually a cash contribution, since they are generally used to purchase a piece of equipment or supplies, construct a facility, or are cash donations to a challenge grant.

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Costshare in Proposals

Principal investigators must include with the UO Proposal Clearance Form written documentation - within the proposal itself or separately - describing the kind of costshare, the source (such as a UO Index number, third-party, or other grant number), and the amount. Both in-kind and cash contributions must be authorized, either by signature on the clearance form, email or letter, by those administratively responsible for the funds. Contributions from collaborating institutions must be similarly documented, with a letter of commitment for any matching funds or costsharing.

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Allowable Costs as Costshare

The proposal must specify:

1. the costshare items, including individuals' names and contributed percentage of effort
2. the amounts, and
3. the source of funds for costshare obligations.

Depending on the program or agency, costshare commitments may be satisfied by providing cash, in-kind services or supplies, tuition waivers, faculty or staff effort devoted the project, or waived facilities and administrative (F&A) costs. Allowable costshare must be for costs that comply with federal cost principles and award terms. They must be costs that are allowable and allocable, necessary and reasonable, and verifiable and accounted for in the institutional records.

Cash costshare can include dedicated dollars (such as for equipment purchase) from a department or institute operating account, from another grant (must be non-federal source to costshare on a federal grant or prior approval obtained from the agency), or from other third-party sources (cash gifts or grants from individuals, industry, foundations, etc.) if not already committed to another project as costshare. In-kind costshare is donated services and goods from any eligible source; that is, donated faculty or staff time that is already paid for by another non-federal account; supplies, equipment or other items newly purchased from or donated by another source and dedicated to and documented for the specific project (do not costshare equipment already owned by the University, as it is included in the indirect cost calculation); the associated F&A costs on the UO contributions; and F&A costs not chargeable to the grant when the program limits the applicable rate and the agency allows the difference to be used as costshare.

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Documenting and Reporting

The award document or attached approved budget usually contains the reportable amount of costshare. This official amount may vary from the amount proposed in the original application. The amount of costshare in the official award notice is the required amount that must be documented and reported as costshare; if an amount does not appear in the award, then the amount originally proposed will be the official costshare.

Whether mandatory or voluntary, in-kind or cash, if the UO proposal contains an offer of costshare contribution, and/or the award document includes a costshare amount, the UO must collect and document this amount during the project and report it to the funding agency to be in compliance with A-110 and audit requirements. Principal Investigators (PIs) are responsible for identifying, accumulating, and reporting the required costshare on a grant. Should the costshare commitment not be completely fulfilled, the award could be reduced in a proportionate amount. Since most federal and some non-federal awards are spent before actual funds are received, this could result in the University paying back funds to the sponsor.

Faculty or staff time that is to be costshared is documented through the institution's activity reporting system. Once the contributed salary is identified, fringe benefits and F&A costs (if any are charged on the grant) will be added automatically as additional costshare. Other kinds of costshare can be reported in various ways. PIs can provide copies of purchasing records, letters certifying the value and use of materials, or other documentation.

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