Policy for Cost Sharing on Sponsored Projects
Cost sharing is a commitment made by the University towards the total cost of a sponsored project. These costs represent actual expenditures above and beyond what a department is already spending on their operations. The expenditures must be identifiable and made within the start and end dates of a grant. The use of existing university property or equipment does not represent cost sharing.
Mandatory Cost Sharing: Cost sharing which is required by the sponsoring agency as a condition of the award. This type of cost sharing must be included in the proposal budget and is usually included on the notice of award. It must be fully documented in the University's accounting records through the grant account.
Voluntary Committed Cost Sharing: Cost sharing which is not required by the sponsoring agency, but which has been committed by the University. If this type of cost sharing is included in the proposal budget, it must be fully documented in the University's accounting records. A common example of voluntary cost sharing is when a PI commits a percent of effort to the project in the budget without any corresponding request for funding.
Voluntary Uncommitted Cost Sharing: Cost sharing that is not committed or budgeted for in a sponsored agreement. It need not be tracked for accounting purposes or reported to the sponsor. Voluntary uncommitted cost sharing commonly results from cost overruns on a project or from PI effort exceeding the amount proposed.
Effects of Cost Sharing
The University policy is to provide cost sharing only when required by agencies. In limited cases, cost sharing will be considered and subject to approval if it is considered necessary due to the competitive nature of the proposal. University cost sharing entails the reallocation of department or University resources towards a specific sponsored agreement. Because resources can be scarce, it is important not to over-commit funds when the sponsor does not require them and when the project can be completed without them.
It should also be noted that cost sharing commitments reduce the University's facilities and administrative rate (indirect cost rate) as it is considered a part of the research base when calculating the rate.
In order to be an allowable cost sharing expense, costs must comply with all of the following:
- It must be necessary, reasonable, and directly related to the project objectives.
- It must occur within the start and end dates of the project.
- It must be verifiable in the University's accounting or time & effort records. The tracking, reporting and certifying of cost sharing are subject to audit.
- It must be an allowable expense under Federal regulations (A-21) and the terms of the sponsoring award.
The following would be considered unallowable cost sharing:
- Administrative salaries, services and supplies which are not permitted by the sponsor as they are included in our F&A rate.
- Existing University equipment or facilities.
- Salary dollars above a regulatory cap.
- Expenses used as cost sharing in any other sponsored program.
- Federal dollars from another award.
- Unallowable costs as defined in A-21, section J found at: http://www.whitehouse.gov/omb/circulars/a021/a021.html
Relationship to Effort Reporting
When a faculty member's time is pledged as cost sharing in a proposal, the pledge should be reviewed by the PI, the department and Academic Affairs to assure that the contribution to the project still is within the 100% effort distribution. Since all cost sharing (mandatory & voluntary) must be fully documented, the PI must include and certify effort towards the project that was not directly charged, on their monthly time & effort report. This time & effort report is the University's means of verifying that cost sharing was performed as promised and commitments were met.
Third Party Cost Sharing
If a sub-awardee makes a cost sharing commitment in their proposal budget, the University will require the sub-awardee to maintain records, report and certify this cost sharing in their invoices to the University. Invoices without cost sharing details and certification will not be paid. The PI must approve these invoices for payment, indicating that the contribution was received.
If committed cost sharing is provided by a third party who is not a sub-awardee, the PI will gather documentation on the third party's letterhead that the cost sharing occurred and its value. Donated supplies, equipment, buildings, and other contributions should be valued at the current market value. Donated services should be valued on rates paid for similar work.
Changes in Cost Sharing Commitments
The actual effort and other costs required to accomplish the goals of a sponsored project might differ from what was proposed and awarded. If changes to the amount pledged for cost sharing are required, a revised cost sharing plan should be submitted to grants accounting for concurrence and forwarded to the awarding agency for approval. The University is bound to meet cost sharing requirements. If it does not, the award will be reduced accordingly.
The University is responsible for demonstrating that it has met mandatory cost sharing commitments. In order to do so, all shared direct costs must be identified by the PI as part of the proposal preparation and approval process. The proposal budget should show committed cost sharing and its sources including account numbers. Once awarded, it is preferable to fund the cost sharing commitments when the grant account is established. Grants accounting is responsible for reporting this cost sharing to sponsoring agencies.