Cost
Sharing at Michigan State University
View CS Training Power Points Presented 10-05
Cost sharing is that portion of
total project costs that are paid from sources other than the sponsor. Typically, cost sharing is a concept that is
used by some federal agencies to demonstrate to Congress and others, a recipient's
willingness to share in the project's expenses. Some agencies make a distinction between "cost
sharing," "in-kind" and "matching." Generally,
all these terms refer to the share of costs not charged to the sponsor.
In some cases these terms can refer to
cash contributions, donated services or facilities. When
completing the MSU "Transmittal for Request and/or Acceptance of Gift, Grant,
or Contract Support," which is required for all off-campus solicitations of
research funds, cost sharing is considered to be all costs listed in the budget
that are not requested from the potential sponsor.
Federal regulations regarding cost sharing are found in OMB Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations" (A-110). Subpart C, Section .23 of A-110 states in part; (a) All contributions, including cash and third party in-kind, shall be accepted as part of the recipient's cost sharing or matching when such contributions meet all of the following criteria.
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other federally assisted project
or program.
(3) Are necessary and reasonable for proper and efficient accomplishment of
project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are
not paid by the Federal Government under another award, except where authorized
by Federal statute to be used for cost sharing or matching.
(6) Are provided for in the approved budget when required by the Federal
awarding agency.
(7) Conform to other provisions of this Circular, as applicable.
(b) Unrecovered indirect costs may be included as part of cost sharing or matching only with the prior approval of the Federal awarding agency...
Subpart C, Section .23 also
delineates specific rules for valuation and documentation for volunteer
services, donated supplies, property, buildings, and equipment. Contact the Office of Contract and Grant
Administration to discuss any items that fall within the preceding
classifications.
Mandatory cost sharing represents
expenses that are paid from non-federal funds that were required by the sponsor
in the project announcement, or costs that were clearly shown in the approved
budget as MSU's share. For example, a
program description may indicate that sponsor funds must be matched at x% in
order to be eligible for the award.
Voluntary cost sharing includes
expenses that have been contributed by MSU to the project in excess of the
sponsor's requirements or those listed in the approved budget. For example, if Professor Jones actually
spent 50% of his time working on the project instead of the 20% that he pledged
in the proposed budget, the excess, 30% (50% - 20%) is considered voluntary
cost sharing.
As can be seen from the above
listing of federal regulations, cost sharing expenses must be documented and
allowable project costs. As a result,
it is important to pick the easiest category of expense to keep track of. In almost all cases, it is easiest to
document salaries (and the related fringe benefits and overhead) than any other
category of expense. Salary cost
sharing is documented via MSU's effort reporting system, which is done once per
semester and is called the Semester Effort Report or SER. Exceptions to the salary cost sharing rule
are made for equipment grants where the documentation is also very easy. Since it is difficult to maintain auditable
records of supplies and services that might be used as cost sharing, unless it
is absolutely unavoidable, these items should not be used.
Cost sharing pledges are a real
commitment of limited university resources.
As a result, cost sharing should only be listed in a proposed budget
when absolutely necessary. Some
examples where cost sharing may be appropriate include:
However, many federal agencies
that use to require cost sharing, have reduced or eliminated the requirement
and instead are basing their funding decisions on the technical merit of the
proposal. Also, the National Science
Foundation recently issued an important notice (No. 124) advising their program
managers and grantees, among other things, that if a proposed budget is cut by
10% or more, a reduced scope of work is expected, and there will be no
expectation of any uncompensated institutional contribution beyond that
formally reflected as cost sharing. For
details please see: http://www.nsf.gov/pubs/1999/iin124/iin124.htm