SUBJECT: Cost Sharing Policy for Sponsored Agreements
SUPERSEDES: GIM 21 (Rev/July 1, 2002)
Cost sharing on federal agreements is participation in the costs of a sponsored project by the University using non-federal funding sources. Cost sharing can be mandatory by statute or program requirements as a condition of the award. If cost sharing is specified and quantified in the proposal budget, budget justification, or budget narrative by the University, the institution is committed even when not required by the sponsor. Cost incurred by the University to fulfill cost sharing pledges or commitments must coincide with the budget period of the sponsor award.
Cost sharing is occasionally required on non-federal agreements. The non-federal sponsor will identify terms of the cost sharing in the award agreement. Documentation requirements are the same for non-federal agreements as they are for federal.
Mandatory cost sharing means there is a requirement by the sponsor for non-federal participation in the costs of the federally supported activity. A cost sharing requirement may specify either a minimum fixed percentage of non-federal funds or a level of non-federal participation that has been negotiated between the University and the federal sponsor.
Committed cost sharing is a contribution of effort or other costs, which are quantified in the proposal budget, budget justification, or budget narrative, but are not required by the sponsor as a condition of the award. A common example of committed cost sharing is when a faculty member identifies cost sharing on the budget page, budget justification, or budget narrative of their proposal by proposing a percentage of their effort without any corresponding request for funding. The University policy is to provide cost sharing only when required by agency guidelines, delineated in specific program announcements or necessary due to the competitive nature of the proposal (i.e., considered as part of the proposal evaluation process). Cost sharing from departmental or school resources redirects funds from instruction or other activities to sponsored agreements. The University discourages cost sharing commitments when not required by the sponsor.
Beginning in January 1, 1998, the University was required to comply with new federal Cost Accounting Standards (CAS). Please refer to GIM 23 for guidance. Included under this standard is the requirement to document all mandatory cost sharing requirements or committed cost sharing quantified in the proposal. Therefore, mandatory and committed cost sharing budgets and effort percentages will be printed on the Faculty Effort Certification (FEC) form.
Cost sharing must only be quantified in the budget, budget justification, or budget narrative of a sponsored proposal – not in the proposal body or narrative. In addition, cost sharing should only be quantified if it is significant. If personnel have been asked to perform effort occasionally for an undetermined but incidental amount of time on a grant proposal, a description, such as “participate in the design of test methodologies” or the term “as needed”, should be used in the proposal instead of dollars and/or percentages. This is not considered committed cost sharing and will not be tracked or reported. Cost sharing does not need to be reported or documented if it is not quantified in the proposal.
Occasionally, it may be necessary to identify University contributions other than faculty effort to satisfy cost sharing requirements or to disclose accurately the total cost of a project. These contributions may include supplies or equipment used for the project and purchased during the period of the award from non-federal funds. In rare instances, cost sharing contributions are pledged from third parties or from sub-recipients. Again, if non-effort cost sharing is incidental, do not quantify it in the proposal. For example, equipment could be listed as “available for use”, without placing a dollar amount in the proposal.
Administrative salaries and office supplies are generally unallowable as direct costs; therefore, they are not appropriate for cost sharing (see GIM 23 for further details). Usually, it is unacceptable to claim a portion of the salary of secretarial, administrative, or shop personnel as cost sharing since such services are ordinarily included under departmental administration in the University's indirect cost rates. Other costs that cannot be used as cost sharing are expenses that have been used as cost sharing on other federally sponsored projects, or costs that are unallowable as direct costs on the sponsored project.
If the need to revise a cost sharing pledge occurs after the pledge is documented in the Faculty Effort Certification system, and the pledge is simply moved from one quarter to another or cost sharing will occur during a no-cost extension, the PI or administrative personnel must notify Grant and Contract Accounting by e-mail (firstname.lastname@example.org).
When faculty time is pledged as cost sharing in a proposal, the pledge should be reviewed by the PI and the department (both mandatory and/or committed) to assure that the contribution to the project still is within the 100% effort distribution that must be certified in quarterly Faculty Effort Certification reports. If changes to the amount pledged for mandatory cost sharing are required, or in the cost sharing sources identified once an award is received, a revised cost sharing plan should be submitted to Office of Sponsored Programs for concurrence and forwarded to the awarding agency for approval, if required.
Cost sharing from departmental or school resources redirects funds from instruction or other activities to sponsored agreements. A portion of the academic year salary of faculty members participating in a research project usually represents the University's share of costs for federal agreements from non-federal funds (plus related employee benefits and associated facilities and administrative costs).
When cost sharing is mandatory or committed; Section B of the GC-1 Addendum must be completed. If an advance budget is requested for an award where mandatory or committed cost sharing will occur, the GC-1 addendum should be attached to the advance budget request to enable cost sharing pledges to be placed into the budget driver as soon as possible.
Faculty effort is reported to Management Accounting and Analysis on the Faculty Effort Certification (FEC) form. Non-faculty effort is reported to Grant and Contract Accounting by submitting highlighted Budget Activity Reports (BARS) or letters from third party contributors to verify the cost sharing.
The University is bound to meet sponsor cost sharing requirements. If it does not, the award will be reduced accordingly.
Questions concerning the applicability of cost sharing requirements to particular research projects should be directed to Office of Sponsored Programs, extension 3-4043. Faculty Effort Certification (FEC) questions should be directed to Management Accounting and Analysis at 5-7395.