Administrative Policies and Procedures Manual - Policy 2430: Cost Sharing on Sponsored Projects

Date Originally Issued: 07-15-1998
Revised: 08-01-2006, 07-01-2015

Authorized by RPM 5.9 ("Sponsored Research")
Process Owners:  University Controller and HSC Senior Executive Officer for Finance and Administration

1. General

Cost sharing refers to a portion of a sponsored project or program costs that is paid by the University. Cost sharing can be imposed by a sponsor as a condition of the sponsored award or it can be volunteered by the University. The Vice President for Research or the Chancellor for Health Sciences will agree to cost sharing only when required by the sponsor or in rare situations when justified by the competitive nature of the award. Cost sharing should be held to a minimum and must adhere to the sponsoring agency's guidelines and comply with this policy.

Cost sharing obligations must be funded from identifiable resources available to the principal investigator, department, school, or center involved. Any indication of cost sharing mentioned in the technical proposal must also be included in the proposal budget. Once a sponsor accepts a proposal containing a cost sharing commitment, it is binding on the University and the sponsoring agency must approve any subsequent changes.

2. Cost Sharing Responsibilities

The primary responsibility for cost sharing lies with the principal investigator, department, unit, college, or school.

2.1. Principal Investigator

The principal investigator must notify the chairperson or director of any external requirements for cost sharing. After the chairperson or director identifies funds for the cost sharing requirements, the principal investigator prepares a proposal based on the funding agency's guidelines. The principal investigator is responsible for ensuring cost sharing funds are expended according to the funding agency's guidelines and this policy.

2.2. Department, College, School, Center, or Division

Before a proposal is submitted, the individual with budgetary authority over the funds used for cost sharing must approve the funding in writing. These funds will be transferred to an assigned cost share account at the start of the project.

2.3. Main Campus or Health Sciences Center Office of Sponsored Projects

Before the proposal is submitted, the Main Campus or Health Sciences Center (HSC) Office of Sponsored Projects reviews the proposal, supporting documentation, and agency guidelines to:

• ensure all required approvals have been obtained; and 
• verify that cost sharing has been correctly reflected in the proposal.

2.4. Main Campus or HSC Contract and Grant Accounting Department

After the award is received, the Main Campus or HSC Contract and Grant Accounting Department:

• transfers assigned funds to the cost share account at the start of the program; 
• approves expenditures for the award account and cost share account; and 
• reports all project expenditures to the funding agency.

2.5. Main Campus or HSC Financial Services Office

The Main Campus of HSC Financial Services Office acts as a liaison with federal and non-federal auditors.

3. Cost Sharing

Cost sharing expenditures are part of the total project and program costs, which include all allowable costs incurred by the University, both direct and indirect, in meeting the objectives of the sponsored project or program. There are two types of cost sharing: mandatory and voluntary. Mandatory cost sharing is cost sharing that is required by the sponsoring agency. Voluntary cost sharing is agreed to by the University in excess of mandatory cost sharing requirements.

3.1. Costs Allowable for Cost Sharing

To qualify as cost sharing, expenditures must:

• be verifiable from the University's records;
• be necessary and reasonable for proper and efficient completion of the project or program objectives; 
• be allowable under the cost principles of Subpart E ("Cost Principles") of 2 CFR Part 200 ("Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards") (Uniform Guidance); 
• be included in the approved budget when required by the sponsoring agency; 
• be incurred for the specific project or program; 
• be incurred within the time period of the award; 
• not be charged or included as contributions to any other federal award, or sponsored project or program; and 
• not be paid by the federal government under another award, except where authorized by federal statute to be used for cost sharing or matching.

3.2. Typical Types of Cost Sharing Costs

Mandatory and voluntary cost sharing expenditures which meet all of the above criteria can include the following types of costs:

3.2.1. Costs funded by the University from non-sponsored accounts, and certain nonfederal sponsored accounts and not included as cost sharing for any other sponsored project or program.

3.2.2. Cash and third party in-kind contributions (non personnel) not included as contributions for any other federally assisted project or program.

3.2.3. Volunteer or in-kind services provided by external sources such as professional and technical personnel, consultants, and other skilled and unskilled labor if the services are an integral and necessary part of an approved project or program and are required by the award.

3.2.4. Grant-related income included in the approved project/program budget and approved as additional costs by the sponsor.

3.2.5. Matching funds usually involving a University contribution of funds specifically appropriated for or allocated to the project.

3.2.6. Where full indirect costs are not charged to the sponsor, they may be shown on the budget as a cost sharing expense being borne by the University. The sponsoring agency must have allowed the use of unrecovered indirect costs as use for cost sharing purposes.

3.2.7. Values for non-federal contributions of services, equipment, property, and supplies must comply with Section 200.306 of the Uniform Guidance.

3.3. Unallowable Costs for Cost Sharing

The following type of expenditures can not be used as contributions to cost sharing:

3.3.1. Unallowable costs as defined in the Uniform Guidance.

3.3.2. Indirect costs in excess of the University's approved indirect cost rates.

3.3.3. Salary dollars in excess of regulatory salary caps, e.g., NIH and NSF salary caps, when effort expended in contribution of the sponsored award exceeds the amount of effort associated with the salary cap.

3.3.4. Cost overruns (for indirect cost proposal classification, the University considers voluntary cost sharing as departmental research).

4. References

• Office of Management and Budget's Uniform Guidance, 2 CFR Part 200 ("Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards")
• Health and Human Services (HHS), 45 CFR Part 74 ("Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards")