Cost share or cost sharing, also referred to as “matching,” refers to the portion of a sponsored agreement’s total project or program costs that is contributed by someone other than the sponsor.
University Policy 1.1, Cost Sharing for Sponsored Agreements outlines critical guidance on cost share. Given that cost share generally comprises institutional funds, it’s important to understand the risks and requirements related to managing this activity.
Federal requirements are outlined in Title II of the Code of Federal Regulation, Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. See §200.306 Uniform Guidance "Cost sharing or matching".
Below is general information regarding cost share. If you have questions on accounting for cost share, please feel free to contact the appropriate Source Accountant or firstname.lastname@example.org
The federal government does not recommend or expect voluntary committed cost sharing to be included in a research project proposal. Only mandatory (i.e., required) cost share is to be included, quantified in a sufficient manner as to adhere to the solicitation requirements.
Quantified cost share, reflected in the proposal budget or budget justification, is a binding commitment and must be accounted for in accordance with university policy. Contributions not quantified in the proposal budget or budget justification (i.e., voluntary uncommitted) are nonbinding commitments and do not require documentation or reporting.
Expenses eligible for cost share must be consistent with terms and conditions of the agreement.
Cost share expenses:
Review agreement documentation to identify cost share commitments. In the case of Voluntary Committed cost share, review the proposal budget or budget justification. Cost share commitments are typically reviewed and approved institutionally before the proposal is submitted and should not be a surprise upon receiving the award.
The following identifiers are found in applications we most commonly use and are populated based on sponsored agreement documentation.
Note: If the agreement documentation does not correspond to the data presenting in any of the tools you use, please contact the appropriate Source Accountant.
This is a calculation of the project’s total indirect costs that would be expensed directly based on the university’s federally negotiated rate, less the amount the agreement approved for recovery. Waived indirect costs can only be used to meet a cost share commitment upon approval by the sponsoring agency although prior approval is automatically granted in some circumstances.
Most contract college accounts are not charged benefits directly and the Labor Benefit Rate Category on those accounts is CC (Contract College). If NYS benefits are utilized as a match component, those entries will not be recorded in the general ledger. This is a calculation of the benefits that would be expensed directly to the project based on the appropriate Employee Benefit Rates.
A subcontractor may be required to contribute to the project’s cost share. External commitments are not recorded in our general ledger and must be monitored by the unit throughout the life of the project. This is generally conducted through review of the subcontract’s financial report.
In kind contributions require documentation to indicate the level of support provided, and the value of the services/donated items. Valuation must be consistent with that described in Uniform Guidance 2 CFR 200.306.
Standard Operating Procedure (SOP) for Cost Share Sub-account (PDF, 865 KB)
To avoid complications well into the project, establish the required accounts/sub-accounts upon execution of the award and monitor them throughout the life of the agreement.
A sub-account is required to track cost share commitments using institutional funds. Costs incurred and contributed to the match need to be posted to the cost share sub-account. Do not post them to the funding account (i.e., the account that is funding the cost sharing).
An account attribute is required to track cost share contributed by one sponsored agreement to another sponsored agreement. This is also used for cost share that is met by capital construction (i.e., a plant account). A separate project-related account consistent with the period of performance associated with the project necessitating the cost share may be required. For plant accounts, a separate sub-account may be used to manage the committed cost share related to the specific portion of a larger plant project.
Do not use a cost share sub-account to track commitments between two separate sponsored agreements or capital construction. Refer to Cost Share Sub-Accounts (PDF, 865 KB).
Be cautious of lengthy negotiations and its impact on proposed commitments. Commitments can change over time and may need to be re-evaluated to ensure they can still be met, prior to executing the agreement.
Voluntary uncommitted cost share is not required to be tracked and should not be recorded in a cost share sub-account. Effort that the unit wishes to track for other reporting purposes technically is not a component of the project that requires tracking and documentation. Therefore, these expenses are institutional and should be recorded appropriately based on institutional funds rather than in the cost base of the project.
The organization (org) contributing activity (i.e., expenses) may need a project-related account and cost share sub-account. Expenses incurred within an org generally must be tracked within that org. In addition, effort contributed by a specific org requires a costing allocation for staffing within that org. In other words, staffing must be allocated directly to that org’s account/cost share sub-account.
Reporting access is derived from the fiscal officer, account manager, and the project’s lead principal investigator. It’s important that a project’s accounting structure, including cost share sub-accounts be structured in a way that allows the individuals responsible for a specific portion of the project to have access to financial data required to provide such an oversight.
In some cases, an org may be contributing funds only. This can be addressed by an institutional transfer to the administrative org, and, in this case, the administrative org processes the transactions that are incurred within that org to address the commitment.
It’s important to monitor the cost share commitment throughout the life of the project. Failure to meet the cost share requirement may result in a loss of funding.
If the project has incurred more expenses than awarded, the result is a project overrun. A project overrun must remain in the same cost base as the project. For example, a research project must have the deficit recorded in a research account. A public service project must have the deficit recorded in a public service account.
The most appropriate mechanism for a project overrun is to record the deficit in a cost share sub-account as part of the closeout activity. By doing that, all costs automatically remain within the project’s cost base. However, a departmental overrun account that is in the correct base may also be used.
Effort in excess of NIH’s salary cap is unallowable toward a cost share commitment but does need to be tracked in a cost share sub-account.
Understanding and Managing the NIH Salary Cap (PDF, 372 KB)