Cost share only when specifically required by the sponsor. Typical cost share items are: PI Salary and fringe benefits and the related facilities and administrative cost. These costs are easily identifiable and documented. Cost sharing in excess of the amount required should be questioned and minimized at the departmental/college level.

Definition of Cost Sharing and Matching

Cost sharing is a phrase used to indicate that more than one sponsor will share in the costs associated with a project. The most common relationship is for an external sponsor to provide most of the funds and for the University to provide the remainder of the project funds. Matching is a form of cost sharing that generally defines a specific ratio of sponsor and University dollars. This type of cost share is usually an eligibility requirement stated in the RFP (Request for Proposal) and is most often provided from institutional resources. Cost sharing and matching are nearly synonymous and are often used interchangeably.

In-Kind and Cash are the most common contributions of cost share.

In-Kind Contribution: In-kind contributions are those wherein a value of the contribution can be readily determined, verified and justified but where no actual cash is transacted in securing the good or service comprising the contribution. Two examples of in-kind contributions are: (1) The donation of volunteer time valued at a rate that would be reasonable for the time devoted had the volunteer been compensated for the time. For example, if you solicit volunteers from the local high school to help run surveys on a research project without compensating the volunteers, it would be appropriate to value the volunteer's time at, say, minimum wage for the number of hours volunteered; (2) The donation of non-institution space where such space would normally carry a fee for purposes other than supporting this particular project (i.e. some negotiation between the PI and the donator, or a benefit will accrue to the donator of the space other than immediate monetary reimbursement for the use of the space). This might be utilization of the local Bank Conference Center without having to pay the pre-defined and published rate.

Cash Contribution: Cash contributions differ from in-kind contributions in that an actual cash transaction occurs and can be documented in the accounting system. This includes allocation of compensated faculty and staff time to projects. Although it is easy to mistake the allocation of compensated faculty/staff time as a donation or as In-Kind because the faculty or staff member would be compensated regardless of the advent of the sponsored project, the value is the result of a cash transaction and should be treated as a cash contribution. Other examples of cash contribution include the purchasing of equipment by the institution or other eligible sponsor for the benefit of the project requiring cost sharing.

Committed versus Uncommitted Cost Share

Committed cost sharing is cost share included in a proposal or a proposal budget must be documented in the official accounting records upon acceptance and management of an award. In-kind contributions must be documented with official correspondence from the organization providing the in-kind cost sharing to include appropriate substantive documentation such as published rate schedules, time cards for volunteers, etc. Any cost sharing outlined in a proposal document considered by a sponsor for funding is known as committed cost share. Cost share that occurs due to internal accounting or project management issues but which is not outlined in a proposal or award document is considered uncommitted cost share. Both committed and uncommitted cost share may require documentation and substantiation prior to project completion (e.g. during the project period). However, if the cost share is uncommitted and voluntary (e.g. not required by the sponsor or the institution), beyond a prudent and sufficient effort on the part of key personnel identified in the proposal (e.g. documentation of effort necessary to conduct the project) does not require documentation.

If Cost Sharing is in the proposal it is deemed committed cost share an obligation will be set up at the time the award is set up. The cost share obligation must be met within the project period. Projects where cost sharing obligations have not been met may be subject to reduction by the sponsor.

Mandatory Requirement versus Voluntary Commitments

Some agencies require Cost Sharing on a project such as EPA at 5% total project costs, some are dollar for dollar, etc. This is known as a Mandatory requirement because the proposal will not be considered without the commitment. If Cost Sharing obligations are not required, they should not be listed on the budget page and should not have a dollar value assigned in the narrative. If cost sharing is listed in a proposal where there is no requirement from the sponsor, a Voluntary Commitment of cost share is established. This results in additional administrative burden for the PI, departmental, collegiate and institutional staff to document, track, audit, and report on transactions where a requirement did not exist prior to establishing it in the proposal. Additionally, a natural effect of cost sharing is to lower our federally negotiated F&A rate which in turn reduces the amount of funds available to the institution for program and infrastructure enhancement.

Some Specific WARNINGS:

• Lab (or any NCSU) space should not be shown as an NCSU contribution.
• Be sure you are not over-committing a person's time beyond 100% effort -- if a person is being paid 100% on other projects and that situation will not be changing, do not commit him/her to this project.
• As a general rule, cost share the minimum amount required.
• Using federal dollars as matching or Cost Sharing toward another federally sponsored project is not allowed unless you have written authorization from both federal agencies.

Calculating Cost Sharing - Some Guidance (not rules)

1. Determine the minimum amount of cost sharing/matching REQUIRED by the sponsor.
2. Determine what kinds of cost sharing/matching the sponsor wants to see. For example, it is often requested that equipment be matched 1:1 (that means for every dollar provided by the sponsor, a dollar must be provided by the institution). Other programs have requirements like 20% of the total request or 50% of the total project costs. Note the different grammar used to describe these various requirements. It is very important.
   1. When the sponsor requires a 1:1 cash match or a 100% commitment, cost match or cost share obligation it means you need to determine the total cost of your project, divide it in half and request one half from the sponsor and one half from the institution.
   2. Similarly, if the sponsor requires 50% of the total project costs to be provided as cost sharing or matching then you need to come up with an equal share of funding from the institution as you are requesting from the sponsor.
   3. If, however, the sponsor requires, let's say, a 20% match of the total grant amount, it usually means that it wants to see a commitment from the institution equal to 20% of the total amount funded by the sponsor. This is similar to the 100% commitment, cash match or cost share obligation as stated in A above but differs from the example in B in that the arithmetic for that scenario is to first determine the entire amount of funds you will need to conduct the project and reduce it by the match requirement.
3. In practice, the reality is you want to know how much money you can get from the sponsor. Here are some examples of how to calculate this figure
   1. Sponsor requires a 20% match. You need $75,000 in direct costs (assume $5,000 of that is equipment) and the sponsor pays full overhead. Your cost sharing calculations look like the following:

      1. First calculate the total direct plus indirect cost you need from sponsor.

         Salaries	50,000
         Fringe	12,500
         Supplies	4,500
         Travel	3,000
         Equipment	5,000
         Direct Cost	75,000
         Indirect Cost (48.5% of everything except equipment	33,950
         Total Award	108,950
         	108,950
         	X .20
         Cost share = 20% Match on Total Award	21,790
      2. You can and should use, as part of this required cost share/match, the overhead associated with the applicable direct cost share items. For example, if you decide you want to meet the cost share/match requirement using faculty time you should include the associated fringe benefits and overhead, at the same rate you used on the requested funds from the sponsor. Other opportunities for meeting cost share/match requirements when the sponsor prohibits all or a portion of our full overhead rate is to use the difference between the allowed overhead and our full overhead. That calculation is located further down under the heading Under-recovery of Indirect Costs. Following are the steps to walk you through calculating backwards from your total cost share/match obligation to determine the amount of time a faculty member must commit on the budget to achieve the required cost share/match:
      • First, back out the overhead (we're using 48.5% here). Do this by dividing the total cost share obligation by 1.485.  (21,790 / 1.485 =  14,673 TDC)
      • Second, from the quotient above back out the fringe benefits (for faculty that's 25%) by dividing by 1.25%  (14,673 / 1.25 = 11,739 PI Salary)
      • In order to determine the amount of fringe benefits, reduce the TDC by the Faculty Salary (14673 TDC – 11,739 Salary = 2,934 Fringe)
      • Third, from that quotient you know how much money you need in salary. Divide that amount by the faculty member’s annualized salary and that is the percentage effort you need to commit in cost share/match.

      • Fourth, put it all together in a budget. Here's how it looks if you assume the faculty member's annualized salary in this example is $65,000.

        Faculty Salary @ 18%	11,739
        Fringe @ 25%	2,934
        Total Personnel	14,673
        TOTAL DIRECT COST	14,673
        F&A @ 48.5%	7,117
        TOTAL COST SHARE/MATCH	21,790

Under-recovery of Indirect Costs (F&A) as Cost Share

Foregone or under-recovery of facilities and administrative costs on the sponsored portion of a project as well as facilities and administrative costs associated with the University contribution can generally be claimed as cost sharing. If facilities and administrative costs are defined as unallowable by the sponsor, then such costs are also unallowable as cost share; however, unallowability must be determined by statuatory regulations for all federal agencies. Please contact SPARCS if you would like assistance negotiating F&A allowability with sponsors. Under-recovery of facilities and administrative costs may only be used as cost sharing if facilities and administrative costs are considered un-reimbursed rather than unallowable costs. The calculation of under-recovered facilities and administrative costs is described in the following algorithm:

Step 1: Calculate (or re-calculate) the F&A cost on the sponsored share using the appropriate, federally negotiated rate and base (i.e. for on-campus research use 48.5%) on MTDC.

Full Federally Negotiated Rate

Salaries	50,000
Fringe	12,500
Supplies	4,500
Travel	3,000
Equipment	5,000
Direct Cost	75,000
Indirect Cost 20%TDC	33,950
Total Award	108,950

Sponsor Limits F&A to 20% TDC

Salaries	50,000
Fringe	12,500
Supplies	4,500
Travel	3,000
Equipment	5,000
Direct Cost	75,000
Indirect Cost 20%TDC	15,000
Total Award	90,000

Step 2: Subtract the F&A costs allowable by the sponsor.

Full F&A	33,950
Reduced F&A	15,000
Difference to be used as match	18,950

This figure is your under-recovery of F&A costs (sometimes referred to as a "waiver" of overhead.

For specific guidance on this matter call SPARCS at 515.2444 or email sps@ncsu.edu.