- Mandatory, Voluntary Committed, Voluntary Uncommitted Cost Share
- Methods of Cost Share
- Consistent Treatment of Cost
- Valuation of Third-Party In-Kind Contributions
- Recognition of Cost Share Requirements
- Excluded or Unallowable Items for Cost Share
- Approval to Cost Share
- Documentation of Cost Share
- Equipment Used as Cost Share
- Exhibit A: Unallowable or Excluded Items of Cost from Cost Share Expenditures
- Unallowable Costs
- Exhibit B: Valuation of Third-Party In-Kind Contributions
Cost sharing is the portion of project costs not reimbursed by the sponsor and may be in the form of cash or in-kind contributions. In a proposal, cost sharing may be offered in response to a requirement from the sponsor (i.e., “mandatory cost sharing”) or may be offered voluntarily (i.e., “voluntary cost sharing”). Cost sharing is most commonly required under federally-sourced grants.
The policy of Emerson is to assume a cost-sharing commitment only when required by the sponsor or by the competitive nature of the award and then to cost share only to the extent necessary to meet the requirements of the sponsored project. The cost-sharing commitment must be included 1) on the Routing Sheet, and 2) in the proposal budget form. Signature on the Proposal Routing Sheet by the responsible official constitutes approval of the cost sharing. This policy statement provides general guidelines for cost sharing in sponsored research.
Mandatory, Voluntary Committed, Voluntary Uncommitted Cost Share
Cost sharing will be considered a specific commitment and mandatory in terms of subsequent documentation requirements when it is a stated requirement of the sponsoring agency or considered significant to the negotiation of the award. Emerson will consider a commitment significant if 1) it is explicitly shown on the Routing Sheet and included in the proposal budget, or 2) it is required as a condition of the agreement. If there is any change in project scope or funding, every effort should be made to negotiate a reduced cost share commitment.
Mandatory Cost Sharing may be required by the sponsor as a condition of the award and becomes an obligation once award is made.
Voluntary Committed Cost Sharing is cost sharing specifically pledged in the proposal’s budget or award and becomes an obligation once an award is made.
Voluntary Uncommitted Cost Sharing is faculty-donated additional effort above that agreed to as part of the award. It is not required as a condition of the award if it is not reflected in the final budget agreement between Emerson and the sponsor and, therefore, is not identified in Emerson’s accounting and personnel records. Examples of voluntary uncommitted cost sharing include statements in the proposal narrative that identify the available expertise of an Emerson faculty member or the available capacity and facilities of the College to carry out the proposed sponsored agreement. If the effort of a Principal Investigator or other employee whose expertise is identified as available is less than 10% of the project time, then this effort should not be proposed as cost share and not shown on the Routing Sheet or proposal budget. It should be noted in the Statement of Work that this person is “available” for the project.
Methods of Cost Share
When cost sharing is required, or allowed, it shall be accomplished through the following methods:
- Project costs funded from other sponsored programs (i.e., federal projects may cost share from private funds; private projects may cost share from federal funds). Federal funds may not be used to cost share other federal funds. (Refer to Exhibit B for valuation methods.)
- In-kind contribution (i.e., project costs represented by services, equipment, and real property, or use thereof) donated by sponsors. (Refer to Exhibit B for valuation methods.)
- Project costs funded by Emerson for the benefit of the specific project. Types of costs that could be cost shared include salary and fringe benefits, travel, supplies and equipment. (Refer to 9. for equipment used as cost share.)
- Waived Facilities & Administrative (F&A) costs. Waived F&A costs are indirect costs that are otherwise available to be recovered by Emerson, but Emerson has agreed to accept less than the full amount. The difference between the F&A costs accepted by Emerson and the F&A costs that would have been provided at the rate allowed by the funder may be used as cost sharing. In some circumstances, the sponsor does not reimburse Emerson at the full F&A cost rate. If waived F&A costs are to be used as cost share, this use must be approved by the sponsor. If approved by the sponsor, when direct costs are cost shared, Emerson will automatically cost share the associated F&A costs at the sponsor’s rate.
Consistent Treatment of Cost
OMB Circular A-21 requires that cost-shared expenses be treated in a consistent and uniform manner from the proposal preparation and award negotiation to the accounting for these expenses in the financial reports to sponsors. The accounting practices used in pricing a proposal and in accumulating and reporting costs on a resulting grant or contract apply to cost share and shall be consistent with respect to:
- Classification of elements of cost as direct or indirect--Cost sharing, which is financed with cash contributed by Emerson or different sponsors, is, by definition, incurred for the same purposes as those costs incurred for the program by the sponsoring agency. Since those costs that can be identified specifically with a particular sponsored program are treated as direct costs to the sponsored program, the amount expended for cost sharing must be treated as direct costs. Thus, cost sharing cannot be expended from F&A-cost cost centers, such as an administrative cost center. However, budget transfers may be made to an appropriate cost center for the purpose of expending cost share dollars.
- Methods of allocating individual costs to the grant or contract—The same method of cost allocation must be used for grants and contracts as it is used for non-sponsored program activity.
- Consistency—Treatment of cost share dollars must be consistent with the functional classification of the sponsored project (e.g., organized research) for which the cost share is committed. If the sponsored program is a research project, then funds used for cost sharing/matching should be from the same functional classification (i.e., organized research). If cost sharing expenditures for research are misclassified as departmental research, the organized research distribution base in the F&A cost proposal will be understated and the F&A cost pool is overstated by the error. This will result in an artificially higher organized research rate.
Valuation of Third-Party In-Kind Contribution
The rule of valuation of a third-party in-kind contribution is "what it would have cost if Emerson had paid for the item or service itself." Special valuation of third-party in-kind contributions for a) volunteer services, b) employees of other organizations, c) donated supplies and loaned equipment or space, and d) donated equipment buildings and land is shown on Exhibit B.
Recognition of Cost Share Requirements
Neither Emerson’s incurred costs nor third-party contributions count toward satisfying matching or cost sharing requirements unless they meet all of the following criteria:
- Verifiable from Emerson’s records (Refer to 8. for documentation of cost share.);
- Not used as matching or cost sharing for any other sponsored program;
- Necessary and reasonable for proper and efficient accomplishment of project objectives;
- Allowable under OMB Circular A-21 (Refer to 6. and Exhibit A for exclusions and unallowables.);
- Provided for in the approved budget; and
- Incurred during the project period of the grant or contract.
Excluded or Unallowable Items for Cost Share
Costs that are included in Emerson’s F&A cost rate proposal usually cannot be used for cost share or matching. Exhibit A to this policy statement specifies the items treated as F&A costs or unallowable costs under OMB Circulars A-21 and A-110.
Approval to Cost Share
Any reduction of F&A costs as cost sharing must be recommended by the Principal Investigator and approved by the Vice President for Academic Affairs, Michaele Whelan at michaele_whelan [at] emerson.edu.
Documentation of Cost Share
Documentation of cost share is the responsibility of the Principal Investigator who commits Emerson’s assets as the cost share. The Office of Finance, in consultation with the Office of Research and Creative Scholarship, will be responsible for transferring funds to be used for cost share into a separate project cost center that has been designated as the cost share amount.
If the cost-share cost center is another grant cost center, the Office of Research and Creative Scholarship will create the cost center upon a request by the PI. When the cost-share cost center is created, it will be noted on the cost center as the companion grant cost center.
Equipment Used as Cost Share
Equipment used as cost share must be identified in the fixed asset inventory system so that the equipment can be identified for the F&A cost rate proposal preparation. This is especially critical when equipment purchased on a grant other than the grant, which requires the cost share. The method is:
- When the grant cost center is setup, the Office of Research and Creative Scholarship will provide the Property Department with the proper coding of the equipment to show the equipment is used as cost share so it may be excluded from any data provided for preparation of the F&A cost rate proposal. [e.g., The Moveable Equipment Inventory Change Request Form should reflect the attribute for equipment used as cost share.] If the useful life of the equipment exceeds the grant period, it would be preferable to negotiate the cost share amounts in terms of depreciation or use charge.
- When the grant ends, the Office of Research and Creative Scholarship will provide the Property Department with the proper coding to show the equipment is no longer used as cost share and may be included in the data provided for preparation of the F&A cost rate proposal. If the equipment used as cost share was a match to a sponsored agreement, the equipment cost should be removed from the F&A cost pool (equipment depreciation) in perpetuity.
Exhibit A: Unallowable or Excluded Items of Cost from Cost Share Expenditures
Costs that are included in Emerson’s F&A cost rate proposal usually cannot be used for cost share or matching. Emerson’s costing policy is to treat the following as indirect costs:
Operation and Maintenance Expenses
- Rental for Emerson Space
- Routine maintenance and normal operation of facilities
- Repair and maintenance of office and general purpose equipment
- Insurance (property, liability, and all other insurance relating to property)—However, costs of insurance required or approved and maintained in order to carry out the sponsored agreement are allowable.
Refer below for equipment used as cost share.
Departmental Administration and General Administration
- Administrative and clerical salaries, wages, and fringe benefits
- General computing costs (business data computing, computer maintenance services, computer network costs, etc.)
- Printing and copying services
- Office, computer, and other small consumable supplies (e.g., diskettes, paper, toner cartridge for printers, dosimeters—film badges and monitoring devise, etc.)
- Local telephone calls
Because the costs associated with the activities listed above are recovered through the application of the Emerson's F&A cost rate, the inclusion of these items in cost share would represent double charging to the federal government.
Unallowable costs may not be used as cost share. See the SUNY RF site for a list of items.
Exhibit B: Valuation of Third-Party In-Kind Contributions
The valuation of a third-party in-kind contribution is “what it would have cost if the College had paid for the item or service itself.” Special valuations of third-party in-kind contributions are:
Services provided to Emerson by volunteers are valued at rates consistent with those paid by Emerson to its employees performing similar work. If Emerson does not have employees performing similar work, the applicable rates are those paid by other employers for similar work in the labor market in which Emerson competes for the same type of services. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
Employees of Other Organizations
When an employer other than Emerson furnishes the services of an employee, these services are valued at the employee’s regular pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided they are in the same line of work for which the employee is normally paid. If these services are in a different line of work, then the rules for volunteer services apply.
Donated Supplies and Loaned Equipment or Space
If a third party donated supplies, the contribution should not be valued in excess of the market value of the supplies at the time of the donation. If a third party donates the use of equipment or space in a building but retains title, the contribution is valued at the fair market rental value of the equipment or space.
Donated Equipment, Buildings and Land
If a third party donates equipment, buildings or land, and the title passes to Emerson, the amount allowed as cost share or matching depends on whether the grant is for capital or operating expenditures. Valuation of the property should be secured by Development and Alumni Relations through the donor. Since the donor will usually take a tax deduction for the contribution, he or she must substantiate to the Internal Revenue Service the value used for the contribution. Development and Alumni Relations should ask the donor for a letter or other documentation, which states a value for the contribution.
Documentation for the value of equipment, buildings or land used as cost share must be attached to the routing of the award, if known at that time.
- Grants for Capital Expenditure If the purpose of the grant or contract is to assist Emerson in the acquisition of equipment, buildings, or land, the value of the asset is the lesser of the total value of the donated property at the time of the donation or the certified value of the remaining life of the property recorded in Emerson's accounting records at the time of donation.
- Grants for Current Operations If the purpose of the grant or contract is to support activities that require the use of equipment, buildings, or land, depreciation and/or use charges based on the market value of the donation are allowed. Or if the federal agency approves, the fair rental value of the donated land and the full market value of the equipment or buildings at the time of the donation may be considered as cost share or matching.