Research Administration Policies
RA50 Cost Sharing
Subject Matter Expert:
Policy Steward:Senior Vice President for Research and Corporate Controller>
- Specific Guidance
- Documentation of Cost Sharing
- Cost Sharing of F&A Costs
- Special Additional Rules for Property and Equipment
- University Matching Funds
- Further Information
- Cross References
To establish policies with respect to the proper use and accounting for cost sharing for sponsored awards. Cost sharing or match is defined in the Uniform Guidance 2 CFR 200.1 as the portion of project costs not paid by Federal funds.
The Uniform Guidance 2 CFR 200.306 Cost sharing or matching outlines cost sharing requirements for grants and cooperative agreements and provides specific guidance on cost sharing. Individual agencies may have guidelines that vary slightly from those identified herein, so one should verify an agency's specific requirements prior to taking any action.
There are two basic categories of cost sharing, committed and uncommitted. Committed cost sharing is specifically identified in a grant proposal. Uncommitted is cost sharing which was not identified in the grant proposal, but must be treated as cost sharing to assure appropriate allocation and treatment of costs.
- Mandatory: Required as a condition to receive an award and specified by the agency in the proposal guidelines or program announcement. This would be the minimum cost sharing required by the agency. Anything committed beyond the minimum becomes Voluntary Committed cost sharing.
- Voluntary: Committed by the University through the inclusion in the proposal as a specific commitment. This commitment could appear in the proposal either in the administrative/business section (e.g. budget or budget justification) or the narrative. Note that per the Uniform Guidance 2 CFR 200.306: (a) Under Federal research proposals, voluntary committed cost sharing is not expected. It cannot be used as a factor during the merit review of applications or proposals but may be considered if it is both in accordance with Federal awarding agency regulations and specified in a notice of funding opportunity. Criteria for considering voluntary committed cost sharing and any other program policy factors that may be used to determine who may receive a Federal award must be explicitly described in the notice of funding opportunity.
Committed Cost Sharing - both mandatory and voluntary - are accounted for in the same ways and must be properly documented for cost accounting purposes. Note: The nature of uncommitted cost sharing (see below) changes to committed as soon as it is included in the proposal budget or award.
- University expenses, such as faculty salaries, over and above that which is committed and budgeted for in a sponsored agreement.
Uncommitted cost sharing is not and must not be identified specifically in the proposal budget or award or any modification and must not be documented or accounted for as part of the award.
Additionally, uncommitted cost sharing, per clarification in Memorandum M-01-06, dated January 5, 2001, "must be treated differently from committed effort and should not be included in the organized research base for computing the F&A rate or reflected in any allocation of F&A costs." Given this requirement, uncommitted cost share has specific requirements for documentation, which are outlined in RAG50 – Documentation of Cost Sharing.
Any shared costs or matching funds and all contributions, including cash and third party in kind, must be accepted by the Federal agency as part of the University's cost sharing or matching when such contributions meet all of the following criteria:
- Are verifiable from the University's records;
- Are not included as contributions for any other federal award;
- Are necessary and reasonable for accomplishment of project or program objectives;
- Are allowable under the applicable cost principles;
- Are not paid by the Federal Government under another Federal award, except where authorized by Federal statute to be used for cost sharing or matching;
- Are provided for in the approved budget when required by the Federal awarding agency; and
- Conform to other provisions of the UG, as applicable (Uniform Guidance 2 CFR 200.306(b)).
See also Penn State's Cost Sharing FAQs for additional detail.
University Services and Property
Values for University contributions of services and property must be established in accordance with the applicable cost principles of Uniform Guidance 2 CFR 200 Subpart E – Cost Principles. If a Federal awarding agency authorized universities to donate buildings or land for construction/facilities acquisition projects or long term use, the value of the donated property for cost sharing or matching purposes shall be the lesser of:
- The value of the remaining life of the property recorded in the University's accounting records at the time of donation, or
- The current fair market value. However, when there is sufficient justification, the Federal awarding agency may approve the use of the current fair market value of the donated property, even if it exceeds the value at the time of donation to the project (Uniform Guidance 2 CFR 200.306(d)).
Volunteer services furnished by third-party professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for third-party volunteer services must be consistent with those paid for similar work in the University's organization. In those instances in which the required skills are not found in the University organization, rates must be consistent with those paid for similar work in the labor market in which the University competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, necessary, allocable and otherwise allowable, may be included in the valuation (Uniform Guidance 2 CFR 200.306(e)).
Third Party Employer Services
When an employer other than the University furnishes the services of an employee, these services must be valued at the employee's regular rate of pay plus an amount of fringe benefits that are reasonable, necessary, allocable and otherwise allowable, and indirect costs at either the third-party's approved federally negotiated indirect cost rate or a rate in accordance with Uniform Guidance 2 CFR 200.414(d), provided these services employ the same skill(s) for which the employee is normally paid. (Uniform Guidance 2 CFR 200.306(f))
Donated Equipment or Property
Donated property from third parties may include such items as equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated property included in the cost sharing or matching share must not exceed the fair market value of the property at the time of the donation (Uniform Guidance 2 CFR 200.306(g)).
The method used for determining cost sharing or matching for third-party donated equipment, buildings and land for which title passes to the University may differ according to the purpose of Federal award, if (1) or (2) apply:
- If the purpose of the Federal award is to assist the University in the acquisition of the equipment, buildings or land, the total aggregate value of the donated property may be claimed as cost sharing or matching, or
- If the purpose of the Federal award is to support activities that require the use of equipment, buildings or land, normally only depreciation for equipment and buildings may be made. However, the fair market value of equipment or other capital assets and fair rental charges for land may be allowed, provided that the Federal awarding agency has approved the charges.
The value of donated property must be determined in accordance with the usual accounting policies of the University, with the following qualifications:
- The value of donated land and buildings must not exceed its fair market value at the time of donation to the University as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the University,
- The value of donated equipment must not exceed the fair market value of equipment of the same age and condition at the time of donation,
- The value of donated space must not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately owned building in the same locality,
- The value of loaned equipment must not exceed its fair rental value.
The following requirement pertains to the University's supporting records for in-kind contributions from third parties:
- Fair market value of goods and services must be documented and, to the extent feasible, supported by the same methods used by the University for its own internal transactions.
Grants and contracts that have any component of committed cost sharing – mandatory or voluntary – must appropriately document the requirement. See RAG50 – Documentation of Cost Sharing for detail.
The Uniform Guidance states:
Unrecovered indirect costs, including indirect costs on cost sharing or matching may be included as part of cost sharing or matching only with the prior approval of the Federal awarding agency. Unrecovered indirect cost means the difference between the amount charged to the Federal award and the amount which could have been charged to the Federal award under the non-Federal entity's approved negotiated indirect cost rate (Uniform Guidance 2 CFR 200.306(c)).
Before seeking prior approval of the Federal awarding agency, PIs must obtain internal approval to include F&A costs in cost sharing. Although the University is firmly committed to assisting faculty in the pursuit of external funding for research initiatives and program development, the resources available for cost sharing are limited. Therefore, all cost sharing must be approved by appropriate institutional officials who administer the sources of cost-sharing funds. All cost sharing must be documented in accordance with University and sponsoring agency policies.
Requests for cost sharing of F&A costs or for institutional cost sharing through the use of F&A costs must be submitted to the Office of Sponsored Programs or the Corporate Controller's Office as detailed in Policy RA30 – Facilities and Administrative (F&A) Costs.
Property/Facilities purchased or provided in fulfillment of committed cost sharing must be reported to Cost Analysis and Property Inventory by the Business Area Financial Officer (or delegate).
Equipment: There are additional actions that must be taken to ensure that equipment is properly coded in the University's Property/Inventory records. The equipment should be accounted for in the appropriate cost sharing cost collector and reported to Cost Analysis and Property Inventory.
The University may provide matching funds to be used for committed cost sharing purposes. Essentially, these matching funds are used to offset the committed cost-sharing requirement for a particular area. These allocations, approved by the Senior Vice President for Research, should be accounted for as part of the budget in the Cost Sharing internal order under the applicable grant. In addition, any cost sharing committed at the college or departmental level should also be accounted for as part of the budget in the Cost Sharing internal order.
If matching funds provided by the University are treated as uncommitted cost sharing (such as for NSF grants which do not permit committed cost sharing), these costs must be managed and reported as per RAG50 - Documentation of Cost Sharing under Voluntary Uncommitted Cost Share.
The University has several guidelines to manage the allocation of central matching funds:
RAG51 – Central Matching Funds Program for Research Equipment
RAG52 – Central Matching Funds Program for Research Assistantships/Traineeships
RAG53 – Coordination Process for Matching Funds and Other University Contributions to Multi-Unit Proposals
Requests for University matching funds must be submitted a minimum of 10 days before the proposal is due. Retroactive requests after the proposal is funded will not be approved.
For questions, additional detail, or to request changes to this policy, please contact the Office of the Senior Vice President for Research or the Office of the Corporate Controller.
Other Policies should also be referenced, especially the following:
RA10 - Costing Principles for Sponsored Awards
RA30 - Facilities and Administrative (F&A) Costs
RAG50 – Documentation of Cost Sharing
RAG51 - Central Matching Funds Program for Research Equipment
RAG52 - Central Matching Funds Program for Research Assistantships/Traineeships
RAG53 – Coordination Process for Matching Funds and Other University Contributions to Multi-Unit Proposals
March 11, 2021 - Updated to reflect new SIMBA terminology
November 28, 2020 - Updated to reflect UG revision
August 8, 2020 - Updated to reflect changes resulting from SIMBA implementation
September 18, 2019 - Changed Vice President for Research to Senior Vice President for Research
- February 26, 2016 - This new policy (incorporating parts of old RA02 and RAG10) has been created as part of the policy reorganization brought about by implementation of the Uniform Guidance (2 CFR 200).
- March 7, 2005 - Editorial changes to correct link to The Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost Sharing and Tuition Remission Costs."
- New Policy Guideline; formerly University procedure CR2074 - University "Matching" Funds.
Date Approved:February 22, 2016>
Date Published:August 8, 2020>