Cost Sharing/Matching

Cost sharing occurs when a cost specifically benefits a sponsored project, but is not charged to that project. Cost sharing is normally in the form of a direct cost that would otherwise be charged to the grant or contract, such as salary, capital equipment, or other direct cost items. In certain circumstances, with the sponsor’s approval, cost sharing may also take the form of Facilities & Administrative (F&A) or indirect costs (where the reimbursement of F&A costs is waived or reduced). Matching is essentially synonymous with cost sharing and occurs when a sponsor agrees to fund a portion of a direct cost predicated on the University making an equal contribution.

Many sponsors require institutional cost sharing/matching on their grants and contracts as a matter of statute, regulation, or policy.* Individual solicitations may also indicate a cost sharing/matching requirement. In these cases, the University follows its long-standing practice of meeting published cost sharing/matching requirements for targeted programs.

It is the University’s policy not to cost share/match on a voluntary basis. Voluntary cost sharing occurs when a principal investigator includes cost sharing in a proposal when the sponsor does not mandate it. It is the University’s objective to obtain maximum cost reimbursement from its sponsors; achieving this objective significantly enhances the University’s ability to continue to grow the research enterprise. Therefore, voluntary cost sharing is highly discouraged.

It is important to recognize the compliance and cost recovery implications of cost sharing, whether the cost sharing fulfills a sponsor mandate or is offered voluntarily. When cost sharing of any kind is represented in a proposal, upon award that cost sharing becomes a commitment that must be met and tracked for sponsor verification in the University’s records.

In expending and reporting effort, it is acceptable for percentages of effort to fluctuate between quarters, so long as the aggregate effort at least equals the commitment made to the sponsor for the budget period. If the PI’s actual aggregate effort represents a reduction of 25 percent or more from the original commitment, the sponsor must be notified. Notification should be sent to OSR for review and endorsement with an OSR-2 form prior to submitting the correspondence to the sponsor. In any given period (academic year quarter or summer month[s]), the amount of salary charged to a sponsored project must be equal to or less than, but can never exceed, the actual effort expended. For example, a 10 percent academic year effort commitment may be met by expending 0 percent effort in the first two quarters and 30 percent in the third quarter, but no salary may be charged to the project during those first two quarters.

The fulfillment of cost-shared effort (salary) commitments is demonstrated through the Professorial and Professional Personnel Activity Report (PAR), by indicating percentages of activity on sponsored projects that include the effort that was expended on but not charged to the projects. The fulfillment of non-salary cost sharing commitments is demonstrated through use of the "Grants-Matching Funds" object code (8799) on sponsored accounts. When deemed necessary for management purposes, separate grant companion accounts may be established to facilitate the tracking of cost sharing commitments related to specific sponsored projects. Regardless of the mechanism, it is essential that salary and non-salary cost sharing are properly identified in the University’s records.

Every dollar of cost sharing results in the University forfeiting not only the recovery of the direct cost, but also the recovery of the associated F&A cost (except in the case of cost shared capital equipment for which there is no associated F&A). In addition, in accordance with federal requirements, the University’s total amount of salary and non-salary cost sharing must be included in the denominator or base of the F&A rate calculation. As such, the University must increase its research base with cost sharing amounts, thereby decreasing its F&A rate.

When cost sharing/matching is sponsor mandated or, when not required, is deemed to be in the University’s best interest to include in a proposal, in-kind contributions should always be considered first. An in-kind contribution represents an item of cost for which support is already in place (and, therefore, no new cash outlay is required), such as salary or tuition. Creative packaging of in-kind contributions may suffice to meet program guidelines.

Cash cost sharing/matching contributions should only be considered if in-kind mechanisms do not suffice to meet sponsor requirements. A cash contribution represents a new, incremental purchase, such as for equipment, travel, or additional staff necessary to conduct the sponsored project.

If in-kind cost sharing is proposed on a voluntary basis, documentation must be provided by the department to OSR (e.g., a memo signed by the department chair) indicating the explicit approval to contribute the department-funded salary or other in-kind cost item as a cost-share. This becomes an official part of the budget and should be documented on the proposal budget justification page.

If cash cost sharing is proposed, requests to Central Administration for contributions should not be made until written confirmation of the school and department contributions is secured. School and department contributions are considered to be a significant measure of the proposal’s relevance to the academic mission. School or department cash contributions may come from gifts, salary surpluses recovered from vacant positions, released funds, and research incentive awards.

Requests for cash cost sharing/matching contributions from the Office of the Vice President for Research should be directed to the associate vice president for research. At the time of proposal submission, documentation of cost sharing (indicating the amount and source) must be provided to OSR by the head of the area(s) making the commitment(s). The University reserves the right to make a proportionate reduction in its cost sharing commitment if awarded funds are less than proposed.

Cost sharing may never come in the form of costs funded by other sponsored programs, nor may cost sharing come in the form of otherwise unfunded salary for effort that extends beyond the contractual appointment period (i.e., unfunded summer months for faculty with nine month academic appointments).

Investigators must notify OSR of their intentions to respond to a solicitation that requires cost sharing/matching and to submit their proposals to OSR in a timely manner. Documentation that evidences both mandatory and voluntary cost sharing/matching pledged by the department, school and/or Central Administration must be submitted to OSR at the time of proposal review.

For further information, contact OSR at 847/491-3003 in Evanston or 312/503-7955 in Chicago.