Cost-sharing (or matching funds) is that portion of a project’s cost that is not reimbursed by the federal agency. According to the Office of Management and Budget (OMB) Circular A-110, it is stated that cost-sharing must come from non-federal sources and contribute directly to the proposed project. In addition, cost-sharing expenses indicated on the proposal budget have to be treated in the same manner as the agency funds. Therefore, cost-sharing expenses must be properly accounted for, documented, and reported. Proposals listing cost-sharing should include an explanation on how the commitments will be met and should be discussed with OSP before the proposal is written and submitted.
Cost-sharing should be kept to a reasonable level and should be limited to where it is mandated by the agency or where the institution has committed to a contribution that is necessary to ensure the success of a competitive proposal or a project. Cost-sharing represents a commitment by CFCC, and there are two types of cost sharing:
Mandatory – It may be required by the agency as a condition for the award; that a certain percentage of the total costs of a project should be the responsibility of CFCC and has to be included in the budget proposal.
Voluntary – The agency does not require cost-sharing as a condition of the award, but the institution offers cost-sharing in the budget proposal to be more competitive.
Please note that whether cost-sharing is required by the agency or is voluntary, once an award is made, all cost-sharing commitments are considered to be mandatory and, therefore, are required to be documented, accounted for, and reported. Cost-sharing commitments are subject to audits.
All cost-sharing contributions have to meet the following criteria:
- not included as contributions to any other federally assisted project or program (They have to be unique in nature.);
- necessary and reasonable for accomplishing the objectives;
- included in the budget proposal and approved by agency; and
- conforms to other federal regulations and policies.
General guidelines for third party contributions– Third party contributions can be cash or in-kind contributions. Commitments by non-federal agencies, private organizations, individuals, and other institutions must be:
- necessary to accomplish program objectives
- allowable if CFCC was required to pay for them (For example, entertainment costs will not be an allowable cost.)
Cash contributions: Must be maintained in the CFCC accounting system.
- Volunteer services – Services will be valued and supported by the same methods used by CFCC for employees performing similar work (or consistent with the labor market) and must be documented.
- Employees of other organizations – If they are in the same line of work, services will be valued at the employee’s regular rate of pay; and if they are not in the same line of work, then the rules of volunteer services will apply.
- Donated supplies and loaned equipment or space:
- Supplies – The contribution is valued at fair market value.
- Equipment or space – If donor retains title, then the donation is valued at fair market value.
- Land, building, or equipment – If title is transferred, then the amount that is allowable depends on whether the grant is for capital or operating expenditures:
- If it is capital, then it is fair market value.
- If it is to support current operations, activities that require use of equipment , buildings or land, then the value cannot be claimed for cost sharing or matching funds.
- The fair rental rate of equipment or property can be claimed for cost-sharing with prior approval (It has to be an allowable cost.).
All third-party contributions have to be supported by documentation. The records have to show how the contributions were valued (calculations). For example, volunteer services must be supported by the same methods used for CFCC employees (rate per hour). IRS Publication 561, Determining the Value of Donated Property, can be used as a guide.