Time with Office of Sponsored Programs

April 4, 2011

Topic: Cost Share

What Is It

• Cost Share – the portion of a project’s costs not funded by the sponsor. Types include:

Mandatory – cost sharing required by the sponsor as a condition of award.

Voluntary – not required by the sponsor, but has been offered in the budget or proposal narrative.

– THEREFORE, BECOMES A REQUIREMENT OF THE AWARD

Methods of Cost Sharing• University

Costs covered by the institution– Documented in the financial system

F/A

• Third Party – Other than University or Sponsor Subcontractor

– Verify appropriateness , reasonableness

Services, Equipment or Materials– Obtain a letter at proposal to quantify commitment– Ensure proper documentation– Certification from third party at award end

Compliance Requirements

• Cost sharing must be:

Allowable as a direct cost

Incurred during the award period

Necessary and reasonable for the award

Verifiable from the University’s records

Counted one timeFederal $ cannot be used to match Federal $

At Proposal

• Committed cost share must be approved

• Evaluate for reasonableness Both $$ and % of total costAbility to meet and compared with existing

commitments

• Ensure all cost sharing is identified – direct or impliedImplied – certain language and other wording

insinuates the PI will commit effort

At Award Set Up

• All cost share must be accounted for in the Financial System.Establish cost share ChartFields-

MUST BE TIED TO THE PROJECT

OSP will establish the chartFieldIf using development funds, OSP must have

program code

• Third party cost share is not tracked in the University’s financial system.Obtain a letter to quantify commitment

During Award

• All cost sharing must be: Verified, recorded, and reportedMonitoredProperly documented

• Effort reports include cost sharingFund 0000 with same project number

Closeout of Award

• Reported in final financial report

• Ensure all cost sharing is:AllowableProperly documentedMet per commitments

Certification from third party

FAQs• How do I know whether my grant

requires cost sharing? –Check the sponsor program

announcement for any cost sharing requirement.

–Cost sharing is required for specific programs-DOE.

FAQs• How does unrecovered F&A (indirect)

cost get documented in the system?

–OSPA’s will make a manual calculation of the F&A and note it in the grant file.

FAQs• Are costs incurred prior to the start

date or after the expiration date of an award allowable as cost share?

–No, these costs will not be allowable unless sponsor approval is obtained. The project’s period of performance

applies.

FAQs• What does the PI need to do to use

funds from a non-federal award to cost share on a proposal?–Approval from Department Chair or to

ensure funds are not already committed.

–No additional external approval needed.

FAQs• When should the sponsor be notified?

– Before you do any of the following, need approval from sponsor: • Using unrecovered F&A as cost share.• Cost sharing for different categories than original

budget.

– Work with OSPA to notify sponsor in all instances.

FAQs• Specialized equipment was purchased from

departmental funds in November 2008. This equipment will be used on a new project that is awarded in January 2009. Can the equipment be used as cost sharing on the new award?

– No. The equipment was purchased outside the

period of availability.

FAQs• On a proposal requiring mandatory cost

sharing, the PI decides to use 10% of his administrative assistant’s salary. Can this be used as cost sharing for the award?

– No. Unallowable costs cannot be used as cost share. – However, if an unlike circumstance exits it may be

allowable.– Obtain sponsor approval and document the unlike

circumstance in the award.

FAQs

• The PI has not included any of her effort in a proposal, but does include other faculty salaries. Is there cost sharing involved with this award?

– Yes. There is implied cost share as the PI will contribute some minimum amount of effort.

FAQs• A $200K award includes a mandatory 5% cost share.

The budget included $10K for equipment provided by the University and in the proposal narrative, the PI notes he will contribute 15% effort to the project. What is the total cost sharing involved with this award?

– Total Commitment-15% Mandatory 5% - $10K of equipment, and PI effort of 15% of his salary-voluntary commitment (implied)

FAQs

• What are examples of awards where the PI is not required to commit any effort?– Equipment grants– Dissertation support, training grants, or other

awards intended as “student augmentation”– Limited purpose awards such as travel grants and

conference support.

FAQs

• The PI commits 10% of a faculty member’s salary as cost share. Later, the PI notes this faculty member will not be working on the award, but another faculty will be instead. Can the PI use the other faculty member’s salary to meet the cost share commitment?

– If the faculty was named in the award, this is considered a change from the original proposal and requires prior approval from the sponsor before it is allowed.

FAQs• How should third-party contributions be

documented?

– A letter signed by a representative from the organization and on the organization's letterhead which includes detailed information (i.e. name, number of hours worked, hourly rate of pay, dates).

– The letter must be signed by an authorized representative of the organization and his/her title must be included.

FAQs

• Can University facilities, such as laboratory space, be offered as cost sharing?

– No, only costs paid by the University can be used for cost sharing.

– University facility costs are charged to sponsors through the indirect cost rate.

FAQs• If a sponsor reduces or removes the effort of a

specific person in the awarded budget -- for example, a 50% FTE Research Assistant -- is that cost sharing?

– If the scope of work is reduced and the individual does not work on the project, then there is NO cost sharing. However, if the individual still works on that project as proposed, and is funded with other University funds, then it IS cost sharing.

– The scope and budget should be reduced before accepting the award.

Requirements

• OMB Circular A-110 – Administrative

Requirements, subpart C.23.

• OMB Circular A-21 - Cost Principles for Educational Institutions – J.10. Effort Reporting

• UM System - APM 60.30 – Cost Share

• Sponsor Guidelines

Questions for OSP