Cost Sharing: Introduction
Cost sharing is a phrase used to indicate that more than one sponsor will share in the costs associated with a project. The most common relationship is for an external sponsor to provide most of the funds and for UNC to provide the remainder of the funds necessary to carry out a project successfully. Matching is a form of cost sharing that generally defines a specific ratio of sponsor and UNC dollars. This type of cost share is usually an eligibility requirement state in the RFP. Cost sharing and matching are nearly synonymous and are often used interchangeably. Other specific types of cost sharing are described here as well.
Major Kinds of Cost Sharing
In-kind contributions are those in which a portion or all of the contribution can be goods or services. Two examples of in-kind contributions are: (1) The donation of volunteer time (valued at a rate that would be reasonable for the time devoted had the volunteer been compensated) and; (2) The donation of non-institution space (where such space would normally carry a use fee for purposes other than supporting this particular project.)
Cash contributions differ from in-kind contributions in that an actual cash transaction occurs and can be documented in the accounting system. This includes allocation of compensated time and effort to projects. Although it is easy to mistake the allocation of compensated time and effort as a donation or as in-kind because the staff member would be compensated regardless of the advent of the sponsored project, the value is the result of a cash transaction and should be treated as a cash contribution. Other examples of cash contribution include the purchasing of equipment by the institution or other eligible sponsor for the benefit of the project requiring cost sharing.
Committed Cost Share
Any cost sharing outlined in a proposal document is known as a “committed cost share”. Committed cost share may require documentation and substantiation during the project period, prior to project completion. Projects where cost sharing obligations have not been met may be subject to reduction by the sponsor.
Cost sharing included in a proposal budget must be documented in the official accounting records upon acceptance and management of an award. In-kind contributions must be documented with official correspondences from the organization providing the in-kind cost sharing. These correspondences should include substantive documentation such as published rate schedules, time cards for volunteers, etc.
If cost sharing obligations are not required by the sponsoring agency, they should not be listed on the budget page and should not have a dollar value assigned in the narrative. If cost sharing is listed in a proposal where there is not a requirement from the sponsor, a voluntary commitment of cost share is established. This voluntary commitment results in additional administrative burdens for the PI, departmental and institutional staff to document, track, audit and report on transactions where a requirement would not have otherwise existed.
Warnings about Cost Share