Cost Sharing

What’s Essential

Cost sharing is the portion of project costs not reimbursed by the sponsor and may be in the form of cash or in-kind contributions. Cost sharing is most commonly associated with federal projects. The UG states that federal sponsors must explicitly state cost sharing requirements in program announcement; cost sharing may no longer be “recommended” by the sponsor. Non-federal sponsor such as foundations may also seek cost sharing in the form of matching funds. The sponsor’s guidelines will spell out what’s needed. OMB establishes the following criteria for such cost sharing:

  • Verifiable from the recipient’s records
  • Not included as a contribution for any other federally assisted program
  • Necessary and reasonable for proper and efficient accomplishment of the project or program objectives
  • Allowable under applicable cost principles
  • Not paid by another federal award, except as authorized by statute
  • Provided for in the approved budget when required by the federal awarding agency

Cost Sharing

Why It’s Important

Cost sharing offered before the award becomes a binding commitment once an award is made. Failure to fulfill the cost-sharing obligation at the level proposed results in the reduction of the amount of the sponsor’s award. The PI is responsible for identifying and providing the resources for cost sharing of direct costs. If the PI volunteers cost sharing, the PI or his/her DLC is responsible for funding the F&A cost (facilities and administration or indirect costs) associated with the cost-sharing commitment.

How to Comply

In the Proposal:

  • If federal sponsors do not explicitly mandate cost sharing in solicitations, cost sharing cannot be considered as a merit review criteria
  • PIs are strongly encouraged to limit explicit commitment of effort contributed at no cost to the sponsor, especially in those instances where contributed effort is not a significant portion of the PI’s total effort
  • If cost sharing is mandated and graduate research assistants (RAs) are budgeted, proposals should not include more than 66 percent of MIT’s anticipated tuition subsidy as a budgeted method of meeting the cost-sharing obligation
  • Anticipated cost-sharing contributions from third parties must be documented in official subrecipient proposals or signed letters of commitment

After the award:

  • PIs and their administrators should monitor cost sharing throughout the duration of the project to make sure the proposed obligation is being fulfilled
  • RAs must be charged to the project as budgeted for tuition subsidy to be an allowable form of cost sharing
  • MIT budgets cost share accounts and funds them with the committed cash. However, cost sharing cannot be documented until cost-shared expenses are incurred in the cost-sharing account
  • DLC administrators must maintain documentation of all cost sharing not documented in the cost-sharing account

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