Cost Sharing

Recommended By
Academic Affairs
Judy K. Sakaki, President
Issue Date
Friday, June 1, 2001
Current Issue Date
Monday, March 26, 2018
Effective Date
Monday, March 26, 2018
Contact Office
Research and Sponsored Programs
Policy number


  1. Purpose

    The purpose of this policy is to provide direction in accumulating, documenting and reporting cost sharing on all grants and contracts administered by Sonoma State University (the University) in pursuit of accomplishing its mission and to comply with sponsor regulations and Integrated California State University Administrative Manual (ICSUAM) §11.003.07.

  2. Definitions
    1. Cost sharing or matching  is the share of the cost of sponsored research programs which is the responsibility of the recipient. In general, cost sharing and matching, therefore, represent that portion of  program costs not borne by the sponsor. Cost sharing can be voluntary or mandatory (that is, required by a sponsor, statute or law), and can take the form of either cash contributions or in-kind contributions. For  federal sponsors, both voluntary and mandatory cost sharing or matching must be provided from non-federal sources; that is, it is not allowable to match federal funding requested with other federal funding (cash or in-kind).
    2. Voluntary Cost Sharing is that portion of a sponsored program that the University and/or third parties contribute to a project on their own initiative.
    3. Mandatory Cost Sharing is that portion of the University contribution to a sponsored program that is required by the sponsor.
    4. Cash Contributions represent the University's cash outlay, including the money contributed to the program by non-federal third parties.
    5. In-kind Contributions represent the value of all non-cash contributions, including services and property, provided by the University and/or third parties. In the case of federally funded programs, property purchased with federal funds may not be included under the definition of in-kind contributions unless authorized by federal legislation.
    6. Recipient's Records are written documents useful for verifying cost sharing calculations in the event of sponsor or the California State University's (CSU) single audits of federal funds. They are individual grant and contract fiscal files maintained  by the Office of Research and Sponsored Programs (ORSP). These files consist of the sponsored program business  documents and official financial reports.
  3. Policy

    Cost sharing commitments should only be made when required by the sponsor and then only to the extent necessary to meet the specific requirements of the sponsored program. It is generally not necessary, from a competitive standpoint, to provide an over-match, or to provide any match at all unless required by the sponsor. Proposals that include cost sharing commitments must have a separate schedule included with the proposal that specifically details out the resources used to meet the cost sharing proposed and the approval signatures necessary to authorize fiscal commitment.

    1. Contributions of Direct Costs

      Direct costs may be contributed to a sponsored program subject to the cost sharing conditions and criteria discussed in the following sections. If direct  costs are contributed to a sponsored program, associated indirect costs should be calculated at the appropriate University negotiated or approved indirect cost rate.

    2. Contribution of Indirect Costs

      It is expected that the full indirect cost rate allowed by a sponsor will be charged. Indirect costs may be contributed to a sponsored program when associated with direct cost contributions. With appropriate approval prior to the submission of a proposal for funding, cost sharing contributions in the form of indirect costs may be made to satisfy a sponsor's cost sharing requirements.

      In other cases, a sponsor may require that an indirect rate below the University approved, federally negotiated rate be used or may require that no indirect costs be requested, resulting in "unrecovered" or "foregone" indirect costs for the University. These costs may be claimed as cost sharing upon approval of the sponsor.

      Approval to use an indirect cost rate other than the federally negotiated rate or a rate lower than the rate stated in the funding opportunity announcement from the sponsor or to forego indirect costs partially or entirely must be obtained from both the Provost and Executive Vice President for Academic Affairs, and the CFO and Vice President for Administration and Finance, or their designees. To obtain this approval, the Principal Investigator (PI) should submit a separate schedule, along with the proposal, that specifies  the sponsor and  the rationale for submitting the proposal in the absence of  allowable indirect costs.

      It is important to note that regardless of whether indirect is disallowed or reduced, it is CSU and University policy that the University will be reimbursed fully for research and sponsored activities including computer networking and maintenance, space, and utilities. Individual projects with low and no IDC will only be approved when the overall IDC revenue of the University from research and sponsored programs is sufficient to cover the costs of administering a project, or the campus unit accepting the award identifies a source of funding for the cost share.

      All cost sharing contributions, both cash and in-kind, which require compliance to  2 Code of Federal Regulations (CFR) §200.306 must adhere to the following:

      1. Are verifiable from the recipient's records;
      2. Are not included as contributions for any other federally  program;
      3. Are necessary and reasonable for proper and efficient completion of the project or program objectives;
      4. Are allowable under the applicable cost principles (2 CFR Subpart E, or other sponsor regulations if the sponsor is nonfederal);
      5. Are not paid by the federal government under another award, except where authorized by federal statute to be used for cost sharing or matching; and
      6. Are provided for in the approved budget when required by the sponsoring agency.
      7. Documentation of Mandatory Cost Sharing

      By accepting an award with mandatory cost sharing, the University incurs an obligation to document and report the financial contributions to the sponsored program. In the case of mandatory cost sharing, written documentation must exist to verify the approval of the on-campus and/or off-campus entities guaranteeing the cost-share, and the signature of the cost-share guarantor on cost share commitment form obligates the guarantor to provide the mandatory cost share.

      In addition, the CFO and Vice President for Administration and Finance, or designee, must approve all mandatory cost sharing contributions pledged by the University. To obtain this approval, the PI should submit a cost sharing commitment form  with the proposal endorsement formthat identifies the budget to be used in satisfying the proposed cost share requirement.

      If the funded proposal will be administered at the school level, the Dean and Provost must approve. If the funded proposal will be administered at the division level, the appropriate Vice President must approve. If there is no identifiable budget for satisfying the cost sharing requirement, the proposal must be presented for approval to the President and Cabinet as a University reserve item, and approved by the CFO and Vice President for Administration and Finance.

    3. Acceptable Cost Sharing Items

      Administrative requirements for cost sharing on federal  programs are in 2 CFR §200.306.

      Cost sharing or matching may consist of the following cost elements used to further program objectives:

      1. Salaries of University faculty or staff who are paid by the University, and who devote a percentage of their compensated time to a sponsored program, without receiving reimbursement from the sponsor
      2. Fringe benefit costs associated with contributed effort as described in item 1.
      3. Indirect costs foregone, that is, the University requests less than the federally approved negotiated rate, and the sponsor does not prohibit the use of indirect costs foregone as cost sharing.
      4. Rent foregone by the University when a sponsored program occupies University owned or rented space, and when there is less than full recovery of indirect costs.
      5. Other direct costs, such as supplies, travel and equipment. Unless equipment is specifically purchased for and solely dedicated to the sponsored program, the value of existing equipment must be prorated and adjusted for depreciation.
      6. Program costs financed by cash contributions by the University, or by cash donated to the University by third parties.
      7. Program costs represented by services and property donated by third parties.
      8. Other contributed services or items of value that are:
      1. necessary to achieve the program objectives
      2. valued in a manner that is reasonable and consistent with 2 CFR §200.306  and verifiable from the University’s records.
    4. Unacceptable Expenditures

    Unacceptable cost sharing in the case of non-federal programs varies depending on the funding source. Examples of expenditures which may not be used to meet cost sharing obligations of federal programs include:

    1. Unallowable costs, such as alcoholic beverages, entertainment and memberships in community organizations.
    2. Any other costs that are not relevant or necessary to the program.
  4. Procedures
    1. Cost Sharing Valuation Methods
      1. Recipient In-kind Contributions:

        Values for recipient in-kind contributions must be in accordance with applicable cost principles (generally 2 CFR §200.306). Recipient institutions are only allowed to offer goods and services as cost sharing when they are able to verify the value from their records.

      2. Third-Party In-Kind Contributions:

      The valuation of third-party in-kind contributions is what it would have cost if the University had paid for the item or service at the time of donation. 2 CFR §200.306 is the primary source for determining the allowability of cost sharing.

      Specific procedures for recipients in establishing the value of in-kind contributions from third parties are as follows:

      1. Volunteer services by professional, technical, consultants, and other skilled and unskilled labor, which are furnished, can be counted as cost sharing or matching if the service is an integral part of an approved program.
        1. Rates for volunteers should be consistent with those paid in the recipient's organization. When that is not possible, rates should be consistent with those paid for similar work in the labor market;
        2. When an employer other than the recipient furnishes the services of an employee, those services are valued at the employee's regular rate of pay.
      2. Value of donated expendable personal property shall not exceed the market value of the property at the time of the donation;
      3. Value of donated non-expendable property may be shown by either of the following methods:
        1. The total value of the donated property can be claimed as cost sharing if the purpose of the award is to assist the recipient in the acquisition of equipment, buildings, or land;
        2. In the absence of specific federal approval, only the depreciated or use charge of equipment, buildings, or land can be used if the purpose of the award is to just support the activities that require the use of equipment, land, or buildings.
      4. The value of donated land and buildings may not exceed its fair market value at the time of donation, as established by an independent appraiser.
      5. The value of donated space shall not exceed the fair rental value of comparable space in the same locality.
      6. The recipient's supporting records for in kind contributions from non-federal third parties are as follows:
      1. volunteer services must be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees;
      2. the basis for determining the valuation for personal services, material, equipment, land, and buildings must be documented.
    2. Responsible Parties

      Because all cost sharing commitments are subject to audit, the University requires appropriate documentation of cost sharing commitments and expenditures in support of those commitments.

      1. Principal Investigators are responsible for:
        1. Securing all necessary cost sharing and matching funds commitments from their academic units or external sponsors in accordance with specific agency program requirements;
        2. Maintaining records to explain and certify fulfillment of cost sharing commitments; and
        3. Completing and adequately verifying with appropriate documentation any cost sharing certification forms and submitting in a timely manner to the grants manager in administration and finance.
      2. Department Chairs are responsible for:
        1. Verifying and ensuring that the department, and/or outside third parties, can and will meet their share of all cost sharing commitments (cash and in-kind);
        2. Determining that the percentage of faculty or staff time committed as an in-kind cost sharing contribution is reasonable; and that the total in-kind effort expended on sponsored projects and University-related duties by faculty and/or staff does not exceed 100 percent.

          The signature of the Department Chair on the cost share contribution form  shall serve as  evidence of adequate review and concurrence of cost share proposed.

      3. School Deans are responsible for:

        Verifying and insuring that academic unit cost sharing commitments (cash and in-kind) can and will be met without detriment to other approved instructional and research activities.

        The signature of the school Dean on the cost share commitment form shall serve as evidence of adequate review and concurrence of cost share proposed.

      4. ORSP Project Administrators are responsible for:
      1. Reviewing funding announcements, award documents, program specific guidelines and agency requirements to determine  cost share requirements;
      2. Providing a basis for recording cost share in the University accounting system.
      3. Follow-up, obtaining, and maintaining up-to-date and appropriate cost share documentation for each cost share program on periodic basis.
      4. Verifying the approval of all cost sharing commitments (cash and in-kind) prior to proposal submission.
      5. Informing all applicants at the pre-submission phase on their cost share responsibilities should their proposal be funded.

      The signature of Provost and Executive Vice President for Academic Affairs, or designee, on the proposal endorsement form shall serve as evidence of adequate review and concurrence of cost share proposed.

      The signature of the CFO and Vice President for Administration and Finance, or  designee, on the proposal endorsement form shall serve as evidence of adequate review and concurrence of cost share proposed.