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 Uniform Guidance states that federal sponsors must explicitly state cost-sharing requirements in the program announcement; cost-sharing may no longer be “recommended” by the sponsor. Non-federal sponsors 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 that is 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.