GAP NO. 200.140
Cost Sharing on Sponsored Projects
I. GENERAL
Cost Sharing is defined as committed resources that are NOT budgeted in a research agreement. Common examples include salary costs in excess of the NIH salary cap and committed but unbudgeted effort.
Example: If a PI has 30% effort on a grant and only 20% is funded by the grant; 10% is cost shared. The 10% is typically paid by the department or discretionary account.
It is critical that we capture effort related to committed cost sharing to demonstrate we are meeting our commitments. If you commit effort on the grant with no salary dollars, you have to capture that effort on the grant.
Duke University will on occasion share in the costs of sponsored programs funded by outside entities. The University recognizes that strong research and training programs are an integral part of the University's academic program.
This procedure has been developed to ensure that “cost sharing” on sponsored projects is proposed, accounted for and reported in a manner consistent with requirements set forth by Duke University, federal regulations (Office of Management and Budget (OMB) Circulars A-110 and A-21), and sponsoring agencies. Regardless of source of funding, Federal Guidelines are used for cost sharing. (Any example using the Federal Government as a sponsor applies also to non-federal sponsors.)
Cost sharing has a significant financial impact on the department providing the funds and on the University as a whole. A decision to cost share should therefore be carefully weighed. On all grant and contract proposals, no cost sharing commitments may be submitted unless specifically approved as outlined in Section IV of this procedure.
The University's procedures, as described in Section V, provide a means of accumulating and documenting cost sharing incurred by the University. This information is critical to Duke's future F&A costs negotiated with the Federal Government.
II. COST SHARING TERMS
The following are Federal Definitions (from OMB Circular A-110) of terms used in this procedure.
A.
PROJECT COSTS
All allowable costs, as set forth in the applicable Federal cost principles, incurred by a recipient and the value of the contributions made by third parties in accomplishing the objectives of the award during the project period.
B.
COST SHARING
Committed resources that are NOT budgeted in a research agreement. Common examples include salary costs in excess of the NIH salary cap and committed but unbudgeted effort.
C.
CASH CONTRIBUTIONS
The recipient's cash outlay, including the outlay of money contributed to the recipient by non-Federal third parties.
D.
IN-KIND CONTRIBUTIONS
The value of non-cash contributions provided by non-Federal third parties. Third party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, and the value of goods and services directly benefiting and specifically identifiable to the project or program.
III. TYPES OF COST SHARING
The following are types of cost sharing:
A. Mandatory cost sharing is that portion of the University's contribution to a sponsored project which is required by the terms of the project. It must be included or a proposal will receive no consideration by the sponsor.
B. Voluntary cost sharing represents resources offered by Duke in sponsored project proposals but is not a specific sponsor requirement.
- Voluntary Committed cost sharing is defined as those resources that are committed and budgeted for in a sponsored agreement.
- Salary amounts in excess of the NIH salary cap are considered voluntary committed cost sharing.
- The fringe benefits associated with that portion of the salary amount in excess of the NIH salary cap are also considered cost sharing.
- Voluntary Uncommitted cost sharing is defined as expenses that are over and above that which is committed and budgeted.
- An example of voluntary uncommitted non-effort cost sharing is expenses that are incurred above the awarded amount such as project overruns. Overruns are moved by the Office of Sponsored Projects to a departmental discretionary account using G/L account 696700 or 696800 as a lump sum.
IV. GUIDELINES FOR COST SHARING PER OMB CIRCULAR A-110
A. All contributions, including cash and third party in-kind, shall be accepted as part of the recipient's cost sharing or matching when such contributions meet all of the following criteria.
- Are verifiable from the recipient's records.
- Are not included as contributions for any other federally-assisted project or program.
- Are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
- Are allowable under the applicable cost principles.
- Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching
- Are provided for in the approved budget when required by the Federal awarding agency
- Conform to other provisions of Circular A-110, as applicable
B. Unrecovered F&A costs may be included as part of cost sharing only with the prior approval of the Federal awarding agency.
C. Values for recipient contributions of services and property shall be established in accordance with the applicable cost principles. If a Federal awarding agency authorizes recipients to donate buildings or land for construction/facilities acquisition projects or long-term use, the value of the donated property for cost sharing shall be the lesser of (1) or (2).
- The certified value of the remaining life of the property recorded in the recipient's accounting records at the time of donation.
- The current fair market value. However, when there is sufficient justification, the Federal awarding agency may approve the use of the current fair market value of the donated property, even if it exceeds the certified value at the time of donation to the project.
D. Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient's organization. In those instances in which the required skills are not found in the recipient organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes, for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
E. When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.
F. Donated supplies may include such items as expendable equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing shall be reasonable and shall not exceed the fair market value of the property at the time of the donation.
G. The method used for determining cost sharing for donated equipment, buildings and land for which title passes to the recipient may differ according to the purpose of the award, if (1) or (2) apply.
- If the purpose of the award is to assist the recipient in the acquisition of equipment, buildings or land, the total value of the donated property may be claimed as cost sharing.
- If the purpose of the award is to support activities that require the use of equipment, buildings or land, normally only depreciation or use charges for equipment and buildings may be made. However, the full value of equipment or other capital assets and fair rental charges for land may be allowed, provided that the Federal awarding agency has approved the charges.
H. The value of donated property shall be determined in accordance with the usual accounting policies of the recipient, with the following qualifications.
- The value of donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient.
- The value of donated equipment shall not exceed the fair market value of equipment of the same age and condition at the time of donation.
- The value of donated space shall not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.
- The value of loaned equipment shall not exceed its fair rental value.
- The following requirements pertain to the recipient's supporting records for in-kind contributions from third parties.
a. Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees.
b. The basis for determining the valuation for personal service, material, equipment, buildings and land shall be documented.
V. COST SHARING AUTHORIZATION PROCEDURE
No commitment for cost sharing or contributed effort may be made without the concurrence and approval of either:
- Office of Research Administration for proposals by the School of Medicine (SOM) and School of Nursing (SON), or
- Office of Research Support for proposals by University/Campus departments.
Cost sharing is a factor in the preparation of proposals and proposal budgets, as well as in the management of project expenditures. Effort or other resources are treated as cost sharing, only if they are quantified in the proposed budget. Principal Investigators (PI's) certify expenditure statements for cost sharing activities/accounts in the same manner as for direct project expenditures. PI's are responsible for ensuring that cost-sharing commitments are met.
For both mandatory and voluntary committed cost sharing, when an award is received in which cost sharing was proposed, the cost sharing becomes a binding commitment that the University must provide as part of the performance of the sponsored project. Mandatory, voluntary committed and voluntary uncommitted non-payroll is all tracked as cost sharing.
VI. COST SHARING EXAMPLES ON FINANCIAL STATEMENTS
All expenses to be cost shared are originally charged to the sponsored project's code. The sponsored project's code is then credited for the cost shared amount. On cost sharing of salaries, equipment, and other direct costs, the cost shared amount is charged to a non-federal cost object of the department.
The following expenses cannot be offered as cost sharing commitments in sponsored project proposals:
- Administrative salaries, services and supplies that are not appropriate as direct costs, as stated in OMB Circular A-21 section F.6. (b). For guidance see GAP 200.320, Direct Costing on Sponsored Projects.
- Unallowable costs, for guidance see GAP 200.320, Direct Costing on Sponsored Projects.
- University facilities such as laboratory space. PI's should take care in preparing proposals for sponsored projects not to commit use of facilities as cost sharing, but rather to characterize the facilities as "available for the performance of the sponsored agreement at no direct cost to the project."
- Depreciation on equipment.
A.
COST SHARING F & A COSTS
For all 3x2 and 3x3 WBS elements the F&A costs are computed at the negotiated rate and charged to G/L account 694600, F&A Costs-Full Costs on the financial statement. The Office of Sponsored Projects does this. If there is cost sharing of F&A costs on these funds, one of the following G/L accounts will be credited:
- 752800 - Non Government Research Cost Objects
- 752900 - Non Government Non Research Cost Objects
- 753100 - Government Research Cost Objects
- 753200 - Government Non Research Cost Objects
EXAMPLE:
WBS element 3031234:
Negotiated F&A Cost Rate:
56%
F&A Costs Cost-Shared:
10%
F&A Cost paid by Sponsor:
46% Modified Total Direct costs for month of April:
$10,000
Negotiated F&A Cost rate:
56%
F&A Costs charged to G/L account 694600:
$ 5,600 Cost sharing credit on G/L account 753100:
($1,000)
Net F&A Costs charged to project:
$ 4,600
For 3x2 and 3x3 WBS elements, the net of G/L accounts 694600 and 75xxxx equals the F&A costs paid by the sponsoring agency.
For all 3xx WBS elements other than 3x2 and 3x3, only the F&A costs authorized by the sponsoring agency are charged to G/L account 694600.
B.
COST SHARING OF SALARIES
A Cost Distribution iForm must be processed indicating the cost shared portion of the salaries. Use one of the following G/L accounts converted to Service Type/Service Category for the cost shared portion of the salary:
- 600300 (60 03), Cost Sharing - Training
603300 (60 33), Cost Sharing - Training Tenure/Tenure Track
600400 (60 04), Cost Sharing - Research
603400 (60 34), Cost Sharing - Research Tenure/Tenure TrackIn the appropriate section of the form, indicate the non-government Cost Object that will actually pay for the cost shared salary. The system will generate an offsetting entry using G/L account 808000 to move the salary and fringe benefits from the sponsored project to the Cost Object actually covering the cost.
EXAMPLE:
The University is cost sharing the salary of Dr. J. Smith who is working on a grant WBS element 303xxxx. The departmental discretionary code, 451xxxx, is picking up the expense for the cost shared salary. For June, the financial statements will show:
WBS element 303xxxx: G/L account Expenses Dr. Smith's Salary: 600400 $1,000.00 Dr. Smith's Fringe Benefits: 610000 216.00 Dr. Smith's Salary, Cost shared: 808000 (1,216.00) Net charge to WBS element for Dr. Smith's salary: -0- Cost Center 451xxxx: Dr. Smith's Salary, Cost shared: 808000 $1,216.00
C.
COST SHARING OF CAPITAL EQUIPMENT
The purchase requisition is processed using the sponsored project's WBS element. After the equipment charge appears on the financial statement, the department must process a Journal Voucher crediting the sponsored project and debiting the cost object that will actually pay for the equipment using G/L account 808100.
EXAMPLE:
In August, a department purchases a microscope for $5,500 for a sponsored project. The microscope is to be cost shared with the department's discretionary 451xxxx cost center picking up the cost. On the purchase requisition, the department charges 303xxxx using G/L account 665000. In September, the $5,500 expense appears on the financial statement. The department does the following Journal Voucher in October to record the cost sharing:
Debit 451xxxx 808100 $5,500.00 Credit 303xxxx 808100 $5,500.00 October's financial statement will show:
WBS element 303xxxx: Equipment: G/L account 665000 $5,500.00 Cost shared equipment: G/L account 808100 (5,500.00) Net charge for equipment: -0- Cost Center 451xxxx: Cost shared equipment: G/L account 808100 $5,500.00
D.
COST SHARING OF OTHER DIRECT COSTS
The sponsored project's WBS element is charged for the expense when it is incurred. After the expense appears on the financial statement, the department must process a Journal Voucher crediting the sponsored project and debiting the Cost Object that will actually pay for the cost using G/L account 808200 .
EXAMPLE:
In August, a PI takes a trip required as part of a sponsored project and processes a Travel Expense Form for $1,500. The travel cost is to be cost shared with the department's discretionary 451xxxx cost center. On the Travel Expense Form, the department codes charges to 303-xxxx using expense types that post to G/L account 698600. In September, the $1,500 expense appears on the financial statement. The department does the following Journal Voucher in October to record the cost sharing:
Debit 451xxxx 808200 $1,500.00 Credit 303xxxx 808200 $1,500.00 October's financial statement will show:
WBS element 303xxxx: Travel expense: G/L account 698600 $1,500.00 Cost shared other costs: G/L account 808200 (1,500.00) Net charge travel expense: -0- Cost Center 451xxxx: Cost shared other costs: G/L account 808200 $1,500.00
VII. IN KIND COST SHARING
The Principal Investigator is responsible for accumulating the data necessary to provide proof of any cost sharing which is received in-kind.
- Complete a Duke University In-Kind Cost Sharing Report
The report should include the value of in-kind contributions. These reports should be prepared each month and sent to the Office of Sponsored Programs for inclusion in the financial reports and billings.
| GAP History | |
| Issued: | March 1995 |
| Revised: | September 2001 |
| Revised: | May 2002 |
| Revised: | July 2002 |
| Revised: | February 2003 |
| Revised: | July 2006 |