15.3 Cost Sharing Policy
Establishes policies and procedures to meet federal requirements for proposing, spending, monitoring and reporting cost sharing.
A. Cost Sharing
Cost sharing represents that portion of the total project costs not borne by the Sponsor. Cost sharing is typically in the form of an actual cash expenditure of funds.
B. Mandatory Cost Sharing
Mandatory cost sharing is required by the sponsor as a condition of obtaining an award. The cost sharing commitment must be included in the proposal to be considered by the sponsor.
C. Voluntary Cost Sharing
Voluntary cost sharing is not required by the sponsor as a condition of obtaining an award. However, if cost sharing is offered it must be included in the proposal.
Under the Uniform Guidance, voluntary cost sharing is not expected by Federal sponsors. It cannot be used as a factor during the merit review of applications or proposals unless specified in both the Federal awarding agency regulations and in a notice of funding opportunity.
D. Committed Cost Sharing
When an award is received in which there was a commitment by Stanford in the proposal to share in project cost, (voluntary or mandatory cost sharing or, matching) the activity becomes a binding commitment which the University must provide as part of the performance of the sponsored agreement. This commitment must be tracked in the accounting system as cost sharing.
E. Voluntary Uncommitted Cost Sharing
Voluntary Uncommitted Cost Sharing is faculty-donated effort or other direct costs above that agreed to as part of the award. Since it was not proposed and constitutes “additional” time or materials it is not considered a binding agreement and shall not be accounted for as cost sharing.
Matching is where the sponsor requires the University to match grant funds in some proportion with funds from another party, either from the University or more typically another sponsor (with both sponsors’ approval). Matching requirements may be in the form of actual cash expenditure of funds or may be an “in-kind” match, which is the value of non-cash contributions to the project including, with sponsor approval, the third-party organization’s approved federally negotiated indirect cost rate or, a rate in accordance with the Uniform Guidance. An in-kind or matching contribution made by a party other than Stanford requires documentation from the third party supporting the use of the funds as in-kind/matching and may require a certification of fair market value.
2. The Cost Sharing Commitment
When a PI proposes, and the University agrees to cost share University resources, the University is required to provide the stated resources in the performance of the awarded project. Considering the administrative requirements and responsibilities inherent in the cost sharing commitment, the PI (or other person responsible for the identified fund) should carefully weigh the cost effectiveness versus the expected benefits of each potential cost sharing commitment. Cost sharing of direct expenditures represents a redirection of departmental or school resources from teaching or other departmental and school activities to support sponsored agreements. This commitment must be indicated on the Proposal Development Routing Form (PDRF). By approving the PDRF, the department chair or designee approves the cost sharing commitment.
Implicit in the University’s commitment to cost share is the PI's agreement to ensure that:
- Voluntary cost sharing is permitted by the particular sponsor and project for which it is being proposed and that funds are available for cost shared direct costs.
- He/She understands that unless specified in both the Federal awarding agency regulations and in a notice of funding opportunity, voluntary cost sharing is not expected by Federal sponsors and cannot be used as a factor during the merit review of proposals.
- Cost shared expenses are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
- Cost shared expenses will be appropriately charged, tracked, reviewed, certified and accounted for in compliance with University and sponsor requirements.
- University space is coded in the University's Space Inventory System, consistent with the coding of expenditures in the accounting system.
The PI will review and certify these expenditures in the same manner as all sponsored project spending. The tracking, reporting, and certifying of cost sharing are subject to audit.
3. Expenditures Eligible for Cost Sharing
Cost sharing may consist of allowable direct and/or F&A costs.
A. Direct Costs
1. Faculty, Student or Staff Effort
It may be appropriate to contribute faculty, student, or staff effort to the performance of a sponsored agreement. The commitment to provide such support binds the University to contribute the effort and record the associated expenditures including fringe benefits in separate cost sharing PTAs.
A faculty member with an appointment less than 12 months may be paid from federal and/or non-federal sponsored projects for no more than 90% (95% for Research Faculty) during any of the summer months. The remaining summer effort cannot be cost shared. This effort is reserved for University obligations of time associated with the key person's position (which would include teaching, committee and departmental responsibilities as well as preparing proposals per RPH 3.2 for sponsored funding and leave from campus).
Equipment cannot be offered as cost sharing unless the receipt of the award is contingent upon such cost sharing e.g. instrumentation proposals. PIs should take care in preparing proposals for sponsored agreements not to commit the use of Stanford-owned or government-owned equipment as cost sharing, but rather to characterize the equipment as "available for the performance of the sponsored agreement at no direct cost to the project."
Proposals which include the acquisition of special-purpose equipment as a direct cost may include an offer of University funds to pay for all or part of the cost of such equipment.
3. Other Direct Costs
Allowable direct costs other than salaries, fringe benefits, or equipment may be committed by the PI as cost sharing on the proposal budget. The following are examples of other direct costs that may be cost shared:
- travel expenses
- items that do not meet the capitalization threshold
- laboratory supplies
- the University contribution to graduate student tuition (imputed)
B. Facilities and Administrative Costs (Indirect Costs)
Facilities and Administrative Costs (Indirect Costs) costs are real costs of conducting instruction and research. These F&A costs do not disappear simply because a sponsor refuses to pay for them; the University must fund any F&A costs that have not been reimbursed. When direct costs are cost shared, the F&A costs associated with the direct costs are automatically cost shared. PIs may take advantage of the automatic cost sharing of these costs, and include them on the proposal budget. PIs may also include any waived F&A costs as University cost sharing in proposals. (For the Stanford policy on waivers, see RPH: Indirect Cost Waivers.) For federal awards, unrecovered indirect costs on cost sharing may be included as part of cost sharing only with the prior approval of the federal sponsoring agency.
The accounting system is not capable of tracking cost shared F&A costs; they will not appear in the expenditure statements. The Office of Sponsored Research will calculate the cost shared F&A costs based on information from the awarded budget and the accounting system for reporting purposes.
4. Expenditures Not Eligible for Cost Sharing
The following expenses cannot be offered as cost sharing commitments in sponsored project proposals:
- unallowable costs as defined in either the Uniform Guidance or OMB Circular A-21 costs designated as unallowable for a particular sponsored project
- salary dollars above a regulatory cap, e.g., NIH
- salary dollars for effort above 90% (95% for Research Faculty) for summer salary for those faculty with an appointment of less than 12 months
- University facilities such as laboratory space. PIs should take care in preparing proposals for sponsored agreements 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."
- University utilities
- depreciation on government-funded equipment
In addition, cost sharing may not be proposed where the sponsor has explicitly prohibited it (e.g., National Science Foundation).
5. Source of Funds for Cost-Shared Expenditures
Identifying and providing resources for cost sharing of direct costs (including equipment) is always the responsibility of the PI. The PI may NOT utilize funds from another federal award as the source of cost sharing, except as authorized by statute. The PI may utilize funds from non-federal awards as the source of cost sharing ONLY when specifically allowed by both parties. Funds for cost shared expenditures are typically identified from among gift, endowment income, operating budget, or other department designated funds. In the School of Medicine, neither operating budget nor designated clinic accounts can be used for this purpose.
After the end of the project performance period, when project expenses result in more charges to a sponsored account than were funded, the amount of the overdraft must be included in the University’s modified total direct cost base (MTDC) for calculation of the F&A rate. An overdraft does not represent cost sharing but it must be charged to a cost sharing account in order for it to be included in the MTDC base.
7. Reduction in Cost Sharing
The actual effort and other costs required to accomplish the goals of a sponsored project might differ from what was proposed and awarded. The total costs could decrease due to changes in programmatic needs. When there is cost sharing on such projects, the sponsor may need to be consulted to determine if the reduction can be applied to either the University's committed cost sharing or to both sponsor and University resource contributions on a pro rata basis. Otherwise, the sponsor's share is reduced and the University’s entire cost sharing commitment must be met. The PI or the PI's departmental or research administrator must consult with the Institutional Official in the Office of Sponsored Research (OSR), Industrial Contracts Office (ICO) or the Research Management Group (RMG) before contacting the sponsor.
8. Reporting Cost Sharing
The Office of Sponsored Research is responsible for providing information to sponsoring agencies that demonstrate the University has fulfilled the cost sharing commitments that it made as a condition of receiving external sponsorship. An overdraft in not considered cost sharing and is not reported to a sponsor.