Cost sharing is defined as the portion of total costs of a sponsored project paid for by Stanford, rather than the sponsor. Cost sharing can be any one of the following types.
Mandatory Cost Sharing
Required by the sponsor as a condition of obtaining the award. It is quantified in the proposal and is legally binding.
Voluntary Cost Sharing
Is not required by the sponsor as a condition of obtaining the award. It must be included in the proposal.
Committed Cost Sharing
Is when an award is received and there was either a mandatory or voluntary cost sharing commitment by Stanford in the proposal. The cost sharing 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.
Voluntary Uncommitted Cost Sharing
Faculty donated effort or other direct costs 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 is not accounted for as cost sharing.
Refers to the sponsor requirement that the University 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. 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.
The Uniform Guidance made the following changes to cost sharing for federally sponsored agreement and any new funding increment awarded on or after December 26, 2014 that states it incorporates the Uniform Guidance.
- Under Federal research proposals, voluntary committed cost sharing is not expected
- Cost sharing cannot be used as a factor during the merit review of applications or proposals, but may be considered if it is both in accordance with Federal awarding agency regulations and specified in a notice of funding opportunity
Note, a sponsor may choose not to incorporate the Uniform Guidance.
Proposing Cost Sharing
When a PI proposes and Stanford agrees to cost sharing using university resources, the PI must fulfill that commitment in the performance of that project.
Considering the administrative requirements and responsibilities inherent in the cost sharing commitment, the PI (or another 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 PDRF (Proposal Development Routing Form). By signing the PDRF, the department chair or designee approves the cost sharing commitment. Implicit in Stanford’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
NSF Policy on Proposing Cost Sharing
The NSF (National Science Foundation) will not accept proposals with voluntary committed cost sharing unless it is specified in the notice of funding opportunity.
What You Can Cost Share
When submitting a proposal that requires cost sharing, make sure to follow the sponsor's instructions and Stanford policy.
You can propose cost sharing for only those expenses that would qualify as allowable project costs.
Examples of Allowable Cost Sharing
Salary and Staff Benefits (School of Medicine prohibits faculty cost sharing)
- 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).
- Tuition (Stanford's contribution only)
- Equipment when the award is contingent upon such cost-sharing
- Material and supplies
- Other project expenses
- Indirect Costs (F&A) - if sponsor approves
Indirect 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 indirect costs that have not been reimbursed. When direct costs are cost shared, the indirect 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 indirect 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 indirect costs; they will not appear in the expenditure statements. The Office of Sponsored Research will calculate the cost shared indirect costs based on information from the awarded budget and the accounting system for reporting purposes.
What You Cannot Cost Share
The following expenses cannot be proposed as cost sharing on sponsored project proposals:
- Unallowable costs as defined in federal regulations
- Costs designated as unallowable for a particular sponsored project
- Equipment unless the receipt of the award is contingent upon such cost sharing. You cannot cost share equipment in Stanford’s current inventory as the sponsor is already paying for a portion of it through the indirect rate. However, Stanford-owned equipment can be used on a sponsored project. To let the sponsor know the PI’s lab already has the necessary equipment the proposal can explicitly state:
The equipment is available for the performance of the sponsored project at no direct cost to the sponsor.
- 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. These proposals may be for equipment or instrumentation grants, where the purpose of the grant is to buy equipment and we are required to share the cost with the sponsor, or research-oriented grants or contracts where the purchase of equipment required for the research is an allowable expense included in the proposal and award. Purchase and acquisition must occur during the period of performance. The portion of the purchase price paid by the University must be charged directly to a cost-sharing account in support of the award.
- Faculty salary (School of Medicine Only)
- Salary dollars above a regulatory cap, e.g., NIH
- Salary dollars for effort above 90% (95% for Research Faculty) for those faculty with an appointment of less than 12 months
- Stanford facilities
It is not appropriate to claim the value of Stanford facilities as cost sharing. The use of Stanford facilities is partially paid for by sponsors through the application of the indirect cost rate. Therefore, offering university space or facilities as cost sharing is forbidden. The PI may want to offer the use of a research lab or facilities for the project. In such a case, the proposal should explicitly state:
The facility or lab will be available for the performance of the sponsored project at no direct cost to the sponsor.
- University utilities
- Depreciation on government-funded equipment
- F&A (Facilities & Administrative) or indirect costs in excess of the 26% administrative cap, except for DOD contract
- Stipends are not considered compensation for effort and are never accounted for as cost sharing
Cost sharing may not be proposed where the sponsor has explicitly prohibited it (e.g., National Science Foundation)
Funding a Cost Sharing Account
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 (except in the School of Medicine), or other department designated funds.
At the time of proposal submission, the OSR (Office of Sponsored Research) or the RMG (Research Management Group) is notified of the cost-sharing commitment through the Proposal. When OSR/RMG receives the award from the sponsor, the notice of award will indicate if the project involves cost sharing. In addition, the existence of cost sharing is noted in SeRA (Stanford Electronic Research Administration) and Oracle.
Cost sharing PTAs are budgeted so that the committed cost sharing appears in the Budget column of the Monthly Expenditure Statement.
In ALL cases, the cost sharing PTAs may not be in overdraft at the end of the University's fiscal year. The cost-sharing PTAs must be funded at the end of each fiscal year and at the end of each award period.
Cost Sharing Account Setup
If cost sharing is committed, that is, proposed by Stanford and accepted by the sponsor, then it must be accounted for as cost sharing. As part of the New PTA (Project Task Award) Setup or PTA Setup Amendment transactions, the SeRA (Stanford Electronic Research Administration) system will automatically create unique cost sharing PTAs as needed.
Cost sharing tasks are given the designation of the 700 task series with budget and expense tied to the sponsored project period. In many instances, when the cost sharing funding source is coming from different schools/departments, or if there are multiple investigators whose cost sharing commitment needs to be tracked separately, multiple tasks can be set up to accommodate this complexity. Cost sharing PTAs will be listed on the SeRA Notice of Award along with the other PTAs set up in support of a particular sponsored project.
For the purpose of identifying federal vs. non-federal and mandatory vs. voluntary cost sharing, four (4) Oracle Award Purpose codes are used:
Cost sharing PTAs are budgeted with the committed cost sharing appearing in the Expense Control column of the Monthly Expenditure Statement.
Overdraft Cost Sharing
If the department administrator becomes aware of cost overruns after the sponsored project end date, contact your OSR (Office of Sponsored Research) accountant to request a cost sharing PTA be set up for overdraft purposes.
If there are cost overruns at the end of an award and a cost sharing PTA has not yet been established for this purpose, the OSR accountant will contact the department administrator to discuss setting up a cost sharing PTA as part of the closeout process. OSR will notify the department when cost sharing PTAs are setup in Oracle. The Oracle Award Purpose code for overdrafts is INR OVERDRAFTS.
An overdraft does not represent cost sharing, but it must be charged to a cost sharing account in order for it to be properly reflected in the calculation of the Indirect Cost (F&A) (Facilities & Administrative) cost rate.
Timing of Funding the Cost Share PTA
The best practice is to fund the cost sharing account at the inception of the PTA. At minimum, the cost sharing PTA(s) must be funded by the end of each fiscal year and at the end of each award period. Cost sharing PTAs cannot be in overdraft at the end of the University's fiscal year. Department administrators must provide the funding source when providing the cost sharing PTA attributes. The funding source can be from one or more of the following sources:
- Gift fund
- Endowment income fund
- Designated/special fund
- Operating budget (not allowed in SoM - School of Medicine)
Monitoring Cost Sharing Expenses
After the cost-sharing Task and Award is opened, you must charge expenses to the cost sharing PTA in order to meet your cost sharing commitment.
PIs and research administrators are responsible for monitoring the activity in their cost-sharing PTAs. This monitoring includes ensuring the charges are allowable, allocable, and reasonable. Expenditure statements are generated for cost sharing PTAs and must be reviewed and certified in the same manner as direct project costs. PIs and research administrators must monitor the fulfillment of the cost-sharing commitment
OSR will review the cost sharing PTA to ensure the commitment was met when preparing interim or final financial reports or closing out the related sponsored project.
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. If the programmatic needs change, possibly reducing the total costs of the project, contact OSR or RMG to determine how to handle the change and whether to contact the sponsor to determine the effect of the change on the cost sharing commitment.
Reporting Cost Sharing
OSR 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. The accounting system is not capable of tracking cost shared F&A costs; they will not appear on the expenditure statements. OSR will calculate the cost shared F&A costs and report them to the sponsor.
Cost Sharing FAQs
If someone "works" in support of a sponsored project, but the position was not committed in the proposal and is paid by gift or other non-sponsored funds, is the effort cost sharing?
No. According to both Stanford policy and the clarification issued on this point by the Office of Management and Budget (OMB), effort devoted to a sponsored project that was not committed to the sponsor in the proposal is not considered cost sharing.
The clarification issued by OMB in January 2001 states: "Voluntary uncommitted cost sharing should be treated differently from committed effort and should not be included in the organized research base for computing the F&A rate . . . "
Can I cost share on an NSF Proposal?
Unless specified in the applicable program solicitation, NSF prohibits the inclusion of voluntary committed cost sharing in solicited and unsolicited proposals.
My PI wants to propose cost sharing for a federal grant. I understand that the Uniform Guidance say it can not be a factor in the review process unless it is both in accordance with Federal awarding agency regulations and specified in the notice of funding opportunity. What should I advise her?
The Principal Investigator can chose whether or not to cost share. In the School of Medicine faculty salaries may not be cost shared without special approval.
Does a university waiver of F&A on an NSF proposal constitute cost sharing?
Yes, NSF considers “waived F&A” to be voluntary cost sharing and inclusion of voluntary committed cost sharing in proposals to the NSF is prohibited. Cost sharing will only be allowed in NSF proposals when explicitly authorized by the NSF Director and included in specific program announcements.
I've heard that the School of Medicine requires that all faculty effort on sponsored projects be proposed and budgeted, and not offered as cost sharing. Is this true?
Yes, the School of Medicine requires that all grant/contract proposals and/or awards must contain and identify faculty effort, and reflect salary support for the faculty in an amount equal to the percentage of time to be spent on the project, consistent with the policies of the sponsor.
If you are in the School of Medicine, please contact your RPM (Research Process Manager) for more information.
If a graduate student who was committed in a proposal devotes effort to a sponsored agreement and receives salary support from a gift or fellowship PTA, is it cost sharing? Is a distinction made if support is in the form of a stipend versus a salary?
If the student is being paid a stipend from another source, it should NOT be accounted for as cost sharing because stipends are paid to students for training rather than effort, and are not included in the MTDC (Modified Total Direct Cost) base. If the student has an appointment as a Research Assistant and is being paid a salary from another non-sponsored project source, it is cost sharing. Salaries are paid for work being performed, and are part of the MTDC base.