3.10 Cost Sharing
1. Uniform Guidance and Cost Sharing Definitions
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.
Cost Sharing Definitions
Cost sharing is defined as the portion of total costs of a sponsored project paid for by Stanford, rather than the sponsor.
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.
Voluntary cost sharing is not required by the sponsor as a condition of obtaining an award. It must be included in the proposal, although the sponsor does not require voluntary cost sharing as a condition of the award.
Committed cost sharing is when an award is received in which 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 is faculty-donated effort or other direct costs above those 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.
Matching 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.
Allowable Cost Sharing Expenditures
When submitting a proposal that requires cost sharing, make sure to follow the sponsor's instructions and Stanford policy. You can propose cost sharing only for 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)
- Tuition (the Stanford's contribution only)
- Equipment when the award is contingent upon such cost-sharing
- Material and supplies
- Other project expenses
- F&A costs
F&A costs are real costs of conducting instruction, research and other sponsored activities. 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.
Unallowable Cost Sharing Expenditures
The following expenses cannot be offered as cost-sharing commitments in sponsored project proposals.
- Unallowable costs as defined in A-21, section J or the Uniform Guidance
- Costs designated as unallowable for a particular sponsored project
- Salary dollars above a regulatory cap, e.g., NIH salary dollars
- Effort above 90% (95% for Research Faculty) for those faculty with an appointment of less than 12 months
- Stanford 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.
- Stanford utilities depreciation on government-funded equipment F&A costs in excess of the 26% administrative cap, except for DOD contract.
- Equipment unless it is a requirement of obtaining the award
- PI Salary ( School of Medicine only)
- Stipend - 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
Cost sharing may not be proposed where the sponsor has explicitly prohibited it (e.g., National Science Foundation).
Sources of Funds for Cost Sharing Commitments
It is the PI's responsibility to identify and provide resources for cost sharing of direct costs (including equipment).
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 or RMG 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 and Oracle.
2. Budget 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