George Mason University

Skip Navigation

Office of Sponsored Programs


 

Cost Sharing Policy and Procedures for Sponsored Projects

Contents

Policy Statement
Reason for Policy
Related Documents
Definitions
Overview
Pre-Award Procedures
Post-Award Procedures
Responsibilities

Policy Statement

Cost sharing must be proposed, approved, administered, and accounted for in a consistent and prudent manner. This includes understanding workload implications of the cost-sharing commitment; determining when cost sharing is appropriate; and accurately recording and reporting cost-sharing expenses.

Reason for Policy

The University may provide resources in a "cost-sharing" arrangement to support a sponsored project. Contribution of such resources must be carefully considered and approved by the party with budgeting authority. Once committed, it is important to document the fulfillment of the university's responsibilities for cost sharing, and to maintain compliance with government and other regulations.

Related Documents

OMB Circular A-21: Cost Principles for Educational Institutions
OMB Circular A-110: Uniform Requirements for Grants and Agreements with Institutions of Higher Education Hospitals, and Other Nonprofit Organizations

Definitions

Cost Sharing:

A portion of total project or program costs related to a sponsored agreement that is contributed by someone other than the sponsor. Cost sharing is further classified as either mandatory or voluntary (see below).

Cost-sharing Activity Code:

A six digit activity code number will be used with budget and expenditures to record committed university contributions to sponsored project or program.

Direct Cost:

A cost that directly benefits and is specifically associated with a sponsored project or program.

Effort:

Compensated time spent, expressed as a percentage, such as on a sponsored project or program.

Effort Planning and Certification Process: 

Effort is planned and budgeted when a project is set up.  Each semester effort reports are distributed to personnel who have worked on sponsored projects and recipients of effort reports certify that the report is accurate.  Both mandatory and voluntary committed cost sharing is reported in effort reports.

Facilities and Administrative Cost:

A cost incurred in support of the project or program that does not directly benefit, and is not specifically associated with a sponsored project or program. Facilities and Administrative costs include such items as utilities and other plant costs, and certain general expenses such as payroll that are to some degree attributable to the project or program.

Indirect Cost:

See Facilities and Administrative Cost.

Mandatory Cost Sharing:

A contribution to a sponsored project or program required by the sponsor as a condition of obtaining the award. Such contributions are binding commitments and must be accounted for in accordance with this policy. Records must be kept of mandatory cost sharing.

Note:

Sponsor “encouraged” cost sharing, not required as a condition of receiving an award does not constitute mandatory cost sharing.

Matching Contribution:

A type of cost sharing, wherein a contribution to a sponsored project or program that is pledged to match some portion of funds provided by the primary sponsoring agency.  Matching contributions may be in any form acceptable to the sponsor, including cash and third party in-kind.

Plan Confirmation:

This is the process used by George Mason University to satisfy federal regulatory requirements for the planning, confirmation, and certification of effort associated with federal organized research projects and other activities that support federal organized research projects (e.g., cost sharing).

Program Code:

The attribute code corresponding to functional classification, assigned to each university fund or organization in the general ledger system.

Program Classification:

The specific purpose of the expenditures incurred in a fund or organization (e.g., instruction, organized research).

Third Party In-kind Contribution:

A non-cash contribution to a sponsored project or program provided by a party other than either Mason or the primary sponsoring agency.  Third party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, or goods and services directly benefiting and specifically designated for the project or program and must be certified by the third party at the time of the proposal submission.

Voluntary Cost Sharing:

A contribution to a sponsored project or program offered by the Principal Investigator but not required by the sponsor as a condition of obtaining the award. Voluntary cost sharing is classified as either committed or uncommitted.

Voluntary Committed Cost Sharing:

Quantified contributions reflected in the proposal narrative, budget, and/or budget justification. These are binding commitments and must be accounted for, in any resulting award, in accordance with this policy.  These contributions are considered to be required cost sharing by the sponsor because they were volunteered as part of the proposal process.

Voluntary Uncommitted Cost Sharing:

Contributions not quantified or reflected in the proposal. These are, therefore, non-binding commitments that do not require documentation or reporting.

Overview

This policy is intended to help with:

  • understanding the administrative, contractual, and financial requirements that result from cost-sharing commitments (see the "Pre-award Procedures" Section of this document);
  • determining when cost sharing is appropriate, and what planned expenditures and services qualify for cost sharing under federal regulations (see the "Pre-award Procedures" Section of this document);
  • proper recording of cost sharing in the university 's accounting system in order to comply with OMB circulars A-21 and A-110; and to ensure consistent collection of cost-sharing information necessary for university purposes (see the "Post-award Procedures" Section of this document);
  • reporting to the Office of Sponsored Programs, who will, as required, in turn report to sponsoring agencies, that the university has fulfilled any mandatory and/or voluntary committed cost-sharing commitments it may have made as a condition of an award (see the "Post-award Procedures" Section of this document).

What Is Cost Sharing?

Cost sharing is the portion of project expenses related to a sponsored agreement that is contributed by parties other than the sponsor and not directly charged to the sponsored project account(s). This may include equipment grants, construction projects, or Interagency Personnel Agreements.

Cost sharing may be required by the sponsor as a condition of receiving an award ("mandatory cost sharing") or offered by the Principal Investigator by including it in the sponsored proposal document ("voluntary committed cost sharing")

Caution:

It is the responsibility of the Principal Investigator and the Unit to evaluate the workload and budget implications of proposed cost sharing (i.e., mandatory or voluntary committed) and to ensure that the university's cost-sharing commitment is met.

Cost sharing represents real costs to the University.

  • Cost sharing represents a redirection of departmental and college resources from teaching or other departmental activities to support sponsored projects.
  • The PI, department chair, college dean or director, and other administrators should carefully weigh the cost-effectiveness and the expected benefits of every proposal for cost sharing prior to making the commitment.  Effort committed may not exceed that allowed by the faculty or staff member’s appointment.
  • The more dollars expended by Mason in cost sharing, the more expensive our research appears to be resulting in a lower F&A (indirect cost) rate.

Multiunit Disciplinary Projects

Some sponsored projects involve multiple university units. In these cases, special attention must be paid to policy compliance by all concerned entities. Thus, it is the responsibility of the unit that administers the award to monitor and advise all affected units regarding compliance with the cost-sharing terms of the sponsored award (see the "Responsibilities" Section of this document).  All questions and reporting related to cost-sharing will be directed to and the responsibility of the lead unit who will be responsible for coordinating communications with any other participating units.

Pre-Award Procedures

Cost-Sharing Commitment

Any University commitment to share in the cost of a project should be identified early in the proposal process.  The University’s cost share commitment must comply with this policy and with the criteria for acceptability.  Funding sources for University cost share commitments must be identified and authorized prior to submission.

Prior to award acceptance, the Office of Sponsored Programs will contact the unit or the Principal Investigator with any concerns it has regarding the university's proposed cost-sharing commitment (mandatory or voluntary committed). At the time of the award, the Office of Sponsored Programs will notify the unit of the mandatory or voluntary committed cost-sharing requirements.

Caution:

Once the award is accepted, failure to comply with the cost-sharing commitment may result in a loss or return of project funds. Tracking of mandatory or voluntary committed cost sharing should be done regularly by units to prevent an over or under-contribution. Over-contributing prevents use of these funds for meeting commitments on other projects; under-contributing may result in a corresponding reduction in the award. If it is anticipated that there will be a significant under-contribution, the Principal Investigator or unit administrator must immediately notify the Office of Sponsored Programs.

Establishing Cost-sharing Effort

Generally, there will be some level of committed faculty (e.g., Principal Investigator) or senior researcher effort directly charged or specifically designated for cost sharing to a sponsored project. For effort to be considered as covered under a sponsored agreement, it must be quantified in the proposal narrative, budget, and/or budget justification. The amount of effort must be realistic and should be determined on a project-by-project basis. For more information, contact the Office of Sponsored Programs.

Caution:

The total of one's effort, including other university duties, must not exceed 100%.

In determining the appropriate level of effort subject to cost sharing, investigators should consider the following:

  • the sponsor's requirement for cost sharing, if any;
  • the percentage of time spent on other sponsored projects;
  • the amount of effort devoted to other functions such as teaching;
  • whether the project involves a co-Principal Investigator;
  • the size of the project.

Allowable Costs for Cost-Sharing

For expenses to be eligible for cost sharing, costs must be all of the following:

  • allowable and allocable under federal cost principles (OMB circulars A-21 and A-110)for federal projects and the terms of the sponsored agreement;
  • necessary and directly related to the project objectives;
  • for labor costs, certifiable in the effort planning and certification (plan confirmation) process.

The costs must not be any of the following (unless approved by sponsor):

  • included as cost sharing for any other project;
  • payable by the same sponsoring agency under another award;
  • payable by a different sponsoring agency within the same governmental jurisdiction under another award (e.g., federal funds must not be used for cost sharing on another federal project).

Specific Expenses That May be Considered for Cost-Sharing

Cost sharing may consist of direct or unrecovered indirect expenses (i.e., waived or reduced indirect cost rate). When direct expenses are subject to cost sharing, the associated indirect costs are automatically subject to cost sharing.

Examples of allowable forms of cost sharing are:

  • the effort of the Principal Investigator and/or employees devoted to sponsored agreements, including the associated benefits costs;
  • tuition, fees, and stipends related to work performed by graduate students on sponsored agreements;
  • the cost of any equipment whose purchase is necessary for, and dedicated to, the successful completion of the project.

Note:

Sponsor approval may be required to include equipment in cost sharing.

Caution:

Existing equipment made available for, but not dedicated to the performance of the sponsored agreement, must not be considered for cost sharing.

  • laboratory supplies;
  • travel necessary for the project;
  • costs incurred by subrecipients or other third parties, including third party in-kind contributions, not otherwise reimbursed.

Caution:

The value of a third party in-kind contribution must be established. When the contribution is in the form of effort, the contributor must certify that the regular rate of compensation was used in the calculation of costs to be shared. When contributions are other than personal services, the provider must state the fair market value of the item.

  • waived or reduced facilities and administrative costs (i.e., the difference between the applicable negotiated indirect cost rate and the amount of indirect costs awarded by the sponsor)

Caution:

Unrecovered facilities and administrative costs (if any) may be included as part of cost sharing on federal awards only if they are specifically identified in the award, or with the specific approval of the awarding agency.

Post-Award Procedures

Accounting for Cost Sharing

All mandatory and voluntary committed cost-sharing expenditures of a sponsored project must be properly recorded and reported in the university accounting system. To facilitate the tracking and reporting of mandatory cost-sharing expenditures by specific awards, unit administrators must track mandatory cost-sharing expenditures by award with activity codes.

When an award is received that has a cost share commitment, the Office of Sponsored Programs will work with the Principal Investigator and Principal Investigator’s home unit to determine the source of funding for the cost share (i.e.  E&G, IDC, Pool, etc.).   The Office of Sponsored Programs will request through General Accounting, the establishment of an activity code that will be used to track the cost share budget, labor and other direct costs.  The activity code assigned will consist of the last four digits of the grant code associated with the project.

If the period of performance on the project overlaps fiscal years, the Office of Sponsored Programs will work with the Principal Investigator to determine cost share commitments per fiscal year.  The Office of Sponsored Programs will then process the necessary budget adjustments, using specific rule codes for a given fiscal year.  The award letter distributed to the Principal Investigator will provide the activity code and a reminder that the activity code must be used on any employee funding change forms, purchase orders, etc. where cost share is to be recorded.  It is the responsibility of the Principal Investigator to ensure that cost share expenses are transacted at the assigned activity code.

To facilitate the accumulation of mandatory and voluntary committed cost-sharing expenditures, Principal Investigators and/or unit administrators should track expenditures.  In-kind contributions from third parties must be properly documented.  Volunteer services should also be documented by the same methods to those used by the university for its own employees (i.e., plan confirmation). Additionally, the basis for determining the valuation of personal service, material, equipment, buildings, and land shall be documented.

Caution:

The amount of cost sharing reported in the accounting system must be consistent with the amount in the award documents. The unit should notify the Office of Sponsored Programs if it anticipates a significant difference.

Documentation

Throughout a project's life and subsequent record retention period, the Principal Investigator and the unit must maintain sufficient supporting documentation to substantiate the mandatory and voluntary committed cost-sharing contribution to the project. This documentation may be required by sponsors and/or auditors.

The specific type of documentation required is based on the nature of the award, the type of cost sharing (i.e., mandatory, voluntary committed), the terms of the sponsored agreement, and other circumstances of the award. For further information, contact the Office of Sponsored Programs.

Note: Upon award, any effort committed as cost sharing should be processed using a funding change form. Voluntary uncommitted effort does not have to be identified. For more information, see University effort reporting policy.

Responsibilities

The major responsibilities each party has in connection with cost sharing for sponsored projects are as follows:

Office of Sponsored Programs

  • Monitor cost-sharing reporting.
  • Review cost-sharing requirements and commitments at the proposal stage.
  • Verify mandatory cost-sharing requirements and voluntary cost-sharing commitments.
  • Notify units of mandatory cost-sharing requirements and reportable voluntary committed cost sharing at time of award.
  • Incorporate appropriate cost-sharing conditions in subrecipient agreements.
  • Upon award, review cost-sharing requirements and commitments.
  • Request an activity code from General Accounting and use this code to update the cost share budget in Banner.
  • Work with Principal Investigator and unit administrators to determine appropriate reporting requirements.
  • Monitor mandatory cost-sharing requirements.
  • Submit necessary cost-sharing reports to sponsors.

Unit Administrator/Principal Investigator

  • Determine and verify the cost-sharing requirements of the project.
  • Evaluate the workload implications of proposed cost sharing.
  • Ensure that the total of all effort for an individual does not exceed 100%.
  • Identify, quantify, and record the mandatory cost-sharing commitment.
  • When appropriate, adjust the employee Effort Distribution to reflect cost-sharing commitments or changes to cost-sharing effort.
  • Review subrecipient invoices for required cost-sharing information.
  • Work with the Office of Sponsored Programs to submit cost-sharing reports that comply with the sponsor's reporting requirements.

For Multiunit Disciplinary Projects

  • Ensure that cost-sharing commitments are met and properly recorded.
  • Ensure that proposal requirements are satisfied for each participating unit.
  • Notify units with separate funds on a single grant of reporting requirements (if applicable).
  • Monitor and advise participating units that have separate funds on a single grant with respect to cost-sharing commitments (if applicable).
 



RESEARCH ADMINISTRATION