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Cost Sharing on Sponsored Projects

Policy
Purpose: 

This policy governs cost sharing and personnel effort on sponsored projects, the participation of University of Kansas Center for Research, Inc. (KUCR) and Office of Research (KU Research) in cost sharing, and the appropriate Facilities and Administration (F&A) rates to charge sponsors. This policy supersedes any previous policies dealing with these subjects.

Applies to: 

Principal investigators, faculty, deans, directors, department chairs, administrative staff

Campus: 
Lawrence
Policy Statement: 

1. Introduction

KUCR and KU Research) are committed to fostering excellence in research and other scholarly activities at the University of Kansas. External funding for sponsored activities is essential in those areas requiring significant equipment, supplies, travel, and the support of specialized facilities. External funds provide support for students and for faculty. In addition, success in an external peer-reviewed proposal process serves as an objective measure of the quality of the research, training, and scholarly activities being conducted.

It is sometimes appropriate for the University to share in the cost of conducting an externally funded grant, contract, or cooperative agreement.  It is important for the Principal Investigator (PI) to commit some percent of direct effort to each sponsored project. This policy governs cost sharing and personnel effort on sponsored projects, the participation of KU Research in cost sharing, and the appropriate F&A rates to charge sponsors. For purposes of this policy, matching/grant matching, in-kind contribution, or hard-dollar match are synonymous with cost sharing.

KU’s Position on Cost Sharing:

The University strives to maximize cost reimbursement from extramural sponsors to support the projects they fund. Therefore, the University will generally allow only the minimum contribution needed to meet a sponsor’s cost sharing requirement. Voluntary committed cost sharing is to be avoided and will be permitted only in limited situations.

This does not mean that investigators should not spend time on projects for which they receive no salary support from the sponsor, nor does it mean that the University will not contribute to the costs of certain types of sponsored projects. But cost sharing commitments must be considered carefully as they have broad implications for both investigators and the University.

First, sponsor acceptance of an offer of cost sharing becomes an obligation that the University must fulfill. Second, cost sharing of project direct costs redirects scarce academic unit or central resources from other mission-critical uses. For every dollar cost-shared, the University forfeits not only the recovery of that dollar, but also any associated research operating costs (also F&A). Third, all cost sharing commitments are subject to audit. Therefore, cost sharing imposes a substantial administrative burden on the Principal Investigator, Shared Service Center, and KU Research to track, document, and report on cost sharing commitments. Fourth, the total value of the University’s cost sharing commitments is added to its research base when calculating the F&A rate. The increased base decreases the University’s overall F&A rate, but does not reduce the actual research operating costs incurred to support a cost-shared project.

Federal Cost Sharing Regulations:

The University’s treatment of cost sharing is governed by rules for Federal awards promulgated by the Office of Management and Budget (OMB) under Uniform Guidance at 2 CFR Part 200.

As at other research universities, it is the University’s practice to apply those standards to all sponsored projects regardless of the source of funds.

Subpart E (Cost Principles) of 2 CFR Part 200 provides comprehensive information regarding costs allowable under Federal awards and for identifying and documenting costs that may be offered as cost sharing. In establishing the principles of allowability, allocability, and reasonableness, Subpart E also creates a context for the application of the cost principles to other subparts and appendices of Uniform Guidance.

Section 200.306 of Subpart D (Post Federal Award Requirements) provides guidance on determining the allowability and value of specific types of cost sharing contributions. There are seven criteria that a cost-shared item must meet in order to be accepted by a sponsoring agency. It must (1) be verifiable from the University’s official records; (2) be used as a contribution only once; (3) be necessary and reasonable for the proper and efficient accomplishment of the project objectives; (4) be indicated in the approved budget, as required by the sponsor; (5) not have been paid to the University under another Federal award, except where specifically authorized by Federal statute; (6) conform to any applicable provisions of 2 CFR Part 200, Subpart D; and (7) be an allowable cost under 2 CFR Part 200, Subpart E.

The Federal Regulations Contain Four Key Points:

1. A cost-shared item must be allowable as a direct cost. Goods and services donated by a third party are the sole exception.

2. The cost-shared item must be allocable as a cost to the project and contributed during the performance period of the award. For example, the salary and fringe benefits of a University employee can be included as cost sharing only if that individual actually works on the project (i.e., devotes effort) during the award period.

3. The same cost sharing contribution cannot be used to meet commitments on more than one project. 

4. The cost-shared item must not duplicate the type of costs included in the University's F&A expenses. Examples of ineligible items includes salaries of administrative and clerical staff, office supplies, library expenses, and operations and maintenance costs. 

2. Types of Cost Sharing

All Cost Sharing Falls Into One of Three Categories:

a. Mandatory cost sharing

Cost sharing that is required by a sponsor as an eligibility condition for submitting a proposal and receiving an award is called mandatory cost sharing. This type of cost sharing can result from a statutory requirement or from a sponsor’s policy statement. The requirement for mandatory cost sharing must be identified in the sponsor’s solicitation (i.e., request for proposals) or funding opportunity announcement and must be explicit. Mandatory cost sharing may be expressed in several ways, such as a specific dollar amount, a percentage of sponsor funds being requested, or a percentage of the total project costs. If the sponsor requires cost sharing as part of the published announcement, then KU Research will endeavor, when feasible, to provide a portion of the required cost sharing on proposals. The PI for the proposal should request the support by writing (letter or email) the appropriate Associate Vice Chancellor for Research. The requirement for mandatory cost sharing must be identified in the sponsor’s solicitation (i.e., request for proposals) or funding opportunity announcement and must be explicit. As long as funds are available and the proposed effort is consistent with normal university sponsored activities, KU Research will provide cash to support a portion of the cost sharing with other units on campus providing the remainder. The total cost sharing shall not exceed the required cost sharing specified in the solicitation (see Amount of Cost Sharing).

Verbal suggestions by sponsor program managers will not be considered as evidence of the need for cost sharing.

b. Voluntary committed cost sharing

Cost sharing offered in a proposal but not required by the sponsor is called voluntary committed cost sharing. Cost sharing that is “encouraged” by a sponsor, rather than stipulated as a requirement in a funding opportunity announcement, is not mandatory cost sharing.  Any cost sharing offered in response to such encouragement is voluntary committed cost sharing. Inclusion of voluntary committed cost sharing in a proposal requires prior approval by the relevant dean or director and by the Vice Chancellor for Research.

Under Uniform Guidance at 2 CFR §200.306, voluntary committed cost sharing is not expected for any Federal award and cannot be used as a factor during the merit review of proposals. It may be considered in making an award, if it is both in accordance with the Federal awarding agency’s policies and specified in the funding opportunity announcement. Once offered in the proposal and accepted by the sponsor, it becomes an obligation that the University must fulfill (see 2 CFR 3 §200.99).

If no level or amount is specified in the announcement, the suggested cost sharing can be considered "institutional support." KU Research will document institutional support in an unquantified letter format rather than by including specific, quantifiable items in the proposal budget.  Institutional support letters may include descriptions of specialized core laboratories, facility enhancements, and additional faculty positions, as appropriate. If a support letter is desired from KU Research, sufficient information and notice should be given to the appropriate Associate Vice Chancellor for Research.

In some cases, an institutional support letter may not be deemed sufficient to meet suggested, but unspecified, cost sharing. The general guideline of providing cost sharing at 10% of the agency request will apply in these cases, but KU Research will not contribute cost sharing.

Large program projects and center grant proposals may require additional cost sharing that should be discussed early in the process with the appropriate Associate Vice Chancellor for Research.

c. Voluntary uncommitted cost share

Voluntary uncommitted cost sharing is cost sharing that is over and above any amount of cost sharing that was committed and budgeted in a sponsored project. It occurs during the course of conducting the project, typically when an individual expends more effort on the project than was agreed to in the award. Voluntary uncommitted cost sharing is neither pledged explicitly in the proposal nor stated in the agency’s notice of award. It need not be documented, tracked, or reported; and it is not subject to effort certification requirements. (See OMB Memorandum M-01-06, 05 January 2001, for more information.)

Voluntary cost sharing on proposals is generally not allowed, regardless of the KU source of the funds, regardless of whether it is cash or in-kind, and regardless of the sponsor.

3. Amount of Cost Sharing

Cost share funds are scarce, and their availability may limit the amount that KU Research can contribute. Therefore, any cost sharing offered by KU Research must be done in collaboration with campus partners, e.g. deans, directors, chairs, etc.

a. Securing cost share funds

It is the responsibility of the PI to obtain cost sharing funds from all participants. An efficient way to do this is to contact the appropriate dean/associate dean/chair/director in writing (email preferred) and propose cost sharing. Once that portion of the match is secured, the dean/associate dean/chair/director should send the request to the appropriate Associate Vice Chancellor for Research to request KU Research's participation. This process takes time; therefore, requests should be submitted to the Associate Vice Chancellor for Research at least two weeks prior to grant submission. Failure to do so may preclude obtaining the necessary approvals.

b. Mandatory cost sharing

In practice KU Research will contribute up to 50% of the total cost sharing required for institutionally important proposals that are judged to be highly competitive.  KU Research will not contribute cost sharing for proposals to for profit sponsors. 

c. In-kind cost sharing

If in-kind cost sharing is allowed in a program announcement, then the maximum amount of in-kind cost sharing allowed should be built into the budget. If additional cost sharing is needed to meet the sponsor’s requirement, KU Research will endeavor to contribute as described in sections 3(a) and 3(b) above.

d. Amount of cost sharing for reduced awards

If KU Research has committed cost sharing for a proposal that is awarded but reduced in value from the proposed amount, the University’s contribution will be reduced proportionally.

4. Principal Investigator (PI) Effort on Sponsored Projects

The Federal government requires the PI to commit sufficient effort to most sponsored projects to assume oversight of financial, scientific, and compliance aspects of a project. Fulfilling those responsibilities takes time. KU requires a minimum of 1% committed effort on each project.  (This requirement does not apply to equipment and instrumentation grants, doctoral dissertation grants, or to certain grant supplements.)

PI effort is usually directly charged to the project, unless the sponsor specifically requires that it be provided as in-kind cost sharing.  In addition, the National Institutes of Health (NIH) requires all Key Personnel to have some level of committed effort, which can be direct charged during summer months.

5. Facilities and Administration Costs

a. University policy on collecting F&A

KU endeavors to collect the maximum allowable amount of Facilities and Administrative (F&A) cost guided by federal negotiated agreements and sponsor regulations. Thus, KU Research will not generally reduce the federally negotiated F&A rate on a sponsored project to provide cost sharing, or to restore funds to an award that the sponsor has reduced in value from the proposed amount. An exception to this policy must be approved by the Vice Chancellor for Research.

b. Sponsor reduction of F&A rate

If a governmental sponsor has statutory authority or official agency policy dictating an F&A rate different from the KU’s negotiated rate, then KU Research will abide by that sponsor's policy.  For example, the State of Kansas will not pay F&A expense on state-appropriated funds. Federal flow-through funds to the state, however, should carry applicable F&A.

c. Foundations

Foundations often do not allow F&A costs. Some will allow a small administrative fee, which KU Research will accept in lieu of F&A. Some foundations will allow direct charging of some administrative items as well, and this is also acceptable. KU Office of Research does encourage pursuing grants from foundations and will collect as much of the appropriate F&A costs as the particular foundation will allow.

d. Subcontracts

Regardless of the F&A rate charged by a prime recipient, when KUCR or KU is a subrecipient, KU Research will charge the applicable F&A rate to the extent allowed by federal regulation or statute.

e. For-profit sponsors

For-profit sponsors will be charged the Industrial F&A rate which is higher than the federally negotiated F&A rate. This rate has been established by KU in accordance with the federal negotiated rates to capture administrative costs that are capped by Office of Management and Budget policy.

6. Communication

Questions about this policy should be directed to the appropriate Associate Vice Chancellor for Research. Timely communication is important in regard to each of these issues (cost sharing, PI effort, F&A rates). For example, with cost sharing, it is important to let KU Research and other sources of the cost sharing know of the need as soon as possible so that proposal deadlines can be met. It is also important to inform KU Research and other sources if a pending proposal is not funded so that any committed cost sharing funds can be released for other proposals.

Contact: 

Rodolfo H. Torres
Associate Vice Chancellor for Research
785-864-7448
torres@ku.edu

Joseph A. Heppert
Associate Vice Chancellor for Research
785-864-3567
jheppert@ku.edu

Approved by: 
Vice Chancellor for Research
Approved on: 
Monday, January 31, 2005
Effective on: 
Monday, January 31, 2005
Review Cycle: 
Annual (As Needed)
Definitions: 

Cost sharing:  Cost sharing is the portion of sponsored project costs that is provided by the University rather than the sponsor. For purposes of this policy, grant matching, in-kind contribution, or hard dollar match are synonymous with cost sharing.

Keywords: 
cost share, cost sharing, PI effort, facilities & administrative costs, F&A
Review, Approval & Change History: 

07/24/2017: Policy revised. Added link to Related Policies. 

11/25/2014: Policy formatting cleanup (e.g., bolding, spacing).

07/02/2014: Updated references to 'Vice Chancellor of Research' to reflect accurate title; updated formatting of Policy Statement, Related Policies, Definitions; selected 'Lawrence' for required Campus field.

01/31/2005: Revision.

Financial Categories: 
Financial Oversight
Research and Sponsored Projects Category: 
Research and Sponsored Projects

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