Topics Covered


Definition

Cost Share occurs when a portion of the costs of an Award are not paid by the sponsor, but paid instead using resources within a department, school/college, or other party.  Cost Share is a commitment made by the PI to use resources, other than the Award, for completion of the Award objectives.  

UW’s policies on Cost Share can be found in GIM 21.

Cost Share is Mandatory, when required by the sponsor, or Committed when a department voluntarily commits to providing funds or resources to complete the Award objectives.

Some sponsors specifically prohibit Cost Share and many explicitly state that Cost Share does not enhance the competitiveness of a sponsored research proposal. 

The UW discourages Cost Share Commitments when not required by the sponsor due to 1) the high administrative burden of meeting Cost Share requirements and 2) the negative impact of Cost Share on the UW’s Facilities & Administration (F&A) Rate.  For more information, see Cost Share’s Impact on the UW’s F&A Rate below.

Cost share Commitments must be met, referred to as Contributions, using allowable sources (budgets) and expenses.  When an expense is identified as being a Cost Share Contribution, it is often referred to as being “Tagged.” See “Cost Share Contribution Sources” below for more information on Cost Share Contributions.

An Award with a Cost Share Commitment is often referred to as the “Benefitting” budget; an Award that contributes to Cost Share is often referred to as the “Contributing” budget.

The Cost Share Addendum is used by departments to identify the individual Cost Share Commitments and calculate the value and/or percentage of effort.

Unit of Measure

The Cost Share Commitment is calculated by one of the following Units of Measure:

  • a fixed dollar amount (e.g., $20,000);
  • a match where the amount of funds provided by the sponsor will be matched by the amount of funds provided by the department (e.g., a 1:1 match would be where the department matches the sponsor in equal amounts);
  • a percentage of the amount provided by the sponsor (e.g., the department will Cost Share 20% of the funds provided by the sponsor); or
  • a commitment of the faculty’s effort (e.g., the faculty will commit to Cost Share 20% of her effort).

If faculty effort is included in the Cost Share Contribution, it will be calculated in one of four ways:

  1. Dollar-based Academic: where the value of Faculty Effort Contribution is calculated in a dollar amount and the FECs are generated on the Academic cycle;
  2. Dollar-based Calendar: same as the Dollar-based Academic except the FECs are generated on the Calendar cycle.
  3. Percent-based Academic: where the value of the Faculty Effort Contribution is calculated on the PI’s percentage of effort and the FECs are generated on the Academic cycle;
  4. Percent-based Calendar: Same as Percent-based Academic except the FECs are generated on the Calendar cycle.

For more information on FEC cycles, please see MAA’s website.

UW Cost Share Systems

Both the Cost Share Commitment and Contributions must be recorded in the appropriate UW systems.  There are three systems used for Cost Share:

  1. The Cost Share Summary system is the official record of the detailed Cost Share Commitment and Contributions.  Commitments and Contributions can only be entered into this system by GCA; department users have access to view (“inquiry”) entries for those budgets for which a user has an ASTRA authorization.  Information on How to Read the Cost Share Summary Reports is available.

     

  2. The Non-FEC Cost Share Tagging Application is used by departments to identify Cost Share Contribution transactions.   Departments can only tag an expense for budgets for which they have been granted permission in MyFD.  Access can be provided either by individual budget or by Org Code. See Tagging Non-FEC Cost Share Contributions for more information.

The Faculty Effort Certification (FEC) process manages Cost Share Commitments and Contributions for faculty effort. This system is managed by MAA.

Types of Cost Share

Mandatory (system code = M): Cost Share required by the sponsor as a condition of the Award.  

Committed (system code = R): Cost Share the department voluntarily commits to in the Award proposal.  Such Commitments are required to be met, as it is a condition of the Award. 

Shift (System Code = S or SS, see below) Post Award Cost Share created when faculty shift their committed effort paid by the Award to a source of funding other than the Award.  The amount of the faculty’s committed effort to the Award does not change; just the funding source changes.

A short-term shift (system code = SS) is for a period of less than six months.  A new or revised Cost Share Addendum is not required.

A long-term shift (system code = S) is for a period of six months or more.  A new or revised Cost Share Addendum  must be completed and submitted to GCA so it can be entered into the UW systems.  

For more information on Shifts, please see MAA's website.

Other Types of Cost Share

There are other situations (namely Salary Cap and K Awards) where faculty effort-related costs are incurred on an Award but cannot be charged in full to the Award.  The unallowable amount must be covered by department resources other than the Award.  These amounts are also sometimes referred to as “cost share” (as the cost must be shared by the department) but is not treated as Cost Share as described in this section and a Cost Share Addendum or tracking in the Cost Share Summary is NOT required.  For more information on these types of cost share, see MAA.

Cost Share Commitment Components

The following components can be used for Cost Share.  Each item below includes a description and information on Commitment and Contribution requirements.

Faculty Effort

Faculty effort is expended on but not charged as a cost to an Award. Faculty effort can dollar-based or percentage-based.  See MAA for more information.

All of the other Cost Share Components are often referred to as “Non-Faculty Effort Contribution (FEC) Cost Share”

Non-Faculty Effort

Non-faculty staff expend effort on but do not charge the cost to an Award.  These Commitments are always made as a Dollar contribution, not as a percentage of effort. 

Non-Salary Expenses

Expenses incurred within the UW on another Award or funding source. There are limitations on the source of these expenses and the type of expense themselves.  See Cost Share Contribution Sources below for more information.  For Tagging information and processing, see Tagging Non-FEC Cost Share Contributions.

Third-Party Cost Share:

Third-party Cost Share is provided by an individual or group outside both the UW and the Award Sponsor.  Such Commitments are typically in the form of donated effort, resources (equipment or materials), or in-kind (volunteer effort).  As these resources are external to the UW, they are not recorded in the UW financial system and do not incur any F&A. 

If a 3rd party contribution is in the form of cash (which is rare), the cash should be deposited into a Gift or other discretionary budget and then expended on the item to be used as Cost Share. 

Commitment Requirements

At the time of proposal, the department must obtain in writing from the 3rd party contributor:

  • the identify of the benefiting Award and, ideally, the PI,
  • a description of the items or services being contributed,
  • a statement indicating how the contribution will benefit the Award,
  • the dollar value of the contribution (if available, see below for more information),
  • if the contirubtor is including F&A on the value, a copy of their approved F&A rate agreement or other documentation supporting the F&A to be claimed. 

If the dollar value cannot be ascertained at the time of proposal, then the department should enter an estimate on the Cost Share Addendum. This estimated amount will be entered by GCA into the Cost Share Module.

Contribution Requirements

Per GIM 21, the PI is responsible for fulfilling the total cost share commitments. If a 3rd party does not provide the amount of Cost Share entered into the Cost Share Module (which may, as above, be an estimate), the PI must either find an accpetable alternative 3rd party contribution or request that the sponsor modify the Award to reduce the Cost Share Commitment.

When the 3rd party has completed their Cost Share Contribution, they should provide the following in writing to the PI:

  • the identify of the benefiting award and the PI,
  • a description and dollar value of the items or services provided, including, if applicable, a breakdown of the direct and F&A costs.

If the 3rd party contributor donates salary, supporitng documentation must include:

  • the name and title of the employee contributing effort,
  • the rate of pay,
  • the total value of their effort including applicable benefits, and
  • the time period of the contribution (must be within the budget period).

Unrecovered Indirect Cost (UIDC) Cost Share: 

If the Actual F&A Rate on an Award is less than the Standard F&A Rate (see below) then the UW is not recovering the full F&A amount on this Award.  The amount of F&A that is the difference between the Actual and Standard rate is referred to as Unrecovered Indirect Costs (UIDC). 

The UIDC amount can be used as Cost Share only if the sponsor provides written authorization to allow for UIDC as a Cost Share contribution.

GCA calculates and enters the UIDC into the Cost Share Summary on a periodic basis.

Cost Share Contribution Sources

There are limitations on the types of funding sources (budgets) and the individual expenses that can be used as Cost Share Contributions.

Cost Share Contribution Budgets

Cost Share contributions are typically made with unrestricted (department or gift) budgets.

Sponsored Award funds may not be used for Cost Share contributions without the prior written approval from both the benefitting and contributing Award Sponsors.

Any federal flow through Awards used for Cost Share must have prior written approval from both the federal sponsor and the flow through sponsor.

The following budget types are typically not allowed to be used for Cost Share contributions:

  • Recharge center operating budgets (Budget Type 11; Program Type 20)
  • Cost center operating budgets (Budget Type 11; Program Type 22)
  • Recharge center reserve budgets (Budget Type 11; Program Type 21)
  • Cost center reserve budgets (Budget Type 11; Program Type 23)
  • Staff assignments (Budget Type 05; Budget Class 45)
  • Royalty Research Fund (Budget Type 05; Budget class 57)
  • Washington Technology Center (WTC) (Budget Type 53; Program type 44)

Cost Share Contribution Allowable Expenditures

Expenditures used for Cost Share contributions must meet the four cost principles of Allowable, Allocable, Reasonable and Consistently Treated.  

This means:

  • Cost Share Contributions must be incurred within the benefitting budget period; and
  • All contributions must be verifiable from the UW’s financial systems or, in the case of third party from the department’s records.

An individual expense cannot be counted as a Cost Share contribution on more than one Award. See Tagging Non-FEC Cost Share Contributions for more information on how the Non-FEC Cost Share Tagging Application ensures that expenses are not used for more than one Contribution.

For information on Faculty Effort expenditures, see MAA.

Tuition waivers (Object Code 08-05) can be used as Cost Share. A waiver is when the UW does not charge a graduate student tuition. The waived tuition amount is charged to a 30-xxxx budget.

Expenses that use the following Object Codes are typically not allowed to be used as Cost Share:

  • 01-50   Postdoctoral Research Trainee Salaries
  • 01-90   Graduate Stipends
  • 02-31   Marketing Services
  • 08-01   Scholarships
  • 08-02   Stipends
  • 08-03   Prizes and Awards
  • 08-04   Loans (Student)
  • 08-09   Loan Cancellations
  • 09-xx   Debt Service (all sub object codes)
  • 21-xx   Cost Transfers (all sub object codes) (should reflect Transaction Code 60)
  • 22-99   Cost Share
  • 27-xx   Grant and Contract Expenditure Summary (all sub object codes)

More detail on allowable and unallowable sources of non-FEC cost share

Cost Share F&A Rates

The Cost Share F&A Rate is the F&A rate applied to the Cost Share Contribution expenses.  In order to determine the correct Cost Share F&A Rate, users need to understand the three different F&A rates that apply to an Award:

Standard F&A Rate:  The negotiated percentage rate of recovery for calculating indirect costs at the time the Award is issued.  This is the rate negotiated between the UW and the federal government for actual cost recovery on a sponsored Award.  Information on the Standard Rate can be found at MAA.

Actual F&A Rate:  The actual percentage rate of recovery applied by the sponsor on the Award.  This rate can be the same or different from the Standard Rate. 

For example, if the Sponsor accepts the Standard Rate then both the Standard and Actual rates would both be 55%.  If the Standard Rate is 55% but the Sponsor limits F&A to 25%, then the Actual Rate is 25%. 

Cost Share F&A Rate (also referred to as “Cost Share I/C Rate”):  This is the F&A rate applied to the applicable Cost Share expenses. 

If the Sponsor:

  • is silent on the applicable F&A Rate for Cost Share expenses, then F&A Rate is the Standard F&A Rate (most common);
  • explicitly disallows F&A to be incurred on Cost Share expenses then the F&A Rate is 0% (rare); or 
  • specifies the F&A Rate to be on Cost Share expenses then that is the F&A Rate (rare).  

    The F&A Base is Modified Total Direct Cost (MTDC). See GIM 13 for more information on MTDC.

F&A applied to Cost Share contributing expenditures does not represent any additional financial burden to the department.  Cost Share F&A is not represented as an increase in expenditure on either the Benefitting or Contributing Budget.  It is simply a representation of recovery of institutional costs incurred to support the research enterprise.

Cost Share's Impact on the UW's F&A Rate

Cost Share Commitments are factored into the UW’s Standard F&A Rate negotiations.  The Standard F&A rate is calculated by taking, from a selected period of time, the total direct costs and dividing it by the total indirect costs for the same period.  The ratio is the basis for the Standard F&A Rate.  The Cost Share Commitments for that same period are added to the total direct costs which decreases the Standard F&A Rate.

For example:

  • F&A Costs/Direct Costs = $50,000/$100,000 = an F&A Rate of 50%
  • Factor in Cost Share Commitments of $20,000:
  • F&A Costs/(Direct Costs + Cost Share Commitments) =  $50,000/($100,000 + $20,000) = an F&A Rate of 42%

Factoring in Cost Share Contributions reduces the UW’s F&A rate, which means fewer resources for the UW.

Setting up Cost Share

The Cost Share Addendum (CSA) is used by departments to identify the individual Cost Share Commitments and calculate the value and/or percentage of effort. 

Upon Award signature, OSP forwards the completed CSA to GCA who enters the Cost Share information into the Cost Share Summary.   The Cost Share Summary is the official record of the Cost Share Commitment.

There may be discrepancies between the CSA (created manually in Excel) and Cost Share Summary (pulls data from the UW financial systems).  In this case, GCA will notify the department via Grant Tracker.

Managing Cost Share

Identifying Cost Share Contributions

Once the Cost Share Commitment has been set up in the Cost Share Summary, it is the department's responsibility to ensure that Cost Share Contributions are identified and the supporting information is submitted to MAA or GCA (as appropriate). 

Faculty Effort Cost Share Contributions are identified via the Faculty Effort Certification process.  See MAA for more information.

All other Cost Share Contributions are identified by campus and submitted to GCA for processing.  See Tagging Non-FEC Cost Share Contributions for more information.

Monitoring Cost Share Balances

Cost Share Commitments, both Mandatory and Committed (Voluntary) are part of the Award agreement.  This means that Commitments must be met and documented by the end of the Award.  

Awards with Cost Share Commitments cannot be closed out with the Sponsor, or in the UW systems, until all Cost Share Contributions are documented in the UW systems and the Contributions match the Commitment.

Best Practices

Monitor the Cost Share Contributions in the Cost Share Summary system.  This system is the official record of all Cost Share Contributions.

If the Cost Share Commitment includes non-Faculty Effort Commitments, those expenses should be tagged on at least a quarterly basis. See Tagging Non-FEC Cost Share Contributions for more information.

Use the Unmet Cost Share Report to obtain a summary balance of the Commitment and Contributions to date.

Monitor the Cost Share Contributions to determine if the Cost Share Commitment will be met.  If it is anticipated that the Cost Share Commitment will not be able to be met then the Sponsor may need to be contacted.

Post Award Changes in Cost Share Commitment

If there is a change in the amount of the Cost Share Commitment (either Mandatory or Committed), a revised Cost Share Addendum (CSA) is, in most cases, required and must be completed and submitted to OSP for review and approval.  OSP will then issue a Post Award Change (PAC) and send it to GCA for entry into the Cost Share Summary system.  

GCA can only change Cost Share Commitments in the Cost Share Summary system without a PAC in the following situations:

  • when a Cost Share Commitment must be moved to a continuation budget; and/or
  • when a faculty member wants to contribute effort in a different FEC reporting cycle within the Award period than identified in the Cost Share Summary.

Sponsor Reporting on Cost Share

Cost Share is reported to the sponsor using either the sponsor’s requirements or UW’s standard reporting template.   

The only time Cost Share is not reported to the Sponsor is if:

  • A non-federal sponsor does not require reporting of Cost Share on the Sponsor’s template; or
  • A federal sponsor specifically directs the UW to not report Cost Share (rare).

Close Out

Requirements

Per GIM 21 Cost Share is a binding requirement of an Award.  Any unmet Cost Share at the end of the Award period may lead to a reduction in the total awarded amount made by the sponsor, or may result in the PI providing the Commitment from other sources (even if unmet third-party Cost Share). The Cost Share Commitment must be met in order to close out the sponsored Award.

Interim Cost Share Reports (Faculty Effort only)

Interim Cost Share reports are completed when there is a gap between when the FEC reports are released to faculty for certification and when actual FEC Cost Share contributions need to be reported to the sponsor on an invoice or financial report. 

Since FECs are only generated a few times a year, the FEC cycle often does not match up with sponsor deadlines for financial reports and invoices (FECs are updated on a fixed schedule twice a year). It is usually necessary to obtain an Interim Cost Share report providing certified documentation the Faculty Effort Cost Share.  GCA will use these Interim reports when submitting invoices and financial reports to sponsors prior to when an FEC is certified. Interim Cost Share Reports must be submitted to MAA for calculation and validation.  MAA will then forward the Interim Report to GCA for use in the report.  For more information on this topic, see the Job Aid from MAA on Interim Cost Share Reports.