Effective Date: October 1, 2011

Revised: September 2016; January 2017

The official version of this information will only be maintained in an online format. Any and all printed copies of this material are dated as of the print date. Please make certain to review the material online prior to placing reliance on a dated printed version.

Policy Statement

The University must ensure that cost sharing requirements of sponsored agreements are proposed, approved, accounted for and reported in a manner consistent with the requirements of the sponsor and the University. Cost sharing can be of the following types: Mandatory, voluntary committed or voluntary uncommitted. Committed cost sharing must be identified, administered and accounted for consistently throughout the University. Voluntary uncommitted cost sharing does not need to be identified and is not covered by this policy.

Federally funded projects must meet the requirements in the U.S. Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements  (Uniform Guidance), Sections 2 CFR 215.23(a)(5), 200.29, 200.306.

OMB Uniform Guidance

University Position on Implementing Cost Sharing on Sponsored Projects

Brown’s objective is to maximize sponsor cost reimbursement to support the continued growth of the research enterprise. Accordingly, the University provides only the minimum amount of cost sharing necessary to meet sponsors’ requirements and discourages voluntary committed cost sharing. Some sponsors require institutional cost sharing on their grants and contracts as a matter of statute, regulation or policy. Individual solicitations may also indicate a cost sharing requirement. In these cases, the University follows its longstanding practice of meeting published mandatory cost sharing requirements for targeted programs.

Brown University does not typically cost share on a voluntary basis. However, a voluntary cost sharing commitment can be made where the competitive forces and perceived institutional benefit of receiving the award are deemed to be sufficiently strong to warrant the commitment.

Under the federal Uniform Guidance of 2014, it states: “Under federal research proposals, voluntary committed cost sharing is not expected. It 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. Criteria for considering voluntary committed cost sharing and any other program policy factors may be used to determine who may receive a Federal award must be explicitly described in the notice of funding opportunity” (CFR 200.306).

The National Science Foundation (NSF) directly instructs proposers that “Unless required by NSF inclusion of voluntary committed cost sharing is prohibited and Line M on the proposal budget will not be available for use by the proposer. NSF program officers are not authorized to impose or encourage mandatory cost sharing unless such requirements are explicitly included in the program solicitation.”

For other funding agencies, voluntary cost sharing commitments must be supported by a well justified plan that aligns with the goals of the research or education program and clearly demonstrates the value added by the voluntary cost share commitment.

When developing budgets which include committed cost sharing, every effort should be made to list expenses the University already covers, such as faculty salary or tuition, as the cost-shared items. This allows the University to meet its obligation without incurring new out-of-pocket expenses.

Purpose of Policy

This document establishes requirements for the identification, approval, funding, accounting and reporting of committed cost sharing, matching, and in-kind requirements associated with sponsored projects. Committed cost sharing represents a binding obligation of the University once the award has been granted.

This Cost Sharing Policy provides information on:

• The definition and types of cost sharing
• The contractual, financial and administrative implications that result from a commitment to cost share
• The cost sharing approval process, including the circumstances in which cost sharing is permitted by the University
• Allowable sources of funds for cost sharing
• Allowable cost sharing expenditures (i.e., direct and facilities and administrative (F&A) costs)
• The criteria for allowable and unallowable cost sharing expenditures
• The roles and responsibilities of University departments and offices with respect to cost sharing

Cost sharing commitments must be considered carefully as they have broad implications for the University. In addition to reducing the University’s ability to maximize its reimbursement from external sponsors, there are negative F&A calculation and administrative impacts. These impacts include:

• A reduction in the total institutional dollars available for research endeavors
• A reduction in the University’s future F&A cost recovery
• An inability to recover F&A costs associated with cost sharing dollars
• A legal, binding commitment with associated administrative requirements
• An auditable commitment upon receipt of award

Cost Sharing Impacts

Organized research includes all research and development activities of an institution that are separately budgeted and accounted for that requires a formal application and approval process and includes:

• Sponsored Research — All research and development activities that are sponsored by federal and nonfederal agencies and organizations
• University Research — All research and development activities that are separately budgeted and accounted for under internal application and University funds

The organized research base is used by the University for the development of its F&A rate. The formula for development of this rate is: Research Pool Expenses/Organized Research Base.

Financial Impact

Cost sharing of direct expenditures represents a redirection of departmental, school and/or central resources from other mission-critical uses to support sponsored agreements. Every dollar of cost sharing results in the University forfeiting not only the recovery of the direct costs but also the recovery of the associated F&A cost (except in the cases of cost shared capital equipment or tuition for which there is no associated F&A).

F&A Calculation Impact

The University’s total amount of salary and nonsalary cost sharing (mandatory and voluntary committed) must be included in the denominator or organized research base of the F&A rate calculation. This increase in the base serves to decrease the University’s overall F&A rate.

Administrative/Compliance Impact

When cost sharing of any kind is represented in a proposal, upon award that cost sharing becomes a commitment that must be met and tracked for sponsor verification in the University’s records. Cost sharing imposes a substantial burden on both the PI and the department to account for and provide supporting documentation, whether the sponsor requires it to be included in a financial report or not. The amount of any obligation included in the original proposal and/or subsequently through negotiation must be documented. All cost sharing expenditures are subject to audit.

All exceptions to this policy must be discussed and approved by the Vice President for Research and may also require school/center approval.

All proposed committed cost-sharing arrangements must be approved by the responsible official before the proposal is submitted to Sponsored Projects.

• The principal investigator (PI) should discuss with the chair and/or dean the cost-share requirement and identify the source(s) of funding
• Appropriate signature(s) of those responsible for the proposed cost sharing must be obtained on the Cost Sharing Commitment Form. 
• The Division of Biology and Medicine requires all proposals with activity type “Organized Research” to reflect PI effort whether or not the effort is paid by the sponsor. This includes proposals to federal and nonfederal sponsors.
• The proposal is submitted with cost sharing commitment form attached.

If a sponsor significantly reduces the award budget presented in the original proposal, it may be appropriate to request a reduction in the cost-sharing commitment as well.

It is the PI’s responsibility to identify all sources of funds for cost sharing during the proposal process.

Cost sharing is typically funded by tuition subsidy, gifts, operating budgets or other department designated funds, including in-kind contributions.

It may not utilize funds from another federal award as the source of cost sharing. Note that an exception is the National Endowment for the Humanities (NEH).

It may include funds from nonfederal awards as the source of cost sharing only when specifically allowed by the nonfederal sponsor.

It may utilize F&A costs associated with the cost-shared direct costs.

It may utilize unrecovered F&A costs with prior sponsor approval.

Cost sharing expenditures must satisfy all of the following criteria (OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 CFR 200) in that they are:

• necessary and reasonable for proper and efficient accomplishment of project objectives;
• allowable, allocable, reasonable and consistently treated under applicable federal costs principles;
• verifiable from the official University records;
• incurred during the effective dates of the grant or during the pre-award phase when authorized by the sponsor;
• not included as contributions for any other federally assisted project; and
• not paid by the federal government under another award, except where authorized by federal statute to be used for cost sharing or matching. 

Unrecovered indirect costs may be included as part of cost sharing or matching only with the prior approval of the federal awarding agency.

The following costs may not be proposed as cost sharing/matching:

• Costs not deemed to be necessary and reasonable for the proper and efficient accomplishment of project objectives
• Costs that are included and reimbursed through the F&A rate (e.g., administrative salaries, office supplies, library expenses and operations, maintenance expenses)
• Salary dollars above a regulatory cap (e.g., National Institutes of Health cap)
• Costs pledged as cost sharing/matching for another funded project
• Costs funded by other sponsored programs, except when specifically allowed by federal or non-federal sponsors
• Costs considered unallowable by the University or by the sponsor

Cost Sharing

Cost sharing occurs when a portion of total sponsored project/program costs are not funded by the sponsor. Cost sharing is classified as either mandatory or voluntary. Voluntary cost sharing is further classified as either committed or uncommitted:

Mandatory Cost Sharing

• Required by the sponsor
• Identified or quantified in proposal
• Condition of receiving the award
• Represents binding commitments that must be captured and documented

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

Voluntary Cost Sharing

Voluntary Committed Cost Sharing

• Not required by the sponsor
• Identified or quantified in proposal
• Represent binding commitments that must be captured and documented

Voluntary Uncommitted Cost Sharing

Voluntary uncommitted cost sharing (VUCS) involves a cost associated with a sponsored project or program and not funded by the sponsor that was not committed in the proposal or in any other communication to the sponsor. These are, therefore, nonbinding commitments that do not require documentation or reporting. VUCS is not covered by this policy.

Direct Costs

Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs. Where an institution treats a particular type of cost as a direct cost on sponsored projects, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution.

Facilities and Administrative Costs

Facilities and administrative (F&A, indirect, overhead) costs are costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity or any other institutional activity.

Institutional Commitment

If the awardee has pledged resources that are necessary to accomplish award objectives as part of an institutional commitment, then sponsors have reasonable expectation that awardee organizations should fully complete the scope of work outlined in the proposal. Program officers and reviewers can consider this in approving future funding amounts even if these amounts are not subject to formal cost sharing requirements. Failure to meet these pledges also could be identified as noncompliance with award terms and conditions.

Letters of Institutional Commitment or Support may be required by the sponsor as part of the proposal submission and review process. If the institutional commitments are detailed with specific dollar amounts, they may be construed by the sponsor as voluntary cost sharing commitments. Sponsored Projects will review prior to submission of proposal to determine if it is voluntary cost sharing. 

Third-Party, In-Kind Contribution

A third-party, in-kind contribution is a noncash contribution to a sponsored project or program provided by a party other than either Brown University or the primary sponsoring agency.  Third-party in-kind contributions may be in the form of goods, services, real property, equipment, supplies or other expendable property directly benefiting and specifically designated for the project or program.

Salary Cap Cost Sharing

Salary cap cost sharing that occurs when the University proposes (or later assigns) effort by individuals whose salary exceeds a sponsor-imposed limit for individual salaries. Salary cap cost sharing cannot be used to meet mandatory committed cost sharing; however, it must be identified during the life of and after award for the effort certification process.  

Unrecovered Indirect Cost

Unrecovered indirect costs (i.e., waived overhead, waived F&A) occur when the award's F&A cost rate is less than the University's federally negotiated rate.

Principal Investigators

• Identify the sponsor’s cost sharing requirements for the solicitation/funding opportunity announcement
• Develop a cost sharing plan and identify the source(s) of funding for all cost sharing commitments and complete the Cost Sharing Commitment Form
• Obtain appropriate approval(s) regarding any cost sharing commitments in advance of the proposal submission
• Ensure that cost sharing commitments are met and notify Sponsored Projects or the BioMed Research Administration (BMRA) as soon as reasonably known that the cost sharing commitment for a particular project may not, or will not, be fulfilled

Department Administrators

• Assist PI with identifying the cost sharing requirements of the solicitation/funding opportunity announcement
• Assist PI with developing a cost sharing plan and identifying the source(s) of funding for all cost sharing commitments and completing the Cost Sharing Commitment Form
• Assist PI with obtaining appropriate approval(s) regarding any cost sharing commitments in advance of the proposal submission
• Ensure that cost sharing commitments are met
• Properly charge and account for mandatory and voluntary committed cost sharing
• Appropriately identify, administer and report on cost sharing

Sponsored Projects

• Reviews proposals prior to submission to assure formal cost sharing requirements and commitments are fully documented and that all necessary approvals have been obtained at the proposal stage
• Verifies mandatory cost sharing requirements and voluntary cost sharing commitments upon receipt of award
• Incorporates appropriate cost sharing conditions in subrecipient agreements
• Reviews cost sharing requirements and commitments upon receipt of award
• Notifies departments of mandatory cost sharing requirements and reportable voluntary committed cost sharing upon receipt of award and works with the department administrator to determine appropriate reporting requirements
• Monitors cost sharing compliance and reporting
• Submits necessary cost sharing reports to sponsors

Office of the Controller

• Assures that cost sharing is correctly reflected in the institution’s facilities and administrative (F&A) rate calculations

• Cost Sharing Reference Guide (PDF)
• Cost Sharing Commitment Form (XLS)