Cost Sharing - Policies and Procedures

  1. Overview
  2. Definitions of cost sharing
  3. The cost sharing commitment
  4. What expenditures can be cost shared
  5. What expenditures are not eligible for cost sharing
  6. How to determine if there is cost sharing on the award
  7. Sources of funds for cost share
  8. Waivers or reductions of indirect cost recovery
  9. Overdrafts
  10. Reduction in cost sharing
  11. Monitoring of cost sharing activities
  12. Reporting cost sharing
  13. References

  1. Overview

    The following document comprises the University's policy on cost sharing and the procedure for monitoring cost sharing and reporting such cost sharing to sponsoring agencies.

    The policies and procedures were developed for the following purposes:

    1. To provide guidance regarding the circumstances in which cost sharing is permitted by the University, including what kind of services, expenditures, or assets may be cost shared.
    2. To provide information to the University community regarding the contractual, financial, and administrative implications that result from the commitment to cost share.
    3. To establish procedures which give the University the ability to provide information to sponsoring agencies which demonstrates that the University has fulfilled any cost sharing commitments it has made as a condition of obtaining external sponsorship.
    4. To establish procedures for reporting on  cost shared commitments and expenditures.

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  2. Definitions of cost sharing

    Cost sharing represents that portion of the total project costs of a sponsored agreement that are not borne by the sponsor or sponsors of the project. These costs are borne by the University or other non-Federal third parties, rather than by the sponsor.

    Cost sharing of direct expenditures represents a redirection of departmental resources from teaching or other departmental activities to support sponsored agreements. Cost sharing can also be sourced from the value of non-cash contributions provided by non- Federal third parties. Third party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, and the value of goods and services directly benefiting and specifically identifiable to the project or program.

    1. Project cost sharing

      1. Mandatory cost sharing

        This is required by the sponsor as a condition of obtaining an award. It must be included or a proposal will receive no consideration by the sponsor.

      2. Voluntary cost sharing

        This represents resources offered by UC Berkeley when not a specific sponsor requirement. In either case, when an award is received in which cost sharing (voluntary or mandatory) was proposed, the cost sharing becomes a binding commitment which the University must provide as part of the performance of the sponsored agreement.

      3. Mandatory or voluntary - Committed cost sharing

        This is any cost sharing included in the Sponsored Project Research agreement hence becomes a component of University Research. Any commitment the University has made in the award agreement, the University must provide. The University must also provide full documentation and audit trail to demonstrate that these resources were committed to the award.

    2. Institutional Cost Sharing

      In contrast to project-by-project cost sharing, "institutional cost sharing" is required by some sponsors (e.g., NSF). Institutional cost sharing is a requirement of some unsolicited proposals whereby the University commits that it will use some of its own resources for related research. This commitment is made at the aggregate level between the sponsor and the University. This approach allows the University greater flexibility by being able to share a greater percentage on some projects and share a lower percentage on others.

      Requirements for inclusion of cost sharing in grants and cooperative agreements are listed in OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals and Other Non-Profit Organizations

      The following is a summary of federal requirements in OMB A-110:

      1. Verifiable from recipient records.
      2. Not included as contribution for any other federally assisted program.
      3. Necessary and reasonable for proper and efficient accomplishment of project or program objectives.
      4. Allowable charges under applicable cost principles.
      5. Not paid by another federal award (except as authorized by statute).
      6. Conform to other provisions in OMB A-110 as applicable.

      The above definitions in this section also apply to non-federal sponsors.

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  3. The cost sharing commitment

    The University wants to support as many proposals from Berkeley as possible but resources are not unlimited. The University will consider providing central campus cash contributions to cost sharing only for proposals with mandatory cost sharing requirements, as indicated in a program announcement or Request for Proposal (RFP).

    The Vice Chancellor for Research and the Executive Vice Chancellor will consider providing a cash commitment toward mandatory cost sharing for a proposal if the Principal Investigator's Department Chair or ORU Director and cognizant Dean have guaranteed that adequate space and infrastructure are available to conduct the project. The competitiveness of the request will depend on how well the application meets at least some of the following criteria:

    1. The proposed project is significant in scope and vital to the campus mission;
    2. The proposed project includes principal investigators from more than one department or ORU;
    3. The Department, ORU, and/or School have already pledged a significant portion of the required cost sharing;
    4. The proposed project is from a department or unit on campus that has limited access to extramural funding by nature of the research discipline;
    5. The proposed project is pioneering in nature and is expected to lead the campus into desired new fields of research endeavor;
    6. The request is for seed money and thus has the potential of fostering new research initiatives on campus and/or opening up new avenues of enhanced future funding;
    7. The proposed project has been selected to represent the campus in a limited submission competition.

    The University cannot provide additional central funding for voluntary, unsolicited cost sharing or for extra cost sharing above the published mandated minimum; however, many other opportunities exist to demonstrate cost sharing in addition to central campus cash contributions. See Sections 4 and 7 for further information on cost share opportunities.

    When a Principal Investigator (PI) proposes and the University agrees to cost share University resources, the University is required to provide the cost shared resources in the performance of the award. Considering the administrative requirements and responsibilities inherent in the cost sharing commitment, the PI and departmental administrators should weigh the cost effectiveness and the expected benefits of each cost sharing commitment, prior to making such commitments.

    Implicit in the University's commitment to cost share is the PI's agreement to ensure that:

    1. Funds are available and are provided for cost-shared direct costs.
    2. Verification of the cost sharing commitment is provided at the time the proposal is submitted, via the "Request for Central Campus Cost Sharing Form".
    3. The Cost Sharing Form with attached budget, indicating the source of cost sharing funds or a guarantee account, is completed upon receipt of the award and submitted to the Sponsored Projects Office (SPO).
    4. Only allowable costs are cost shared.
    5. Expenditures on cost sharing are documented and certified.
    6. Records for cost sharing reports are retained for the same period as the records for related sponsored agreement.

    The cost sharing report is completed as part of the close out process for the award and submitted to the Extramural Funds Accounting Office (EFA).

    Note: The tracking, reporting, and certifying of cost sharing are subject to audit.

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  4. What expenditures can be cost shared

    To provide the most flexibility and to best support the award, it is highly recommended that the cost sharing be proposed as a lump sum amount.

    Cost sharing may consist of allowable direct and/or indirect cost resources.

    1. Direct Costs

      1. Faculty, Student, or Staff Effort

        It may be appropriate to contribute faculty, student, or staff effort to the performance of a sponsored agreement. The commitment to provide such support, binds the University to contribute the effort and record the associated expenditures including fringe benefits in the cost share reports.

        Cost sharing effort is included in the calculation of total committed effort. Although proposals could be in circulation at any given time which exceeds 100% of a faculty, student, or staff's effort, care must be taken at the time of each award to ensure that effort is not committed more than the appointment allows for concurrent periods of time.

        Note also that significant decreases (25% or more for grants or an amount specified by the sponsor for contracts) in the effort by key personnel to a project require coordination with and/or advance approval by a federal sponsor; non-federal sponsors may have similar requirements. This applies to changes in committed levels of effort to be cost shared on the project, as well as to that which will be charged directly to the project.

      2. Equipment

        Equipment cannot be offered as cost sharing unless the receipt of the award is contingent upon such cost-sharing.

        PIs should take care in preparing proposals for sponsored agreements not to commit the use of UC Berkeley-owned or government-owned equipment as cost sharing, but rather to characterize the equipment as "available for the performance of the sponsored agreement at no direct cost to the project."

        Proposals which include the acquisition of special-purpose equipment as a direct cost may include an offer of University funds to pay for all or part of the cost of such equipment. These proposals may be for equipment or instrumentation grants, where the purpose of the grant is to buy equipment and we are required to share the cost with the sponsor, or research-oriented grants or contracts where the purchase of equipment required for the research is an allowable expense included in the proposal and award. Purchase and acquisition must occur during the period of performance.

      3. Subsidized services of shops and other cost centers

        Subsidized services offered by shops and cost centers if a service is provided to the project at less than actual cost (e.g. subsidized departmental machine shops, animal care by OLAC)

      4. Other Direct Costs

        Allowable direct costs other than salaries, fringe benefits, or equipment may be committed by the PI as cost sharing on the proposal budget. The following are examples of other direct costs that may be cost shared:

        • Travel expenses
        • Items that do not meet the capitalization threshold
        • Laboratory supplies

        See Section 5 for expenses that may not be offered as cost sharing.

    2. Overhead Costs (Indirect Costs)

      Overhead costs are real costs of conducting instruction and research. These indirect costs do not disappear simply because a sponsor refuses to pay for them; the University must fund any overhead costs that have not been reimbursed. When direct costs are cost shared, the overhead associated with the direct costs are also cost shared. PIs may take advantage of the cost sharing of these costs, and include them on the proposal budget. PIs may also include any approved waived indirect cost recovery as University cost sharing in proposals. To waive overhead the PI must have received approval from the VC Research. Waivers will only be given under special circumstances. See Waivers.

      EFA will calculate the cost-shared overhead recovery based on information provided on the "Cost Sharing Contribution Report Form" forwarded to EFA by the department at the end of the period of the award, as part of the close out procedures.

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  5. What expenditures are not eligible for cost sharing

    The following expenses cannot be offered as cost sharing commitments in sponsored project proposals:

    1. Any costs included in the overhead cost pool
    2. Indirect Costs in excess of the 26% administrative cap
    3. Unallowable costs as defined in A-21, section J
    4. Salary dollars above a regulatory cap e.g., NIH
    5. University 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."
    6. Depreciation on government-funded equipment

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  6. How to determine if there is cost sharing on the award

    At the time of proposal submission, the Sponsored Project Office (SPO) was notified of the cost sharing commitment through the "Request for Central Campus Cost Sharing" form. When SPO receives the approved award from the sponsor the "Notice of Award" is sent to the department by SPO. This notice indicates if the University committed to cost sharing on this award. In addition, the existence of cost-sharing is noted as an attribute in the BFS fund panel for the award.

    Final determination of funding to support cost sharing is at the discretion of the department chair/administrator and is based upon individual PI circumstances and available funds.

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  7. Sources of funds for cost share

    Identifying and providing resources for cost sharing of direct costs (including equipment) is always the responsibility of the PI. 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 the non-federal sponsor. Funds for cost-shared expenditures are typically identified from among gift, endowment income, operating budget, or other department designated funds.

    Third party contributions such as equipment donated by a third party or effort donated by third party (other than federal) maybe used for cost sharing purposes

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  8. Waivers or reductions of indirect cost recovery

    Overhead waivers are strictly regulated by UCOP, and are granted only for vital programs as described below. Policies for returning overhead to the campus from UCOP in effect since 2000 make the cost to the campus of waivers or reductions in indirect cost recovery comparable to direct cash contributions. Campus policy is to provide central campus contributions to cost sharing by cash contribution rather than by waiver or reduction of indirect cost recovery.

    The University may consider waiving or reducing indirect cost recovery in special cases if the project rigorously meets the criteria used by the Office of the President to define vital programs:

    1. Small seed grants which may attract future larger awards;
    2. Cases of hardship for a new investigator;
    3. Awards which include contributions of equipment or building renovation funds;
    4. Awards for a community relations interest vital to the campus;
    5. Supplements for a student services activity which the campus must provide;
    6. Supplements for library holdings or public exhibits.

    If granted a vital program waiver, the reduction in overhead maybe used as costing sharing, however, in no circumstances will a vital program waiver be approved for the sole purpose of meeting cost sharing requirements.

    The campus also automatically grants waivers or reductions of indirect costs for most individual agencies that have formal policies dictating an indirect cost rate different from the federally negotiated campus rates. These waivers are handled automatically by the Sponsored Projects Office.

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  9. Overdrafts

    After the end of the project performance period, when unanticipated project expenses result in more charges to a sponsored account than were funded, the amount of the overdraft is accounted for in the same manner as cost sharing, i.e. they are funded from other University sources ( e.g. gift funds, other unrestricted departmental funds etc.).  These costs represent project costs being borne by UC Berkeley. However, these costs cannot be considered cost sharing for purposes of fulfilling a cost sharing commitment because overdrafts are considered unallowable under A-21.

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  10. Reduction in cost sharing

    The actual effort and other costs required to accomplish the goals of a sponsored project might differ from what was proposed and awarded. The total costs could decrease due to changes in programmatic needs. When there is cost sharing on such projects, the sponsor may need to be consulted to determine if the reduction can be applied to either the University's committed cost sharing or to both sponsor and University resource contributions on a pro rata basis. Otherwise, the sponsor's share is reduced and the University's entire cost sharing commitment must be met. The PI or the PI's departmental or research administrator must consult with the Sponsored Projects Office (SPO) before the sponsor is contacted.

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  11. Monitoring of cost sharing activities

    Principal Investigators and their departmental administrators are responsible for monitoring the cost sharing activity for the designated fund sources. This monitoring includes ensuring the charges are allowable, allocable and reasonable and that the final cost sharing report statement is certified. In addition, the Principal Investigators and their departmental or research administrators must monitor the fulfillment of the cost sharing commitment. If the program needs change, possibly reducing the total costs of the project, SPO should be contacted to determine how to handle the change and whether to contact the sponsor to determine the affect of the change on the cost sharing commitment.

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  12. Reporting cost sharing

    When required, UC Berkeley is responsible for providing information to sponsoring agencies that demonstrates the University has fulfilled the cost sharing commitments that it made as a condition of receiving external sponsorship.

    EFA is responsible for providing cost sharing reports to sponsors when required by the sponsor. In order to do so, departments must provide the necessary information on the Cost Sharing Contribution Report Form and instructions in the close out process for the award unless other time frame is specifically required in the award document.

    The department needs to ensure they have followed the accounting procedures described in the previous sections of this policy.  In addition, when preparing interim or final financial cost share reports or closing out the related sponsored project, the department should review the cost sharing activity to ensure the commitment was met.

    Although the individual award may not indicate cost share in the body of the document, certain sponsors require "institutional cost sharing". For example all awards from NSF are marked as cost share and reports need to be submitted to EFA at the end of the award. (Note: this cost share attribute indicating whether the award is subject to cost share is maintained in the BFS fund panel when the award is set up and is also included on the close out notice sent to departments prior to termination of the award.   

    Even if there is no requirement to send a cost share report to the agency, if the University has committed cost share for an award, the department must submit a cost share report to EFA.

    The department must keep on file in their office the cost share report along with a documented audit trail to the supporting documentation for the report. This report and the supporting documentation may be subject to review by Federal or A133 auditors. Records for cost sharing reports are retained for the same period as the records for the related sponsored agreement.

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  13. References

    UCOP Contract and Grants Manual chapter 5

    OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals and Other Non-Profit Organizations

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