Cost Sharing and Matching
The University may be required to share in sponsored project expenses at a level indicated in the approved project budget. The University must maintain complete and accurate records of all project costs whether they are charged to a sponsored project or supported by cost-sharing, matching, or in-kind contributions. All cash and in-kind contributions to a project that are provided by the University or by a third party are acceptable as the University’s cost share when such contributions meet the following criteria:
- Are verifiable from the University’s records;
- Are not included as contributions for any other federally-assisted program;
- Are necessary and reasonable for the proper and efficient accomplishment of project objectives;
- Are allowable under the cost principles outlined in OMB Circular A-21;
- Are used to support activities that are included in the approved project work plan; and
- Are incurred during the award period.
There are several types of cost sharing: mandatory, voluntary committed, voluntary uncommitted, or in-kind/matching. Mandatory, voluntary committed cost sharing and in-kind/matching must be identified, administered, and accounted for consistently throughout the University. Cost sharing can also be provided in the form of salary and accompanying benefits (effort devoted to a sponsored project). Provided below are definitions of the types of cost sharing.
Mandatory Cost Sharing is required by a sponsor as a condition of obtaining an award. It must be included or a proposal will receive no consideration by the sponsor.
Voluntary Committed Cost Sharing represents resources offered by the university (documented and quantified in the proposal) when it is not a specific sponsor requirement. It becomes a binding commitment which the university must provide as part of the performance of the sponsored agreement.
Voluntary Uncommitted Cost Sharing is a cost associated with a sponsored project and not funded by the sponsor, which was not committed in the proposal or in any other communication to the sponsor. This includes effort of faculty or administration that is over and above that which is committed and budgeted for in a sponsored agreement.
In-Kind/Matching is the requirement by some sponsors that grant funds be matched in some proportion with funds from another party, either from the University or another sponsor. Matching may be in the form of actual cash expenditure of funds or may be an “in-kind” match, which is the value of non-cash contributions to the project. In-kind or matching contributions made by a party other than NDNU require documentation from that third party supporting the use of the funds as in-kind/matching and may require a certification of fair market value.
Certain federal awards allow for the establishing or improving of an endowment fund with federal grant funds, so long as the grantee complies with the provisions of the award. For example, under the Developing Hispanic-Serving Institutions Program as awarded to NDNU, the federal government will match 20% of total grant related expenditures provided the University raises endowment funds in an amount equal to, or exceeding these matching funds.
The University may not use the following for endowment matching (34 CFR 628.42):
- A pledge of funds or securities;
- Deferred gifts such as a charitable remainder annuity trust or unitrust;
- Any federal funds;
- Any borrowed funds; or
- The corpus or income of an endowment fund or quasi-endowment fund existing at the closing date established by the Secretary for submission of eligibility requests under the Endowment Challenge Grant Program. This includes the corpus or income of an endowment or quasi-endowment fund established by a foundation if the foundation is tax-exempt and was established for the purpose of raising money for the institution.
For the duration of a grant period, the matching federal endowment funds can be invested in savings accounts or in low-risk securities (34 CFR 628.43). Such savings accounts and low-risk securities include:
- A federally insured bank savings account
- A comparable interest bearing account offered by a bank
- A money market fund
- Certificates of deposit
- Mutual funds
The endowment funds raised by the University for matching purposes are recorded as permanently restricted funds. The federal matching funds are recorded as temporarily restricted funds. Both endowment funds raised by the University and federal matching funds are invested in low-risk stocks and bonds with CommonFund. The University exercises judgment and care in the prudent management of the endowment funds and will continue to do so throughout the duration of the grant period.
Endowment Fund Use
During a grant period, the University
- May not spend the endowment corpus;
- May spend 50% of aggregate endowment fund income. The endowment income is calculated based on current total value less the endowment fund corpus. Expenditures could be for general operating costs or costs associated with managing the endowment;
- May not spend the remaining 50% except for sponsoring agency approved expenditures in financial emergencies, natural disasters, or in case there is a judgment against the Institution.
At the end of a grant period, the University
- May use all of the grant income for any educational purpose;
- May use the endowment fund corpus for any educational purpo