Cost Sharing
Cost sharing occurs when a portion of the project funding is not provided by the sponsor—the University of New Orleans shares in the costs. These are real dollars, which may be from the UNO general fund or a restricted fund, but which must be auditable. Cost share dollars may fund faculty time, supplies, equipment, etc.
When applying for external funds that require cost share, the total cost of the project is considered to have at least two components:
- that portion which will be covered by an external private entity or public agency (federal, state, or local)
- that portion which is covered by the University (sometimes in conjunction with an external third party).
The portion covered by the University (sometimes in conjunction with an external third party) is considered to be "cost sharing" or "matching funds."
Sponsored award funds may not be used for cost share contributions without prior written approval from both the benefiting 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.
Frequently Asked Questions (FAQs)
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Are cost sharing dollars "real"?
Cost sharing dollars are absolutely "real" and must be auditable. Thus, UNO cannot allow for any proposal to be released from the University without having signature approvals for all categories of cost sharing revenues. Cost sharing can take the form of an actual cash contribution and/or an in-kind contribution. The most common example of cash cost sharing is faculty time available to use in a specific project. An example of in-kind contributions would be labor and equipment dedicated to a project by a private business, when the University is applying for federal or private foundation revenues. The external source would have to provide a statement as to the value they attach to this contribution.
Cost sharing (or matching funds) is usually expressed as a combination of direct costs and indirect costs, also known as Facility & Administrative (F&A) costs. Any institutional contribution in the direct costs’ column would also have F&A calculated on that portion. The F&A calculated on the institutional match is considered In-Kind Cost Sharing. The combination of the (Institutional Direct Costs) + (Institutional F&A Costs) constitutes UNO's total cost sharing or matching funds contributed to a project. Additionally, in some instances (either because of an agency restriction or private foundation policy), UNO is not able to collect its full Federally Negotiated F&A Rate on a project. For instance, some U.S. Department of Education training grants allow the full F&A rate; others may be restricted to an 8% F&A rate. In these instances, UNO is permitted to count the remaining uncollected portion as matching funds, because it is cost sharing that portion of F&A costs (e.g. cost of Purchasing, Human Resources, Payroll). This portion of institutional contribution is considered In-Kind Cost Sharing.
In all cases, approval for any cost sharing from any source is reflected by signatures on the UNO Routing Form. In cases of cash, an account number must be indicated. The funds remain in the original account until an award is made, and it is only expressed on this form for tracking purposes. For in-kind services, provided the correct signatures are obtained, no account code is required.
When an award notification is received, the Office of Research makes the stated cost sharing available to the PI by removing funds from the account promised on the routing form, opening a new account, and assigning a number. The PI is notified of their new account. The stated cost sharing must be spent in the manner prescribed in the proposal during the same dates as the award. If an award is less than the original funding request, the university may reduce its cost share commitment in proportion to the sponsor's reduction in funding, unless the funder stipulates that cost sharing must remain at 100%. Some agencies require that cost share committed in the proposal remain at the same level even if they fund you at a significantly reduced rate. Unspent cost share may result in an equal amount of funds being unreimbursed on invoices.
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Is cost sharing mandatory in order to get funding?
If cost share is mandatory, then it will be listed in the Request for Proposal or agency guidelines.
In many federal grant programs from major funding sources like the National Science Foundation (NSF) and the National Institutes of Health, mandatory or absolute cost sharing percentages have been eliminated. Most NSF programs will reject without review a proposal that includes voluntary cost share.
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How much time does it take to gain cost sharing commitments?
The levels and complexity of cost sharing matching funds may vary extensively. In no case should one ever assume agreement to any funds unless an approval signature has been obtained, regardless of prior agreements. Each funding request is unique. Thus, even if there was a prior arrangement on the same proposal now being resubmitted to the same agency, a new approval must be obtained.
It is important to recognize that any commitments mentioned in the proposal narrative that carry financial obligations must also be identified in the UNO Proposal Routing form with proper approval signatures supporting them. It is recommended that you contact the appropriate cost share approval source approximately 3 months prior to the application deadline and no less than 8 weeks prior to the deadline. By allowing as much lead time as possible, you are limiting the possibility of having to completely restructure your budget totals at the very last minute if your request is not approved.
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Potential Sources of Cost Sharing for UNO Projects
From year to year, the precise amounts and the protocols for requesting these funds as part of external funding requests may vary. These are generally listed in the order in which they might be requested.
1. Faculty Time To Be Dedicated to the Project
This is the most common form of cost sharing at UNO. The most common way that we calculate potential faculty time for projects is that we consider every full-time faculty member's time divided into equal units (generally 4), and decisions governing how much of that time is to be allocated to research, teaching, and community service is determined by one's Chair and/or College Dean. Thus, as an example, if one is teaching two courses per semester, for accounting purposes it is agreed that there are potentially two "units" available for other duties, or, 50% of one's time (i.e. for research, other scholarly activities, academic committees, community service, etc.).
When applying for a grant, provided your Chair and Dean are in agreement, you may be able to request part or all of the remaining time as an investment in the project as a primary form of cost sharing. Sometimes this "available" time may also be broken into smaller increments, if that is reasonable and appropriate for the project, i.e. hours, days, weeks or months. We use 180 days or 1,440 hours to represent one full-time academic year. For fiscal appointments, we use 260 days or 2,080 hours to represent full-time. In all cases above, the base is the faculty salary (either academic or fiscal). Whatever salary figures are derived must have payroll benefits calculated as a separate line item on the budget.
Type of cost sharing: Cash
Required Approvals: Dean and/or Chair, with a General Fund account number representing the salary line
2. Office of Research - Revenues from F&A Costs
It is appropriate to reinvest money the University receives from funded research into future research projects. The Office of Research makes every effort to redistribute these funds into projects in an equitable fashion, taking into account College and Dean priorities, broad scale directions of the university, potential for launching other successful efforts, and other factors as appropriate.
New faculty startup can be leveraged for cost share on proposals. If awarded, the startup package may need to be extended so funds are available during the external award life cycle.
Return of F&A is provided to colleges, departments, and PIs. Any of these funds can be used for cost share with approval of the appropriate account manager.
Sponsors that do not allow the university to recover F&A costs will often require cost share but allow the waived F&A to be counted as cost share. Agency guidelines should be attached to the UNO Routing Form.
Type of cost sharing: Cash
Required Approvals: Varies — appropriate account manager
3. Information Technology Funds for Capital Developments
In technology-related projects, a large portion of IT effort cannot be counted as additional cost sharing because IT Operations & Maintenance efforts are already included in the calculation of our Federally-Negotiated F&A Rate Agreement. However, there are sometimes exceptions to this, when some of IT effort can legitimately be claimed as matching revenue.
First, there are instances where no F&A costs are allowed from the funding source.
Secondly, there are IT efforts which are primarily new development and/or capital improvements projects—efforts which are separate and distinct from standard operations and maintenance. Examples of these costs can include associated faculty development technical training, infrastructure building, system installation, etc., and other components which are in addition to operations and maintenance, when new systems are acquired through grants.
Type of cost sharing: Cash
Required approvals: Head of IT
4. Federal Funds Cost Shared on State Projects
Some research institutes and other efforts at UNO are comprehensively or primarily funded with federal dollars. If these federal funds are going to be available during the stated project term in the proposal, they may be committed as leveraging if the federal program officer agrees in writing.
Type of cost sharing: Cash
Required approvals: Chair and/or Dean, in conjunction with the appropriate federal program officer (a letter authorizing this commitment would be required)
5. State Funds Cost Shared on Federal Projects
In instances where state funding has been obtained, with permission, those funds might be leveraged for a larger project to be funded with federal funds. These instances are less common because the entire goal of the program is to make the PI nationally competitive.
Type of cost sharing: Cash
Required approvals: Chair and/or Dean, plus appropriate state funding source program officer (a letter would be required)
6. Other Specialized Funding: Student Technology Fees (STF)
In some instances, there are base project funds available which have the potential to achieve much broader goals by leveraging those for additional federal funds. The Student Technology Fees (STF), under appropriate circumstances, could be used to leverage for much larger funds to achieve their mandated goals—that is, to promote teaching and other scholarly projects that will directly benefit our students on a much broader scale. In all instances, these projects will only be considered for cost sharing provided they clearly meet the legal mandate of the STF. This type of request should go through appropriate channels prior to the Provost.
Type of cost sharing: Cash
Required approvals: Academic Affairs
7. Other Specialized Funding: Start Up Funds for New Faculty
Due to specific priorities that a College may have, some new tenure-track faculty may be allocated a certain level of funds which are guaranteed upon entry and are available until exhausted to be used for research needs or to leverage on proposal applications. In most cases, the Office of Research will not consider cost sharing requests from new investigators who have startup funds available for leveraging.
Type of cost sharing: Cash
Required approvals: Chair and/or Dean (with appropriate account code)
8. Private Funds
Commitments from entities external to the University can represent allowable and viable sources of potential leveraging, usually for larger federally-funded projects. The private funds can be in three forms.
First, they might be in the form of a gift from a benefactor, in which case it is important to understand the benefactor's restrictions in terms of when the funds will be available, and whether they wish to impose some restrictions or goals on the funds.
Secondly, private funds may also come from business and/or industry who view this type of leveraging for federal capital as a means to accomplish goals they could not otherwise afford.
Thirdly, they may be from a private foundation with specific goals, restrictions, etc. and one which is knowledgeable of the concept and willing to leverage for additional federal revenues to achieve more.
In any case, the private funds must be available in the year the federal funding would actually be received. Thus, given the required funding cycle lead times, the private source must be willing to commit the funds for possibly as long as three years to warrant the kind of front-end negotiation and effort which would occur to make the project successful.
Type of funds: In-kind or cash
Required approvals: At UNO, the Vice President for Research & Economic Development; from the private source, a ranking official from the private organization must agree in writing, and this written commitment will be submitted to the funding agency.