Purdue University Cost Sharing Guidelines, February 1, 2007
This document provides guidance that will facilitate compliance with Federal Costing and Cost Sharing requirements as set forth in OMB Circulars A-21 and A-110. This guidance applies to both Federal and non-Federal sponsored programs.
Cost Sharing Defined
Cost sharing means that portion of project or program costs that are not borne by the sponsor.
Types of Cost Sharing
There are two types of cost sharing that occurs on sponsored projects. The two types of cost sharing are:
The cost sharing types are defined, for purposes of implementation at Purdue University as follows:
Mandatory Cost Sharing – Mandatory cost sharing is that commitment to participate in the cost of the project required either by Statute or by Administrative regulation. The requirement for such cost participation will be explicitly set forth in project announcements or guidelines issued by the sponsor, and will be a requirement for eligibility to participate in the project and will be specifically identified within the University’s proposal.
Mandatory cost sharing also includes any commitment by the University to participate in the cost of the project that is not required by Statute or administrative regulation, but is a part of the University’s proposal to the sponsor.
Voluntary Cost Sharing – Voluntary cost sharing is the University’s participation in the cost of a project when there was no commitment within the University’s proposal to share in the cost of the project or when the University’s actual participation in the cost of the project exceeds the cost sharing commitment made as a part of the University’s proposal.
Criteria for the Acceptability of Cost Sharing
The obligation for cost sharing is predominately associated with Federal grants and cooperative agreements. In accordance with OMB Circular A-110, cost sharing must meet all of the following criteria:
- The cost sharing must be verifiable and auditable within the University’s accounting system.
- The cost sharing must not be included as contributions for any other Federally assisted project or program.
- The cost sharing is necessary and reasonable to accomplish project or program objectives.
- The cost sharing is allowable in accordance with the applicable cost principles (OMB Circular A-21), the terms of the agreement and Purdue University costing policies.
- The cost sharing must be funded from non-Federal sources, unless authorized by Federal statute.
- The cost must be incurred during the term of the agreement.
Cost Sharing and the Proposal
Any University commitment to share in the cost of a project should be identified early in the proposal process. The Business Manager, Sponsored Program Services staff and the Project Director share responsibility for ensuring that the following has occurred prior to the submission of the proposal:
- The University commitment and the cost associated with the commitment are in accordance with University policy.
- The University commitment complies, in all ways, with the Criteria for the Acceptability of Cost Sharing.
- The funding source(s) for the University commitment have been identified and authorized utilizing a Form 32.
Sponsored Program Services personnel authorized to submit proposals will ensure that the preceding has occurred prior to approving the proposal for submission to the sponsor.
Funding University Cost Sharing Commitments
University cost sharing commitments must be funded from non-Federal sources. These sources include University general funds, gift funds, PRF funds and non-Federal sponsored program funds. In general, the responsibility for funding the University cost sharing commitment lies with the department/school. The exceptions are as follows:
- Funding to meet special or unusual cost sharing needs has been budgeted by the President and the Vice President for Research. Requests to utilize any of these cost sharing funds must be discussed with the Special Assistant to the Vice President for Research. The formal request to utilize any of these funds for cost sharing commitments must be forwarded to the Special Assistant to the Vice President for Research not less than two weeks prior to the date of proposal submission.
- The Facilities & Administrative costs and fringe benefits applicable to mandatory cost sharing funded by department/school general funds will be funded from central sources. If mandatory cost sharing is funded by a fund source that is chargeable for fringe benefits and/or Facilities and Administrative costs, then that fund source will be responsible for the fringe benefits and/or Facilities and Administrative costs associated with the cost sharing.
Documentation of Cost Sharing
The University has the following obligations regarding the documentation of cost sharing:
- Proposal commitments to cost share, when accepted, become a condition of the agreement relationship established by the University and the sponsor.
- If no effort for the Principal Investigator is included in the budget to the sponsor, then voluntary cost sharing should be noted so the faculty effort is appropriately classified for purposes of the University’s facilities and administrative cost proposal.
- All cost sharing must be verifiable and auditable within the University’s accounting system.
Consistent with these obligations, University cost sharing will be documented as follows:
- Mandatory cost sharing will be documented by utilizing the University’s single account cost sharing procedures.
- Mandatory cost sharing funded by non-federal restricted funds will be documented annually and at closing by memorandum cost sharing procedures. The memorandum documenting the cost sharing will be prepared and certified by the Project Director within thirty days of the completion of each annual budget period and within sixty days of the completion of the entire project period. The memo will be maintained in the Sponsored Program Services project file for audit purposes.
- Cost sharing involving donated items or volunteer services will be valued and documented in accordance with the guidance provided by OMB Circular A-110.