Cost Sharing
This policy has been affected by the new federal Uniform Guidance regulations. For a summary click here.
Cost sharing is defined as the portion of total costs of a sponsored project paid for by Stanford, rather than the sponsor.
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Definitions
The Uniform Guidance is effective for federally sponsored agreements and new funding increments incorporating the Uniform Guidance awarded on or after December 26, 2014. Proposals submitted for federally sponsored projects expected to be awarded on or after December 26, 2014 will reflect the following change in Cost Sharing.
The Uniform Guidance and 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.
In addition, the National Science Foundation will not accept proposals with voluntary committed cost sharing unless it is specified in the notice of funding opportunity.
Mandatory Cost Sharing
Required by the sponsor as a condition of obtaining an award. The cost-sharing commitment must be included in the proposal to be considered by the sponsor.
Voluntary Cost Sharing
Is not required by the sponsor as a condition of obtaining an award. It must be included in the proposal, but the sponsor does not require cost sharing as a condition of the award.
Committed Cost Sharing
Is when an award is received in which there was either a mandatory or voluntary cost sharing commitment by Stanford in the proposal. The cost sharing activity becomes a binding commitment which the University must provide as part of the performance of the sponsored agreement. This commitment must be tracked in the accounting system as cost sharing.
Voluntary Uncommitted Cost Sharing
Is faculty-donated effort or other direct costs above that agreed to as part of the award. Since it was not proposed and constitutes “additional” time or materials it is not considered a binding agreement and is not accounted for as cost sharing.
Matching
Refers to the sponsor requirement that the University match grant funds in some proportion with funds from another party, either from the University or more typically another sponsor (with both sponsors’ approval). Matching requirements 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. An in-kind or matching contribution made by a party other than Stanford requires documentation from the third party supporting the use of the funds as in-kind/matching and may require a certification of fair market value.
Committed Cost Sharing
If cost sharing is committed, that is, proposed by Stanford and accepted by the sponsor, then it must be accounted for as cost sharing. The costs can then be sorted and categorized for the indirect cost calculation. Uncommitted effort (not in the proposal) does not need to be tracked as cost sharing.
For committed cost sharing, OSR will open both:
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Project PTA(s)
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Related cost sharing task and award
Proposing
When a PI proposes, and Stanford agrees, to cost share university resources, the university is required to provide the stated resources in the performance of the awarded project.
Considering the administrative requirements and responsibilities inherent in the cost sharing commitment, the PI (or other person responsible for the identified fund) should carefully weigh the cost effectiveness versus the expected benefits of each potential cost sharing commitment. Cost sharing of direct expenditures represents a redirection of departmental or school resources from teaching or other departmental and school activities to support sponsored agreements.
This commitment must be indicated on the Proposal Development Routing Form (PDRF). By signing the PDRF, the department chair or designee approves the cost sharing commitment. Implicit in the Stanford’s commitment to cost share is the PI's agreement to ensure that:
- Voluntary cost sharing is permitted by the particular sponsor and project for which it is being proposed
- Funds are available for cost shared direct costs once awarded
- Cost sharing is managed in the same manner as project PTA
- Cost shared expenses will be appropriately charged, tracked, and accounted for in compliance with University and sponsor requirements
- University space is coded in the University's Space Inventory System, consistent with the coding of expenditures in the accounting system
- The PI will certify these expenditures in the same manner as all sponsored project spending
Cost sharing tracking, reporting, and certifying are subject to audit.
What You Can Cost Share
When submitting a proposal that requires cost sharing, make sure to follow the sponsor's instructions and Stanford policy.
You can propose cost sharing for only those expenses that would qualify as allowable project costs.
Examples of Allowable Cost Sharing
- Salary and Staff Benefits (School of Medicine prohibits faculty cost sharing)
- Tuition (the Stanford's contribution only)
- Equipment when the award is contingent upon such cost-sharing
- Travel
- Material and supplies
- Other project expenses
- F&A costs
F&A costs are real costs of conducting instruction and research. These F&A costs do not disappear simply because a sponsor refuses to pay for them; Stanford must fund any F&A costs that have not been reimbursed. When direct costs are cost shared, the F&A costs associated with the direct costs are automatically cost shared. PIs may take advantage of the automatic cost sharing of these costs, and include them on the proposal budget. PIs may also include any waived F&A costs as Stanford cost sharing in proposals.
What You Cannot Cost Share
The following expenses cannot be proposed as cost sharing on sponsored project proposals:
- Unallowable costs as defined in federal regulations
- Costs designated as unallowable for a particular sponsored project
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Equipment unless the receipt of the award is contingent upon such cost sharing. You cannot cost share equipment in Stanford’s current inventory the sponsor is already paying for a portion of it through the indirect rate. However, Stanford-owned equipment can be used on a sponsored project.
To let the sponsor know the PI’s lab already has the necessary equipment the proposal can explicitly state:
The equipment is available for the performance of the sponsored project at no direct cost to the sponsor.
- 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. The portion of the purchase price paid by the University must be charged directly to a cost-sharing account in support of the award.
- Faculty salary (School of Medicine Only)
- Salary dollars above a regulatory cap, e.g., NIH
- Salary dollars for effort above 90% (95% for Research Faculty) for those faculty with an appointment of less than 12 months
- Stanford facilities. It is not appropriate to claim the value of Stanford facilities as cost sharing. The use of Stanford facilities is partially paid for by sponsors through the application of the indirect cost rate. Therefore, offering university space or facilities as cost sharing is forbidden. The PI may want to offer the use of a research lab or facilities for the project. In such a case, the proposal should explicitly state: The facility or lab will be available for the performance of the sponsored project at no direct cost to the sponsor.
- University utilities
- Depreciation on government-funded equipment
- Facilities and Administrative (F&A) or indirect costs in excess of the 26% administrative cap, except for DOD contract.
Cost sharing may not be proposed where the sponsor has explicitly prohibited it (e.g., National Science Foundation)
Funding a Cost Sharing Account
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 both parties. Funds for cost-shared expenditures are typically identified from among gift, endowment income, operating budget (except in the School of Medicine), or other department designated funds.
At the time of proposal submission, the Office of Sponsored Research (OSR) or the Research Management Group (RMG) is notified of the cost-sharing commitment through the Proposal. When OSR/RMG receives the award from the sponsor, the notice of award will indicate if the project involves cost sharing. In addition, the existence of cost sharing is noted in SeRA and Oracle.
Cost-sharing PTA(s) are budgeted so that the committed cost sharing appears in the Expense Control column of the Monthly Expenditure Statement.
In ALL cases, the cost-sharing PTA(s) may not be in overdraft at the end of the University's fiscal year. The cost-sharing PTA(s) must be funded at the end of each fiscal year and at the end of each award period.
Set Up
If cost sharing is committed, that is, proposed by Stanford and accepted by the sponsor, then it must be accounted for as cost sharing. As part of the New PTA Setup or PTA Setup Amendment transactions, the SeRA system will automatically create unique cost sharing PTAs as needed.
Cost sharing tasks are given the designation of the 700 task series with budget and expense tied to the sponsored project period and carried over the fiscal year end (corresponding to the primary sponsored agreement). In many instances, when the cost sharing funding source is coming from different schools/departments, or if there are multiple investigators whose cost sharing commitment needs to be tracked separately, multiple tasks can be set up to accommodate this complexity. Cost sharing PTAs will be listed on the SeRA Notice of Award along with the other PTAs set up in support of a particular sponsored project.
For the purpose of identifying federal vs. non-federal and mandatory vs. voluntary cost sharing, four Oracle Award Purpose codes are used:
- INR_CS_FED_MANDATORY_REPORT
- INR_CS_FED_VOLUNTARY_NO_REPORT
- INR_CS_NON_FED_MANDATORY
- INR_CS_NON_FED_VOLUNTARY
Definitions and descriptions of each code can be found here.
Cost sharing PTAs are budgeted with the committed cost sharing appearing in the Expense Control column of the Monthly Expenditure Statement
Overdraft Cost Sharing
If the department administrator becomes aware of cost overruns after the end date of a sponsored project, administrators can contact their OSR Accountant to request a cost sharing PTA to be set up for overdraft purposes. If there are cost overruns at the end of an award and a cost sharing PTA has not yet been established for this purpose, the OSR Accountant will contact department to discuss setting up a cost sharing PTA as part of the closeout process. OSR will notify the department when cost sharing PTAs are set up in Oracle. The Oracle Award Purpose code for overdrafts is INR OVERDRAFTS.
Funding the Cost Share PTA
The best practice is to fund the cost sharing account at the inception of the PTA. At minimum, the cost sharing PTA(s) must be funded by the end of each fiscal year and at the end of each award period. Cost sharing PTAs cannot be in overdraft at the end of the University's fiscal year. Department administrators must provide the funding source when providing the cost sharing PTA attributes. The funding source can be from one or more of the following sources:
- Gift fund
- Endowment income fund
- Designated/special fund
- Operating budget (not allowed in SoM)
All cost sharing expenses must be fully funded by the fiscal year end.
Project Management
After the cost-sharing Task and Award is opened, you must charge expenses to the cost sharing PTA in order to meet your cost-sharing commitment. PTAs must be monitored to ensure cost-sharing is occurring.
Expenditure statements are generated for cost-sharing PTAs must be reviewed and certified in the same manner as direct project costs. Indirect cost associated with an expense should also be offered as cost sharing.
PIs and their departmental or research administrators are responsible for monitoring the activity in their cost-sharing PTAs. This monitoring includes ensuring the charges are allowable, allocable, and reasonable. Review and certification requirements applicable to sponsored project PTAs apply also to cost-sharing PTAs. In addition, the PIs and their departmental or research administrators must monitor the fulfillment of the cost-sharing commitment.
If the programmatic needs change, possibly reducing the total costs of the project, the OSR or RMG 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. When preparing interim or final financial reports or closing out the related sponsored project, OSR will review the cost-sharing PTA to ensure the commitment was met.
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 Office of Sponsored Research before the sponsor is contacted.
Reporting Cost Sharing
OSR is responsible for providing information to sponsoring agencies that demonstrate the University has fulfilled the cost-sharing commitments that it made as a condition of receiving external sponsorship. An overdraft in not considered cost sharing and is not reported to a sponsor. The accounting system is not capable of tracking cost-shared F&A costs; they will not appear on the expenditure statements. OSR will calculate the cost-shared F&A costs, and report them to the sponsor.
Cost Sharing Implementation Guidelines
The Cost Sharing Implementation Guidelines provide helpful resources on cost sharing including frequently asked questions (FAQs.)
