Cost sharing is the portion of the total project costs of a specific sponsored agreement that is borne by UMass rather than the sponsor. Cost sharing normally represents a reallocation of departmental or school resources to partially support an externally sponsored project.
Determine if cost-sharing is mandated by the sponsor.
Cost share only when required by the sponsor. Unless mandated (or strongly suggested) by the sponsoring agency, do not cost-share.
Unnecessary cost sharing adds an administrative cost and burden to the principal investigator, the department, the Controller’s Office, and other administrative functions on campus due to the need for creating an adequate and auditable paper trail for those costs.
Undocumented or improperly documented cost sharing leaves UMass vulnerable to audit findings. In addition, the more an institution cost shares, the greater the downward impact on its federally negotiated indirect cost rates.
- Mandatory or voluntary? Cost sharing is classified as either “mandatory” or “voluntary”.
- If the published sponsor guidelines include language that either requires cost sharing or simply suggests that the application will be more favorably reviewed if cost sharing is included, cost sharing is considered “mandatory.”
- Additional suggestion: check the sponsor guidelines for their scoring/review criteria. If cost sharing is listed in a manner that would preference the sponsor review, cost sharing is considered mandatory.
- In the absence of sponsor published guidelines supporting the need to cost share, cost sharing would be seen as “voluntary” and therefore not allowed by UMass.
- Some sponsors require proof of “institutional commitments,” but this requirement does not necessarily mandate the inclusion of quantifiable cost sharing. Instead, it generally calls for non-monetized commitments in support of the project. Statements from Chairs for example protecting a faculty member’s time for research that would ordinarily be committed to teaching. When cost sharing is not mandated by the sponsor, but institutional commitments are required, do not provide monetized descriptions of institutional support. When in doubt, consult with an Offices of Pre-award Services (OPAS) Pre-award administrator assigned to that sponsor.
- If the sponsoring agency does not require cost sharing but the PI feels voluntary cost sharing is justified, a request to include such Voluntary Cost Share must be submitted to the OPAM Director. For details, see Cost Sharing Guidance.
Conclusion: the sponsor must have a written policy in place in order to cost share. Provide your business manager, OPAS Pre-award Administrator with a copy of this policy if it is not otherwise included in the guidelines. This clarification cannot be provided by way of an email from a sponsor representative. It must be a universally advertised policy.
Identify eligible budget categories to cost share and secure approvals.
Mandatory cost sharing can include direct cost budget items and indirect costs, depending upon the specific requirements of the sponsor. UMass practice is to cost share only from salaries, associated fringe, equipment, graduate student tuition waivers, indirect costs and subcontractor cost share.
- Cost sharing must be from non-federal sources
- Cost-shared personnel and items must contribute directly to the project
- Cost sharing is expended during the project's period of performance
- All cost sharing amounts and their associated account numbers must be listed on the Kuali Record. This cost sharing must also be authorized with a signature, where indicated, by the individual authorized to commit the shared funds. Typically for salaries, it is the department head or dean.
- Cost sharing of salaries is allowable for the portion of salary associated with any UMass employee's effort committed to the proposed project.
- Cost sharing of faculty on nine-month academic appointments can only be committed for the academic year. Summer pay cannot be cost shared on academic appointments unless there has been a special arrangement where the department head or dean has agreed to use other university sources such as RTF or state funding to pay the faculty summer compensation. This is an unusual circumstance.
- The dollar value of the shared time must be listed within the Institutional Committment section of Kuali with appropriate speedtypes. Department heads and deans approval is required during proposal routing and approval.
- Cost sharing of salaries must be from a non-federal account, typically the state ledger from which the individual is paid from. If uncertain, check with your bookkeeper or department head.
- Faculty with nine-month academic year appointments must complete a “Faculty AY Effort Cost Share Approval Form”. Once signed, this form should be uploaded to Kuali in the “Internal Attachments” section and routed to OPAS.
- Cost sharing of Graduate Research Assistant salaries typically represents real cash vs. the in-kind contribution of a faculty member's academic year time.
Only cost share fringe that is associated with cost-shared salary. See the Fact Sheet for current rates.
Equipment can be cost shared only if it meets the following criteria:
- Has not already been purchased.
- Will be purchased specifically for exclusive use on the project.
- Purchased during the project’s period of performance.
- Ownership of equipment will remain with UMass at the end of the project period.
- Must be cost shared from a non-federal account, typically the departmental state ledger, and approved by the account owner on the during Kuali proposal routing. If approver is not already on the routing map, you will need to add them. Speedtype must be listed in the Institutional Commitment section of Kuali.
Budgeting partial cost of equipment: For those situations when the sponsor does not require matching funds on equipment and it is anticipated that the amount budgeted for sponsor support will only fund a portion of that equipment, please adhere to the following procedures:
- Submit a request for voluntary cost share to the Director of OPAM in order to request permission to include voluntary cost sharing in the budget
- If the OPAM Director approves inclusion of non-mandatory cost sharing, show the dollar amount of the UMass contributed portion in the Institutional Committment section of Kuali with the appropriate speedtype to be charged. Provide authorized sign-off of the person in charge of the cost share account, typically the department head or dean, and/or the VCRE if research area matching funds are provided.
- List equipment in the sponsor budget as "partial funding for equipment"; show value of contributed amount as well as the amount charged to the sponsor.
Graduate Tuition Waivers
- Cost sharing of tuition is allowable as long as graduate student(s) have a "working" vs. a "non-working" appointment. A "working" appointment results in the waiver of tuition and fees. "Non-working" appointments may result in tuition waivers as well. For help in defining "working" vs. "non-working" graduate appointments, call the Graduate School Assistantship Office for assistance.
- Tuition wavers should be added as a separate line and listed as cost share in the Kuali budget.
- Graduate Research Assistants must be budgeted at a certain amount of salary per semester to qualify for a tuition waiver. For more details, consult with the Graduate School Assistantship Office
- See the Fact Sheet for the current annual cost share allowance for in-state and out-of-state tuition. This figure is the result of an audit worthy equation that blends the value of in-state and out-of-state rates since the graduate student’s residency is often unknown at the time of submission.
- Tuition is exempt from indirect costs. Do not assess indirect costs on shared tuition
- Place tuition in the "Other" budget line item category.
- Shared tuition can derive from either RA's being charged to the grant or cost-shared RA's allocable to the project
- Tuition wavers must be identified in the Institutional Commitment section of Kuali.
- Tuition waivers must be approved on the by the Graduate School Business Office. Include Debbie Britt in the Kuali routing approval map.
- Unless the guidelines explicitly state otherwise, cost sharing can be claimed on the indirect costs associated with the direct charges being shown as UMass cost share.
- Should the indirect cost rate the sponsor allows be lower than the University’s negotiated rate, the difference between the two rates may also be used as University cost share. In the event of an indirect cost waiver from the Vice Chancellor for Research and Engagement, those indirect costs may also be cost shared.
- If it is anticipated that an Indirect Cost Waiver or reduction will be requested, follow the Procedure for Indirect Cost Waiver or Reduction.
- Cost sharing of indirect costs are always based on an MTDC basis rather than a TDC basis.
Subcontractor Cost Share
If the budget includes a subcontract to another organization, that organization can include shared costs in their own budget if the following is observed:
- The cost sharing is specifically signed off by the authorizing official of that organization, their sponsored research office or OPAS equivalent
- Shared costs must be auditable. A rule of thumb to follow is to show only those type of costs allowed by UM (salaries, fringe, indirect costs, etc - items with audit trails)
- Subcontractor cost share would be detailed in the subcontractor detailed budget and only appear in the overall UMass budget as follows (dollar figures are hypothetical):
|Total Direct Costs||$102,000||$32,000||$134,000|
|Total Indirect Costs (59.5% MTDC)||$54,740||$7,735||$62,475|
Further considerations on subcontractor shared costs from sample:
- The $14,000 cost shared by the subcontractor includes shared indirect costs.
- Indirect costs are NOT assessed by UMass on the subcontractor's total cost share (in this example, $14,000 is exempt from the base by which UMass cost shares its indirect costs).
Third Party Cost Share
When necessary to meet mandatory sponsor requirements, cost share provided by third parties is allowed when the third-party is legally bound to the UMass Amherst via a subcontract. In such cases, no formal approval is necessary. All other third-party cost share is strongly discouraged and requires VCRE approval in recognition of the higher risks associated with it.
Third-party cost-share requests, with department and school/college recommendations, are due via email to firstname.lastname@example.org, two weeks in advance of the internal OPAS deadline. If approved, evidence of VCRE approval must be uploaded in Kuali in the “Internal Attachments” section.
The reasoning behind the need for review and approval is that this type of cost share is very high risk to the institution. Should it not come through, or be disallowed by the sponsor, the amount of cost share must come from other University sources, or will result in a cost disallowance and payback to the sponsoring agency.
The third-party cost-share request should include:
- Very specific details regarding why their match is needed
- A copy of the detailed budget with the third party match and a version without that match
- Documentation on how the match will be tracked and reported
- Documentation from the authorized representative of the third party to provide the match
If the Vice Chancellor for Research and Engagement formally approves third-party cost-share, the following considerations must be taken into account:
- The third-party contributor must provide OPAS with a letter of support/commitment. This letter would provide some detail about the resources committed and should be signed by the individual authorized to make such commitments (sponsored program office, OPAS equivalent; contracting officer, business official, etc.). Shared costs must be auditable and directly allocable to the project and documented in the letter of support/commitment.
- Do not assess indirect costs on third-party cost-share as part of the UMass indirect cost cost-share
- Should the project be awarded, the third party would be required to enter into a formal agreement with the University indicating its commitment to provide the University reports and supporting documentation on their contribution for auditing purposes.