When the University bears a portion of the costs of a sponsored project (e.g., by purchasing equipment or supplies for the project from University resources or by committing faculty or staff effort to project at no cost to the sponsor), it is considered to be cost sharing.

Cost sharing may be either mandatory (when a sponsor requires a certain portion of the costs to be paid by other funds) or voluntary (when no such requirement exists). "Voluntary" cost sharing at the proposal stage becomes "mandatory" once the proposal is approved for funding by the sponsor.

Cost sharing has programmatic, administrative and financial consequences for the University and, as a general rule, is strongly discouraged unless required by the sponsor (typically by a statement in the program announcement). An explicit commitment to devote a percentage of effort to a project carries auditable record-keeping requirements, reduces flexibility and has an adverse effect on the University's recovery of F&A costs. The salary and fringe for the time committed voluntarily in a proposal and the amount of any other contribution of University funds are included with other direct charges in the "research base" (the denominator of the fraction used to calculate the University's federal indirect cost rate). As a result, unnecessary cost sharing reduces the University's recoverable indirect costs.

Cost sharing requirements are ordinarily specified by the sponsor and displayed in the budget as a fraction of total costs. Should a program announcement require cost sharing and cap indirect costs at a rate below the full federal rate, a proposal for that program should use the maximum indirect costs allowed by the sponsor in satisfying the cost sharing requirement.

It is important to remember that once the grant is awarded, all cost sharing amounts are subject to audit. Also, on any federal award, federal funds from a different source cannot be used to meet the cost sharing requirement. If a revised budget is requested, remember to reduce the cost share commitment proportionately.

For more information, see the University's Policy on Cost Sharing and Financial Management - Cost Sharing.