Cost Share on Sponsored Awards

Procedure Area: Vice President for Research

Latest Revision: May 1, 2023

Responsible or Contact Office/Role:

The Office of Sponsored Programs is responsible for:

  • Establishing and communicating policies and procedures related to cost sharing.
  • Assisting unit research administrators and faculty in determining if an award requires cost sharing and documenting such commitments.
  • Reviewing proposals to ensure that the cost share funding source is identified in the funding proposal.
  • Incorporating appropriate cost sharing terms and conditions into outgoing subcontracts.
  • Establishing cost share companion accounts (CS Grants) in the financial system.
  • Ensuring third party cost sharing is properly reviewed, documented and reported.
  • Conducting periodic reviews of cost sharing expenses for compliance with sponsor requirements.
  • Reviewing and submitting necessary cost sharing reports to sponsors, the Cost Analysis group, and others as requested.

The Office of Financial Planning and Analysis is responsible for:

  • Ensuring committed cost shared expenditures are included in UVa’s organized research base for F&A rate calculation.

Principal Investigators and Project Directors are responsible for:

  • Determining and verifying any cost-share requirements on proposals.
  • Ensuring that cost share contributions are documented on the funding proposals and proposed budget.
  • Ensuring adjustments to salary/effort committed as cost share are made as appropriate.
  • Ensuring that cost share commitments are met by UVA and/or third party.
  • Attesting to cost share expenditures on the Statement of Cost Sharing Certification, when required.

Department Chair/Dean and/or Vice Presidents are responsible for:

  • Obligating University resources for cost share.
  • Ensuring that cost share resources are available.
  • Approving the funding proposal.
  • Approving F&A waiver requests

Research Administrators and/or Fiscal Contacts are responsible for:

  • Assisting the PI/PD in determining and verifying any cost-share requirements on proposals.
  • Assisting with preparing the funding proposals to include cost share commitments.
  • Ensuring that cost share commitments are adequately documented.
  • Ensuring that payroll costing allocations are set up in the payroll system when salary/effort is committed as cost share.
  • Monitoring cost share throughout the life of the project to ensure compliance with the sponsored agreement.
  • Maintaining documentation in support of cost share contributions in accordance with OSP’s document retention procedure. 

Purpose: 

This procedure describes the management of sponsored agreements that include cost sharing. UVa is required to track cost shared expenditures in the financial system and submit certified reports to sponsors. Post Award will work with department administrators to ensure cost shared expenditures are verifiable from UVa’s financial system, monitored for allowability, allocability, reasonableness and consistency with UVa policy and sponsor requirements. 

Definitions:

1. Committed Effort: Any part of ‘University effort’ that is quantified and included in a sponsored program proposal and the subsequent award (e.g., two summer months, 12% time, one half of a year, three person-months, etc.). This quantified effort is associated with a specific dollar amount based on the employee’s Institutional Base Salary (IBS). Committed effort can be paid or unpaid, in the form of one or both of the following:

  • Direct Charged Effort: Any portion of ‘committed effort’ toward a sponsored program activity for which the sponsor funds the salary and benefits.
  • Cost Shared Effort: Any portion of ‘committed effort’ toward a sponsored program activity for which allowable UVa sources fund the salary and benefits.

2. Cost Sharing: Allowable and allocable costs of a sponsored project that are not borne by the sponsor. Categories of cost sharing include:

  • Mandatory Cost Sharing: Cost sharing required by the sponsor as a condition of obtaining an award. Such requirements are generally incorporated in the funding opportunity announcements or solicitations or required by legislation and will be considered as an award eligibility by the sponsor.
  • Voluntary Committed Cost Sharing: Cost sharing specifically pledged on a voluntary basis in the proposal budget or federal award which becomes a binding requirement of the award must be tracked, documented, and reported (when required) to sponsors.
  • Voluntary Uncommitted Cost Sharing: Cost sharing over and above proposed and awarded commitments. Such cost sharing does not need to be tracked, documented, or reported to sponsors.
    • For example, for a key person committed to and charged 25% of the Institutional Base Salary to the project, but actually spent 35% effort on the project, the additional 10% effort devoted to the project is considered voluntary uncommitted cost sharing.
  • Additional Notes:
    • Cost sharing represents real costs associated with University resources.
    • Cost sharing requires University redirecting funding for instructions or other activities to support research.
    • Committed (mandatory and voluntary) cost shared expenditures are included in the organized research base for F&A calculation, lowering University’s F&A (indirect cost) rate.

3. Third Party Cost Sharing occurs when cost share commitments are borne by cash or in-kind contributions of an entity external to UVA.

4. Funding Proposal: A SmartForm in Research UVA, the Funding Proposal is an internal UVA document containing critical financial and non-financial data about all proposed extramurally funded activities.

5. Facilities and Administrative Cost (F&A): Costs that are incurred for common or joint objectives benefitting more than one cost objective and therefore cannot be identified readily and specifically with a particular cost objective, sponsored program, an instructional activity, or any other institutional activity.

6. Institutional Base Salary (IBS):

The annual compensation that the University and/or University Physicians Group (UPG) pays for an individual’s appointment, whether that individual’s time is spent on research, instruction, administration, or other activities (e.g., patient care or proposals preparation).

7. Principal Investigators/Project Directors (PI/PD) and Other Key Personnel: Individuals whose effort is essential to the success of the proposed activity, either because of their critical leadership positions within the proposal (and consequently their intellectual guidance) or because of the uniqueness of the expertise they are contributing relative to the proposed scope of activity. ‘Key personnel’ typically include research scientists, principal scientists and senior scientists, depending on their intellectual contribution to the proposed scope of activity. Typically, replacement of any of these individuals requires approval from the sponsor. Importantly, the status of ‘Principal Investigator/Project Director’ and ‘key personnel’ does not necessarily imply salary support from the sponsor.

8. Sponsored Program:  Any externally funded research, public service, or scholarly activity (including hosting or attending conferences) at the University that has a defined scope of work often including a set of specific programmatic objectives and/or deliverables, and line-item-based budget, providing the basis for sponsor expectations and awardee accountability (i.e., a reciprocal transfer of something of value). Sponsored programs are funded through agreements that usually include terms and conditions for the disposition of tangible properties and outcomes (e.g., equipment, records, specified technical reports, theses, or dissertations) or intangible properties and outcomes (e.g., rights in data, copyrights, and inventions). Note: The terms sponsored program, sponsored project, and/or sponsored activity are often used interchangeably.

Notes: 

Funding sources available for cost share expenditures are typically identified from department funds, local funds, gifts, and endowment income.  Federal funds may not be used for cost sharing commitments without advanced approval from the contributing agency.

Procedure:

Proposal Stage

In preparing proposal packages, the Funding Proposal is completed by the responsible PI/PD with assistance from the cognizant departmental/school research administrators. When cost share commitments have been made in the proposal budget or narrative, the Funding Proposal should reflect the types of the commitments and all funding sources that will be used to fulfill the commitment. The cost sharing commitments included in the Funding Proposal are approved by the cognizant departmental/school official.

Pre-Award will review cost sharing requirements from program solicitations and advise the PI/PD on whether cost sharing will be appropriate and if needed, obtain clarification from the sponsoring agency.

Award Stage

Upon award, OSP will identify the cost sharing included in the sponsored agreement and recommend establishment of a cost share Grant and/or other methods of tracking such obligations.  In Workday, the Award Special Condition must be selected for the cost sharing type proposed by UVA and awarded by the sponsor. The Workday Award Funding Details will be updated with the Cost Share Total and the Cost Share Required by Sponsor field should be Yes.

A cost share Grant will be created in the financial system, with non-sponsored fund sources and worktags identified for covering cost shared expenses. When cost sharing is covered from multiple fund sources (example, gift and designated), separate cost share Grants need to be established for each fund source.

Occasionally, specific State appropriations, non-federal sponsors or donors of restricted gifts allow their funds to be used for matching or cost sharing for research programs. In such cases, OSP Financial Compliance recommends departments using unique optional worktags, linked to the state (e.g., ETF), non-federal sponsored or restricted gift worktags for easy identification of the cost sharing funding source/s.  

Post Award Stage

Pre-Award creates the cost sharing Grant, associated with an Award Line with $0 Award Line Amount and set up as “Fixed” Award Line Type. The cost share Grant has “cost share” included in the name (CS) and assigned GRH002 Grant Hierarchy. The cost share grant requires non-sponsored fund source and other worktags (DN, GF, etc.) as Allowed and Default related worktags for identifying funding sources that will be charged for the expenditures. There are no billing schedules associated with the cost sharing grant award lines.

Departments set up payroll costing allocations, requisitions, purchase orders and other commitments on the cost sharing Grants for tracking and documenting cost shared expenditures within the financial system.

Cost shared expenditures are posted on the non-sponsored funding sources directly via transactions, grant expenditure reports show these expenditures for reporting purposes.

For third party (cost sharing from subawardees) or other institutional cost sharing such as waived F&A, where a cost sharing grant need not be established, the Statement of Cost Sharing Certification must be completed and certified by the PI. Post Award Grant Manager must create an Award Task for the cost share certification requirement and assign the Task to the departmental Grant Manager with Task start and end dates.

OSP Post Award monitors cost shared expenditures through the life of the sponsored program, reports cost sharing to sponsors in accordance with their specific requirements and closes out cost sharing grant along with the sponsored award. OSP Post Award recommends adjustments to cost sharing commitments when necessary and directs department administrators to OSP Pre-Award for sponsor approvals.

Office of Financial Planning and Analysis captures cost shared expenditures posted on cost shared grants for F&A rate calculation.

Notes:

Allowable and allocable cost overruns can be considered as cost sharing when necessary.

Over the cap salary for NIH and other sponsored awards with salary restrictions cannot be used to meet cost sharing commitments. However, over the cap salaries and associated benefits are considered as research costs by the federal government and will be included in the research base for F&A rate calculation.

Before committing to cost sharing and including this commitment in a proposal, considerations about sponsor expectations, internal budget impacts and resulting administration should be weighed in. Committing to cost sharing is usually only necessary when mandated by the sponsor. Cost sharing of un-recovered facilities and administrative (F&A) costs are not always permitted by federal sponsors and will require prior approval before including these costs toward a commitment. The terms of the award and/or the Funding Opportunity Announcement/Request for Proposal may address this specifically. Prior to making such commitments, obtain appropriate approvals.  

Policy or Other Underlying Requirement UVA Policies:

Federal Requirements/Guidelines: