Cost sharing
Definition
Cost sharing is the portion of a sponsored project's costs that the funder does not pay and the recipient institution, or a third party, covers instead. It can be required by the funder (mandatory) or offered by the applicant (voluntary).
How it works
Cost sharing works by committing institutional resources, such as faculty effort, equipment, or cash, to the project in addition to the funder's money. There are three types:
- Mandatory cost sharing. The funding announcement requires it, often as a percentage of the total or federal share. Some Department of Energy research and development programs, for example, require a 20% non-federal share.
- Voluntary committed cost sharing. The applicant offers it without being asked and states it in the proposal, usually in the budget or budget justification. Once the award is made, it becomes a binding commitment the institution must track and document.
- Voluntary uncommitted cost sharing. Effort or resources the institution contributes but never promised in the proposal. It does not need to be tracked or reported.
Committed cost sharing has to meet the same standards as charges to the award: it must be verifiable, necessary for the project, allowable, and not paid by another federal award.
Federal rules on cost sharing
Under the Uniform Guidance (2 CFR 200.306), voluntary committed cost sharing is not expected in federal research proposals and cannot be used as a factor in merit review unless the notice of funding opportunity says it will be. NSF goes further and prohibits voluntary committed cost sharing in proposals unless the solicitation requires cost sharing. For this reason, most university policies discourage offering cost sharing that is not required.
Why it matters for research offices
Cost sharing matters because every committed dollar is a real obligation that has to be funded, documented, and reported during post-award, and auditors check it. Committed faculty effort that is not paid by the award must still be recorded in effort reporting. Cost sharing also lowers the institution's effective indirect cost recovery, since the shared costs often carry F&A that nobody reimburses.
Common mistakes
- Mentioning institutional contributions in the narrative with dollar amounts, which can turn them into committed cost sharing.
- Promising third-party matching funds without a signed commitment letter.
- Failing to set up a separate account to track committed cost sharing after award.
- Overlooking a mandatory match until the budget is nearly finished.
Frequently asked questions
Usually not. Most NIH and NSF programs do not require cost sharing, and NSF prohibits voluntary committed cost sharing unless the solicitation requires it. Check each funding announcement.
Mandatory cost sharing is required by the funder as a condition of the award. Voluntary committed cost sharing is offered by the applicant in the proposal and becomes binding once the award is made.