This policy sets the procedures and standards to oversee and regulate the use of matching funds/cost sharing (M/CS) for all sponsored programs at the University of Alaska Fairbanks (UAF). This policy for M/CS is in accordance with 2 CFR 220 (OMB Circular A-21) and 2 CFR 215 (OMB Circular A-110), sets guidelines for when M/CS is appropriate and allowable for UAF sponsored programs, and sets procedures for budgeting and approval of M/CS.
UAF will authorize M/CS commitments only when required by the sponsoring agency and only to the extent necessary to meet the sponsor's requirements. All M/CS commitments must be included in the proposal budget and must be approved by the dean or director of the UAF unit or department responsible for these funds, or by the appropriate official of a third party. After that approval, all M/CS commitments must be approved by the OSP Director before they will be binding. All committed M/CS must conform to UAF and federal guidelines regarding allowability, allocability, and reasonableness (cost accounting standards) and must be verifiable through documentation and UAF's financial accounting system.
UAF authorizes M/CS commitments only to the extent necessary to meet a sponsor's requirements. The university's financial resources are limited, and it is essential that the use of M/CS does not overburden these resources. UAF strives to protect the integrity of the process by which it is reimbursed for F&A costs and maximize the amount of F&A recovery. Excessive or unnecessary M/CS commitments have the effect of reducing the indirect cost rate since committed M/CS must be included in the determination of the negotiated F&A rate. Sponsors and auditors must be able to verify that M/CS funds have been committed and expended toward a project. This policy has been developed to help faculty and staff properly document and report M/CS commitments.
The terms "matching," "cost sharing," and "in-kind contributions" (all referred to here as M/CS) refer to the portion of allowable project costs not paid by the sponsoring agency. These project costs are paid by UAF or through contributions by organizations outside UAF (third parties). There is no distinction between the terms in federal law, 2 CFR 220 (A-21) and 2 CFR 215 (A-110). Historically, "matching" and "cost sharing" are the same principle expressed differently. Matching means to "match" concurrently during expenditure of funds. Cost sharing means that obligation must be met by the end of the project.
Compliance with federal cost accounting standards requires that M/CS expenses be treated in a consistent and uniform manner in proposal preparation, in award negotiation, and in the accounting of these expenses in financial reports to sponsors. Sponsors also require that any M/CS included in an award budget is a condition of the award and subject to audit.
All UAF sponsored programs involving M/CS commitments must be executed in accordance with university policies and procedures, applicable state and federal laws, regulations, policies and guidelines.
Applicable laws, regulations, policies and guidelines include, but are not limited to, 2 CFR 220 (OMB Circular A-21), 2 CFR 215 (OMB Circular A-110), OMB Circular A-133, OMB Memorandum M-01-06, the federal cost accounting standards, and UAF's DS-2 Disclosure Statement.
- Federal Cost Accounting Standards: Federally mandated accounting standards intended to ensure uniformity in budgeting and expenditure of funds.
- Matching Funds/Cost Sharing/In-Kind Contributions (M/CS): For the purpose of this policy, M/CS is the portion of allowable project costs not paid by a sponsoring agency. These project costs are paid by UAF or through contributions by third parties. M/CS may consist of direct costs and/or unrecovered F&A costs (a cash match) or the value of donated services and real or personal property (in-kind).
- Matching Funds: To "match" funds concurrently during the expenditure of federal funds.
- Cost Sharing: The obligation to share project costs must be made by the end of the project.
- In-Kind Contribution: A non-cash contribution of the fair market value of goods or services provided to a project.
- Office of Management and Budget (OMB): A federal office attached to the White House that assists the President in the development and implementation of budgets, programs, management, and regulatory policies.
- Sponsor/Sponsoring Agency: An entity, usually external to UAF, which funds a sponsored program.
- Sponsored Program: A research, training, or educational project that is funded by a sponsor, generally one outside UAF. Activities funded through grants, contracts, and cooperative agreements are sponsored programs. A sponsored program is traditionally initiated with a proposal to a sponsor and followed by an award with specific terms, objectives, rights, and reporting requirements. The sponsor, whether it is federal, state, or private, holds UAF accountable to meet designated requirements in exchange for project funding.
- UA Statewide Office of Cost Analysis: Located in the office of the UA Statewide Controller, this office oversees development of UA's cost accounting policies and practices to ensure compliance with state, federal, and university rules and regulations.
- UAF Office of Grants and Contracts Administration (OGCA): Organized under the Vice Chancellor for Administrative Services, this office manages and monitors all post-award activities for UAF sponsored programs.
- UAF Office of Sponsored Programs (OSP): Organized under the Vice Chancellor for Research, this office manages and monitors all pre-award activities for UAF sponsored programs.
It is the responsibility of OSP, OGCA, and all unit faculty and deans/directors who commit to furnish M/CS to follow all applicable laws, regulations, policies, procedures, and guidelines that govern these funds.
- Responsible University Officers: The OSP Director is responsible to perform final reviews of M/CS commitments on all sponsored programs to ensure they are compliant with the law and this policy and to grant or deny institutional approval of these commitments. The Vice Chancellor for Research (VCR) shares the responsibility for final M/CS review and approval authority and has the authority to authorize funds for equipment purchase match. The OGCA Director is responsible for final certification to the sponsor of approved and allowable charges attributable and verifiable as M/CS.
- Office of Sponsored Programs: OSP is responsible for reviewing M/CS commitments on all sponsored programs to ensure they are compliant with the law and this policy and to advise the OSP Director about such commitments.
- Office of Grants and Contracts Administration: OGCA is responsible for assigning unique fund identifiers (Fund(s) 14) to track university-committed funds and to ensure that unrecovered F&A and certified third party match amounts are recorded in the Banner Finance System.
- Unit/Department: The initial responsibility for M/CS commitments rests with the proposing unit/department. The unit dean or director must authorize and approve M/CS commitments if departmental resources are going to be used. Units are responsible for all M/CS commitments, including obtaining third party contributions.
- Principal Investigator: It is the responsibility of the Principal Investigator (PI) to seek out and secure sources of all M/CS commitments and obtain necessary approvals before the proposal is submitted to OSP. PIs should discuss proposed M/CS commitments with their unit research administrators well in advance of the submission deadlines to avoid last-minute problems and misunderstandings.
- Third Parties: Third parties must certify their M/CS commitments prior to submission of the proposal to the OSP. Such third parties are subject to audit. The university is held accountable for all committed M/CS funds regardless of the source. If the M/CS cannot be paid or tracked in accordance with federal standards as was originally anticipated, or the third party is unable to meet its obligation, the bottom line value declared in the terms of the award must be met by the proposing unit(s) responsible for the project and award.
Criteria for M/CS Commitments
Federal regulations in 2 CFR 215 (OMB Circular A-110.23.), state that "all contributions, including cash and third party in-kind, shall be accepted…when such contributions meet the following criteria:"
- Are verifiable (through effort reports or other appropriate documentation);
- Are not included as contributions for any other federally assisted program;
- Are not charged to the federal government directly or indirectly under any other grant or contract;
- Are necessary and reasonable for proper and efficient accomplishment of project objectives;
- Are allowable under applicable cost principles defined in OMB Circular A-21 (reasonable, allowable, allocable, consistently treated);
- Are provided for in the approved budget and conform to other provisions of OMB Circular A-110 (or in the terms of the sponsored agreement);
- Are not charges also claimed as part of the institution's F&A costs (double dipping);
- Are not costs financed by program income generated by activities of the project, unless the funding agency expressly permits such use of such income; and
- Are incurred during the same funding/budget period as the sponsored project.
Types of M/CS
- Mandatory: Mandatory M/CS is a committed level of M/CS that is required by the sponsor in its general guidelines or in a specific program announcement.
- Voluntary Committed: Voluntary committed M/CS is not required by the sponsor, but offered by UAF and quantified in the proposal budget. If accepted by the sponsor, voluntary commitments are reflected in the final budget agreement between UAF and the sponsoring agency. As a condition of the award, these commitments must be tracked in UAF's financial system and are subject to audit. UAF does not normally authorize voluntary committed M/CS.
- Voluntary Uncommitted: Voluntary Uncommitted M/CS is defined as "university faculty (including senior researchers) effort that is over and above the effort committed and budgeted for in a sponsored agreement." (A-21 Memo M-01-06) Voluntary uncommitted M/CS is not required as a condition of the award. These commitments will not be reflected in the final budget agreement between UAF and the sponsoring agency. This treatment is consistent with 2 CFR 220 (OMB Circular A-21) in that precise documentation of faculty effort is not always feasible and is not expected because of the inextricably intermingled functions performed by the faculty in an academic setting. Applicable and allowable costs in overrun of the allocated budget are also be recognized as Voluntary Uncommitted M/CS.
Allowable Forms of M/CS
- Faculty Time: A faculty member's salary, in which an attributable and verifiable portion of their compensated time is devoted to a sponsored project, with related staff benefits and the associated F&A on the salary and benefits.
- In-Kind (UAF and Third Party):In-kind contributions are non-cash contributions in the form of goods or services that can be given a cash value. Examples include the fair market value of project supplies, transportation, and services.
- Other Direct Costs (UAF and Third Party): Other direct costs that are paid for from sources other than the sponsor and directly attributable to support of the project may be used as M/CS. Examples include travel or equipment.
- Unrecovered Indirect Costs (UAF): Some sponsors limit the amount of indirect cost recovery UAF can receive on a project. The difference between the UAF's federally negotiated indirect cost rate and the sponsor's limited indirect cost rate (unrecovered indirect costs) may be used as a M/CS commitment, but only with advance written approval from the sponsor. A third party's indirect costs may not be used as M/CS.
Unallowable Forms of M/CS
Certain contributions are unallowable forms of M/CS. Expenses listed in 2 CFR 220 (A-21, Section J.) as unallowable costs cannot be listed as M/CS contributions, either in the proposal or in the award.
Examples of Unallowable M/CS Commitments:
- Costs used to meet a M/CS commitment on another project. Since these funds have already been committed and possibly expended, they cannot be used again.
- Using federal funds to meet a M/CS commitment on another federally-funded project unless specifically allowed by statute or by the federal sponsor's program guidelines.
Other unallowable M/CS includes costs that are part of UAF's F&A rate calculations, such as:
- UAF-owned space, buildings, and equipment.
- Administrative salaries such as those of a dean, department chair or clerical position.
- Any cost that duplicates the type of costs in the campus indirect cost rates.
Volunteer Effort: Time donated by an individual cannot be tracked and certified, so UAF does not allow the use of time donated by volunteers or employees to meet a M/CS commitment. Additionally, UAF employees may not donate services for which they would normally be entitled to compensation from UAF or any other entity.
M/CS Commitment Approval Process
If the project sponsor requires M/CS, documentation must accompany the proposal when it is submitted to OSP. The OSP Director will evaluate M/CS documentation prior to proposal submission. M/CS documentation must include:
- An Authorization for Matching Funds/Cost Sharing Form (Form OSP-002) signed by the dean or director of the unit which authorized departmental resources to be used as M/CS.
- The sponsor's instructions detailing the terms of the M/CS requirement (commonly found in project guidelines, requests for proposals, and program solicitations or announcements, or in an e-mail from the program manager verifying the M/CS requirement).
- If there are third party M/CS contributions, commitment letters from the third parties describing the resources and fair market value of their contributions. The letters must be signed by representatives of the organization with the authority to obligate the resources described. The third party's M/CS commitment must be documented on Form OSP-002.
- If there is a request for equipment matching funds, the signed written approval of the Vice Chancellor for Research on Form OSP-002.
Procedures to implement this policy are established and set by OSP in consultation with UA Statewide Cost Analysis and OGCA. This policy will be reviewed at least annually by OSP and modified if necessary to reflect applicable changes in federal and state laws and regulations, and UA policies, regulations, and business practices. The Chancellor may change or update this policy at any time.
Exclusions from This Policy
These exclusions are subject to the procedures specified as to each:
- Indefinite Match/Cost Share: Indefinite M/CS occurs when a sponsor does not explicitly state that M/CS is a requirement, but the application guidelines indicate that increased M/CS will enhance a proposal's competitiveness in the funding agency's review process. In such cases, the proposing unit must contact OSP immediately and the OSP Director will determine the appropriateness of a M/CS commitment before the proposal is submitted to the sponsor. OSP must receive additional information to justify the suggested M/CS commitment. Questions the proposing unit must address include:
- How did the sponsor indicate or demonstrate that M/CS would be valuable to the proposal?
- What is the total cost to UAF compared to the gain
This information must be submitted in writing to OSP along with Form OSP-002.
- Leveraging/Leveraged Resources: Leveraging occurs when a sponsor requests the applicant to demonstrate additional resources, including co-funding, that are available to the applicant for the project. Some sponsors require enumeration of these resources (listing a dollar value), and some sponsors do not require enumeration. When possible, leveraged resources should not be enumerated. While leveraging is not technically M/CS, enumeration requires that UAF track these funds.
- Sponsor-required enumeration of leveraging will be treated the same as regular M/CS in the pre-award and post-award stages. Form OSP-002 must be submitted with the proposal at the pre-award stage. At the post-award stage, an M/CS fund will be established and expenditures will be tracked in accordance with federal regulations.
- Non-enumerated leveraging (where resources or co-funding are listed without a dollar value) does not constitute a M/CS commitment and does not require either Form OSP-002 or setup and tracking of a Fund 14 account.
- Form OSP-002: Authorization for Matching Funds/Cost Sharing
- 2 CFR 220 – OMB Circular A-21: Cost Principles for Educational Institutions
- 2 CFR 215 – OMB Circular A-110: Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations http://www.whitehouse.gov/omb/circulars_a110/
- OMB Circular A-133: Audits of States, Local Governments, and Non-Profit Organizations
- UAF's DS-2 Disclosure Statement http://www.alaska.edu/cost-analysis/downloads/DCAA/UAF_DCAA_Rev_4.pdf
- UA Statewide Accounting Manual, G-14: Cost Sharing or Matching Concepts
UAF Policy on Matching Funds/Cost Sharing/In-Kind Contributions on Sponsored Programs at UAF (M/CS) – Approved by: Stephen B. Jones, UAF Chancellor - 02/21/07