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Cost Sharing FAQs
Updated 12/2/2014
Cost Sharing Requirements
- #1 - How do I know whether cost-sharing is required?
- The program guidelines, Request for Proposals, program announcement, etc., will state explicitly that cost sharing is required and will specify the expected level. This information is frequently found in a “Special Instructions” section, or in the budget guidelines in the proposal preparation section.
- #2 - What happens if I cannot meet my cost sharing commitment as originally determined?
A. If the project includes a requirement for cost sharing, it is important that the account be monitored closely to ensure that the PI will meet those requirements. If there is a concern that s/he will be unable to meet the committed amount, it is essential that the sponsor be contacted as soon as possible to request a budget modification or an amendment to the award. Your pre-award contact should be involved in this communication. If you have not met the cost sharing requirements, and the sponsor is unwilling to renegotiate the amount, it is likely that the funds provided by the sponsor will be reduced by the percentage the shortfall represents. Not meeting the cost-share requirement puts the project at risk of being deemed non-compliant by the sponsor and may force us to have to return the funding. Every effort should be made to meet the obligated amount using start up/discretionary funds, unrestricted monies, and/or any appropriate non-federal grants.
Non-federal Funds
Q. #3 - Why are we using federal regulations regarding cost sharing when non-federal sponsors may or may not require such accounting?
A. Having two cost sharing policies has been discussed, but it was determined that it might not be a good option for several reasons. Often PIs have both federal and non-federal funding for research projects, and two cost sharing policies would likely cause confusion and increase the risk of non-compliance with federal regulations, especially in areas of faculty salary cost sharing and effort reporting. In order to have consistent training and compliance, and to reduce confusion, it was determined that one policy made the most sense.
Q. #4 - If non-federal grants are considered “unlike purpose and circumstance” in the A-21 terminology, why do non-federal funds have to obey the same rules as federal funds when used as cost sharing on a federal project?
A. Since we include both federal and non-federal sponsored direct expenses in the “research base” of the University’s F&A calculations, we must adhere to the stipulations in our Disclosure Statements (DS-2s) to the federal government, where we promise a level of consistency in treatment of all sponsored expenditures.
Alternatives to Cost Sharing
Q. #5 - Do projects with more than one sponsor have to involve cost sharing?
A. No, it’s often possible to think of a project as a “multi-funder project,” in which two or more sponsors are funding pieces of the project, but no explicit cost sharing is involved.
Q. #6 - Does University participation in a project automatically imply that there is cost sharing?
A. No, since cost sharing is disadvantageous to the University for a number of reasons, it is frequently possible to phrase the pledge to participate in a non-quantitative way, such that no explicit cost sharing is offered. For example, saying “Harvard will provide twenty microscopes valued at $3000 apiece” would constitute a cost sharing commitment, whereas “Harvard will provide the necessary infrastructure to ensure that the project moves forward” would not.
Coding Cost Sharing
Q. #7 - Does sponsored cost sharing need to be recorded on the cost sharing form?
A. Yes, all cost sharing commitments must be recorded on the C/S form.
Q. #8 - Why can’t the accounting system accommodate sponsored cost sharing?
- A formal “companion account” requires the use of a sponsored activity value with a non-sponsored fund value. Sponsored cost sharing has always been recorded in GMAS as a separate sponsored award using a different activity value. The chart of accounts rules for sponsored accounts do not allow sharing of activity values across funds, unless they are segments within a larger project.
Q. # 9 - Could you provide an example of the use of a companion account?
A. Let’s assume that your main account is a federal award, fund 123456, activity 234567, subactivity 0001. Your companion account would be a non-sponsored account, fund 000123, with the same sponsored activity/subactivity combination (234567-0001). Your companion account coding would be: Tub-Org- 000123-234567-0001-Root.
Q. #10 - If I’m cost sharing with University funds using a companion account, do I have to split-code every transaction?
A.No, if it’s more convenient to do so, you can spend the grant money on some of the items in the budget and the cost-sharing funds on others, not necessarily simultaneously, as long as the companion expenditures are within the period of performance of the grant and before the end of the current reporting period back to the sponsor.
Q. #11 - What about when the cost share is non-federal and non-Harvard?
A. As with University funds, non-federal “Sponsored cost sharing” funds must be spent within the period of performance of the grant requiring the cost share, but transactions do not have to be split-coded.
Faculty Effort Cost Sharing
Q.#12 - Is there a required minimum of cost-shared faculty time if there is no time paid for?
- There is no required minimum of cost shared faculty time. However, the F&A rate calculation requires that we impute a small amount of effort for faculty on every sponsored project to which no effort, either paid or unpaid, has been committed.
Q. #13 - Can salaries over the NIH cap and supported by non-federal sources be offered to meet cost sharing requirements?
A. No.
Cost Sharing with Equipment
Q. #14 - Can I purchase equipment to meet my cost sharing requirements?
A. Depreciation of equipment is part of the Facilities, or “F” piece of the F&A rate. Since this depreciation is included in the indirect cost rate, federal regulations preclude the University from treating it as a direct cost, which makes it inadvisable for cost sharing. In the event that a University contribution to an equipment purchase is included in the proposed cost sharing, measures must be taken to exclude that depreciation from the next F&A calculation.
- #15 - Supposing that the only way that I can meet a cost sharing requirement is with the purchase of equipment. Who is responsible for ensuring that the equipment isn’t included in the indirect cost rate calculation?
- The department or school is responsible for alerting OSP that this type of cost sharing is being used. The Cost Analysis team will “scrub” this data to ensure that the appropriate items are excluded when calculating our base.
Overrun Cost Sharing
Q.#16 - How should I handle the situation where more expenses are charged to a grant than the amount funded by the Sponsor, i.e., a cost overrun?
A. Cost overruns have been spent on the project, but must be journaled to a non-sponsored account so that the sponsored account is not overspent. The amount of the overrun is cost sharing and it is departments’ and schools’ responsibilities to code journals that transfer charges off of overspent grants using the convention for University cost sharing, i.e. the sponsored activity with a non-sponsored fund value.
Q. #17 - How does OSP know whether there is overrun cost sharing, i.e. cost sharing from journals of charges from overspent sponsored accounts to non-sponsored funds?
A. The University must be able to document all cost sharing. OSP relies on the use of companion accounts to identify cost sharing resulting from cost overruns. Please note that overruns are cost sharing even in cases where the award had no cost sharing requirements!
Cost-shared Indirect Costs
- #18 - How is “unrecovered overhead” going to be tracked?
- The Office for Sponsored Programs will track these costs using the attached template. Cost-shared indirect costs will not be recorded in Harvard’s General Ledger. Unrecovered overhead can be used as cost sharing only when a sponsor will not allow us to apply our federally negotiated rate. A-110 section C.23b also disallows unrecovered indirect costs as cost sharing on federal proposals unless we have received prior approval from the federal sponsor.
Q. #19 - How does OSP calculate and record cost-shared IDC?
A. Indirect costs offered as cost sharing must be documented on a Cost Sharing Form and submitted to OSP at the time of award. OSP will use the template to identify the IDC, obtain department approval and keep the approved form in the permanent file.