Whenever Stanford University agrees to pay a portion of the allowable costs of a sponsored project, i.e., those costs which would otherwise be paid by the sponsor, the University has made a COST SHARING COMMITMENT.

Cost sharing has a significant financial impact on the department providing the funds and on the University as a whole. A decision to cost share should therefore be carefully weighed. Committed cost sharing must be tracked and accounted for separately from other expenditures of University funds because it must be included in the "Organized Research" base - the denominator of the fraction which defines our indirect cost rate.

In addition, certain other sponsored projects expenses paid by Stanford must be tracked and accounted for in the same manner as cost sharing, in order to be included properly in that "Organized Research" base. Included in this category of costs are project overdrafts, and other unallowable but essential project costs, such as salaries over an agency cap. While these are not technically cost sharing (because they are not allowable expenses), they are accounted for in cost sharing activities/accounts in order to capture them in the "Organized Research" base.

Interpretations of OMB A-21 requirements for cost sharing of voluntary, uncommitted effort to sponsored projects have led to significant questions in this regard. On January 5, 2001, the Office of Management and Budget issued a Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost Sharing and Tuition Remission Costs. This clarification establishes that:

Voluntary uncommitted cost sharing should be treated differently from committed effort and should not be included in the organized research base for computing the F&A rate . . .

Cost sharing is a factor in the preparation of proposals and proposal budgets, as well as in the management of project expenditures. If effort or other resources are offered in the proposal narrative or budget justification, the associated costs must be treated as cost sharing, even if they are not quantified in the proposed budget. PIs certify Expenditure Statements for cost sharing activities/accounts in the same manner as for direct project exepnditures. PIs are responsible for seeing that cost sharing commitments are met.

At the end of the page is a self-test. Use it to test your knowledge of applicable regulations, policies and practices related to cost sharing.

If you have questions about any of this material, you may send an e-mail message to the Assistant Dean of Research and Graduate Policy .

Stanford policy related to cost sharing is defined in:

• Cost Sharing Policy

  Defines voluntary, mandatory and committed cost sharing. Describes expenses which may and may not be offered as cost sharing. Discusses the sources of funds for cost sharing expenditures. Explains the handling of project overdrafts, and the accounting and space inventory treatment of cost sharing. Discusses reporting of cost sharing and notifications to sponsors when levels of cost sharing are reduced.

There are two Attachments to this Policy:

• Federal Requirements for Cost Sharing, a summary of the requirements of OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals and Other Non-Profit Organizations, and
  
  
• Stanford's Cost Sharing PTA Attribute Setup Request [ downloadable form ], required at the time an award which includes cost sharing is finalized. This form authorizes the Office of Sponsored Research to establish cost sharing activities/accounts, and identifies the source of funds for those activities/accounts.

In addition, the following Stanford policies relate to subjects which bear on the general subject of cost sharing:

• Categories of Sponsored Projects

  Defines "Organized Research," the denominator of Stanford's indirect cost ratio, as the combination of both Sponsored and University Research, and includes committed cost sharing as part of University Research
  
  

• Fiscal Responsibilities of Principal Investigators (PIs)

  Discusses cost sharing as an issue in the preparation of proposals, and in the opngoing management of project funds

These Frequently Asked Questions have been updated by the Research Policy Discussion Group to conform to the policy revisions which took effect in February 2012.

These Accounting Procedures have been updated and now incorporate some of the accounting information formerly in the Cost Sharing policy.

OTHER RESOURCES

• Guidance on the specific subject of Charging of Deans' Effort/Salary
  
  
• Stanford's Controller's Office provides additional resources to assist in project accounting.
  
  
• The Office of Research Administration provides a Cost Transfer Checklist to review any transaction involving sponsored funding for accuracy and completeness (pdf file)

There are two PRACTICE QUIZZES provided here:

• one focuses on Stanford policy and implementation, and
  
  
• the other asks you to analyze cost sharing situations.

You do not need to identify yourself, and no record of any scores will be kept. Go ahead, mark wrong answers! Nobody knows, nobody cares! The quizzes actually function better as tutorials if you get a few questions wrong.

These quizzes will open in a separate browser window.

There are more questions and answers about Cost Sharing in the Implementation Guidelines.