Current version: February 1, 2012
Establishes procedures to meet government requirements to report cost sharing to sponsors. Reflects the:
Modified to provide clarification and streamline the process.
This document comprises Stanford University's policy on cost sharing and the procedure for monitoring and reporting cost sharing. This policy is effective for awards received on or after September 1, 1994. The policy was developed for the following purposes:
Cost sharing represents that portion of the total project costs not borne by the Sponsor. Cost sharing is typically in the form of an actual cash expenditure of funds.
Matching is where the sponsor requires the University to match grant funds in some proportion with funds from another party, either from the University or more typically another sponsor (with both sponsors’ approval). Matching requirements may be in the form of actual cash expenditure of funds or may be an “in-kind” match, which is the value of non-cash contributions to the project. An in-kind or matching contribution made by a party other than Stanford requires documentation from the third party supporting the use of the funds as in-kind/matching and may require a certification of fair market value.
Types of Cost Sharing:
When an award is received in which there was a commitment by Stanford in the proposal to share in project cost, (voluntary or mandatory cost sharing or, matching) the activity becomes a binding commitment which the University must provide as part of the performance of the sponsored agreement. This commitment must be tracked in the accounting system as cost sharing.
Voluntary Uncommitted Cost Sharing is faculty-donated effort or other direct costs above that agreed to as part of the award. Since it was not proposed and constitutes “additional” time or materials it is not considered a binding agreement and shall not be accounted for as cost sharing.
When a Principal Investigator (PI) proposes, and the University agrees to cost share University resources, the University is required to provide the stated resources in the performance of the awarded project. Considering the administrative requirements and responsibilities inherent in the cost sharing commitment, the PI (or other person responsible for the identified fund) should carefully weigh the cost effectiveness versus the expected benefits of each potential cost sharing commitment. Cost sharing of direct expenditures represents a redirection of departmental or school resources from teaching or other departmental and school activities to support sponsored agreements. This commitment must be indicated on the Proposal Development Routing Form (PDRF). By signing the PDRF, the department chair or designee approves the cost sharing commitment.
Implicit in the University’s commitment to cost share is the PI's agreement to ensure that:
Note: The tracking, reporting, and certifying of cost sharing are subject to audit.
Cost sharing may consist of allowable direct and/or indirect cost resources.
It may be appropriate to contribute faculty, student, or staff effort to the performance of a sponsored agreement. The commitment to provide such support binds the University to contribute the effort and record the associated expenditures including fringe benefits in separate cost sharing PTAs.
A faculty member with an appointment less than 12 months may be paid from federal and/or sponsored projects for no more than 90% (95% for Research Faculty) during any of the summer months. (Refer to section 1.C. of Research Policy Handbook 3.1, Fiscal Responsibilities of Principal Investigators). The remaining summer effort cannot be cost shared. This effort is reserved for University obligations of time associated with the key person's role in a tenured/tenured track position (which would include teaching, committee and departmental responsibilities as well as preparing proposals for sponsored funding and leave from campus).
Equipment cannot be offered as cost sharing unless the receipt of the award is contingent upon such cost-sharing.
PIs should take care in preparing proposals for sponsored agreements not to commit the use of Stanford-owned or government-owned equipment as cost sharing, but rather to characterize the equipment as "available for the performance of the sponsored agreement at no direct cost to the project."
Proposals which include the acquisition of special-purpose equipment as a direct cost may include an offer of University funds to pay for all or part of the cost of such equipment. These proposals may be for equipment or instrumentation grants, where the purpose of the grant is to buy equipment and we are required to share the cost with the sponsor, or research-oriented grants or contracts where the purchase of equipment required for the research is an allowable expense included in the proposal and award. Purchase and acquisition must occur during the period of performance. The portion of the purchase price paid by the University must be charged directly to a cost sharing account in support of the award.
Allowable direct costs other than salaries, fringe benefits, or equipment may be committed by the PI as cost sharing on the proposal budget. The following are examples of other direct costs that may be cost shared:
Proposed administrative expenses must meet the criteria for direct charging, defined in Stanford’s policy Charging for Administrative and Technical Expenses, Research Policy Handbook 3.6. If those proposed expenses are disapproved by the sponsor yet still incurred (i.e., scope of work is not reduced), they must be accounted for as cost sharing. The portion of the expense that is directly utilized and benefits the project must be charged to a cost sharing account in support of the award. The amount cost shared may be less than the amount proposed.
Facilities and Administrative (F&A) costs are real costs of conducting instruction and research. These F&A costs do not disappear simply because a sponsor refuses to pay for them; the University must fund any F&A costs that have not been reimbursed. When direct costs are cost shared, the F&A costs associated with the direct costs are automatically cost shared. PIs may take advantage of the automatic cost sharing of these costs, and include them on the proposal budget. PIs may also include any waived F&A costs as University cost sharing in proposals. (For the Stanford policy on waivers, see Research Policy Handbook 3.10, Indirect Cost Waivers.)
For contracts sponsored by the US Department of Defense (DOD), PIs may cost share the costs associated with the rate differential between the capped and uncapped F&A cost rates. Please contact the Cost and Management Analysis office for the rate differential between the current negotiated capped rate and the uncapped rate.
The accounting system is not capable of tracking cost-shared F&A costs; they will not appear in the expenditure statements. The Office of Sponsored Research will calculate the cost-shared F&A costs based on information from the awarded budget and the accounting system for reporting purposes.
The following expenses cannot be offered as cost sharing commitments in sponsored project proposals:
In addition, cost sharing may not be proposed where the sponsor has explicitly prohibited it (e.g., National Science Foundation).
Identifying and providing resources for cost sharing of direct costs (including equipment) is always the responsibility of the PI. The PI may NOT utilize funds from another federal award as the source of cost sharing, except as authorized by statute. The PI may utilize funds from non-federal awards as the source of cost sharing ONLY when specifically allowed by both parties. Funds for cost-shared expenditures are typically identified from among gift, endowment income, operating budget (except in the School of Medicine), or other department designated funds.
After the end of the project performance period, when unanticipated project expenses result in more charges to a sponsored account than were funded, the amount of the overdraft must be included in the University’s modified total direct cost base for calculation of the F&A rate. An overdraft does not represent cost sharing but is accounted for in the same manner.
The actual effort and other costs required to accomplish the goals of a sponsored project might differ from what was proposed and awarded. The total costs could decrease due to changes in programmatic needs. When there is cost sharing on such projects, the sponsor may need to be consulted to determine if the reduction can be applied to either the University's committed cost sharing or to both sponsor and University resource contributions on a pro rata basis. Otherwise, the sponsor's share is reduced and the University’s entire cost sharing commitment must be met. The PI or the PI's departmental or research administrator must consult with the Office of Sponsored Research before the sponsor is contacted.
The Office of Sponsored Research is responsible for providing information to sponsoring agencies that demonstrate the University has fulfilled the cost sharing commitments that it made as a condition of receiving external sponsorship. An overdraft in not considered cost sharing and is not reported to a sponsor.