Financial Affairs Policies

3702 (C)

UMB Policy on Sponsored Award Cost Sharing

Financial Affairs   |   Approved August 1, 2024

Responsible VP/AVP

Dawn M. Rhodes, DBA, MBA

Applies to Faculty, Staff, Students

Purpose

To set forth the standards for University of Maryland, Baltimore (UMB) for Cost Sharing on Sponsored
Awards.

Policy Statement

Cost Sharing is when UMB is required to use resources other than the award itself for completion of the award objectives. In other words, a certain portion of the costs of an award are not paid by the Sponsor, but are paid using resources from a UMB department, or a third party. Cost Sharing is a commitment included in the award document, either required by the Sponsor or offered by UMB. Cost Sharing can be Mandatory Cost Sharing, Voluntary Committed Cost Sharing, or Voluntary Uncommitted Cost Sharing, and can take the form of either Cash Contributions or In-Kind Contributions.

UMB will agree to Cost Sharing in a proposal only when Cost Sharing is a requirement of the  request for proposal or program announcement, whether the proposal is a new proposal or a non- competing continuation. Cost Sharing should not be offered by UMB on federal contracts, corporate agreements, or other contracts.

When a Sponsor requires Cost Sharing as a condition of the award (Mandatory Cost Sharing; see definition below), the Cost Sharing is limited to the extent and manner required by the Sponsor.

Any instance of Cost Sharing must be approved by the Principal Investigator's (PI's) Department Chair and School Dean. The PI must enter the Cost Sharing into Kuali Research at the time of proposal for the review and approval.

All Cost Sharing Contributions by UMB must be allowable, reasonable, and necessary costs to support the award and cannot be costs the Sponsor has specifically disallowed. Typical costs not allowable for Cost Sharing are:

  • Cost Sharing from one federal award to another federal award
  • Personnel compensation in excess of the Sponsor Salary Cap (Over the Cap Salary)

The amount of Cost Sharing to which UMB agrees in the award document (Cost Sharing Commitment) must be met by UMB to close out the award. At the end of the award, any unmet Cost Sharing obligations may lead to a reduction in the total amount awarded to UMB by the Sponsor or may result in the PI being required to pay the amount from other sources.

The Code of Federal Regulations 2 CFR 200.306 provides that, for all federal awards, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity's (UMB's) Cost Sharing or matching when such contributions meet all of the following criteria:

  1. Are verifiable from the non-Federal entity's (UMB's) records;
  2. Are not included as contributions for any other federal award;
  3. Are necessary and reasonable for accomplishment of award or program objectives;
  4. Are allowable under 2 CFR 200 Subpart E {Cost Principles};
  5. Are not paid by the federal government under another federal award, except where the federal statute authorizing a program specifically provides that federal funds made available for such program can be applied to matching or Cost Sharing requirements of other federal programs;
  6. Are provided for in the approved budget when required by the federal awarding agency; and
  7. Conform to other provisions of 2 CFR 200.306, as applicable.

Definitions

Mandatory Cost Sharing is required by the sponsor as a condition of the award. UMB's contribution must be recorded in the financial system or tracked appropriately by written documentation for in-kind transactions. UMB's records are used for verifying Cost Sharing in the event of an audit of federal funds. These costs are reported to the Sponsor.

Voluntary Committed Cost Sharing is not required by the Sponsor, but the department voluntarily commits Cost Sharing in the award application or proposal.  If UMB's offer for Cost Sharing is accepted by a Sponsor during proposal negotiation, Voluntary Committed Cost Sharing becomes binding and must be tracked in the same manner as Mandatory Cost Sharing. These costs are auditable and reported to the Sponsor.

Voluntary Uncommitted Cost Sharing is not offered as part of an award application or proposal or other communication to the Sponsor. These contributions are not linked to a Sponsored Award in UMB's financial system and are not reported to the Sponsor.

Over the Cap Salary is the portion of a faculty or staff member's salary and associated fringe benefits that exceeds a regulatory maximum imposed by the Sponsor. Over-the-Cap Salary cannot be used to meet a Mandatory Cost Sharing or Voluntary Committed Cost Sharing requirement, since the Sponsor considers it an unallowable cost. This is tracked via companion account for reporting of effort.

Cash Contributions represents UMB's cash outlay for Cost Sharing expenses, including actual funds from internal and external sources. Funds from federal sources may not be used as part of UMB's Cash Contributions unless these funds are authorized by federal statute to be used for Cost Sharing.

 In-Kind Contributions represent the value of non-cash contributions for Cost Sharing expenses, including services and property, provided by UMB and/or non-federal third parties, when: (i) the value of the non-cash contributions can be readily determined, verified, and justified; and (ii) if provided by a third party, no financial transaction occurs between UMB and the third party to secure the services and/or property. These contributions must be manually tracked by the department managing the award. The value of In-Kind Contributions is based on the fair market value but is not recorded in the UMB financial system and does not incur any indirect costs.

 

Scope and Exceptions

This policy applies to Cost Sharing in a Sponsored Award, according to the terms and conditions of the award. This policy is in accordance with 2 CFR Part 200 {Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards} specifically 2 CFR 200.306.

UMB's Policy on Cost Sharing is based on the following consideration:

  1. If UMB resources are committed to an award unnecessarily, then the resources are not available for Mandatory Cost Sharing or other uses. Proper approvals must be granted prior to committing UMB resources for Cost Sharing.
  2. Mandatory Cost sharing and Voluntary Committed Cost Sharing could lead to the erosion of UMB's indirect cost rate.
  3. Faculty members with many Cost Sharing awards could become overcommitted and unable to substantiate their total promised levels of effort.
  4. Failure to meet contractual Cost Sharing obligations may result in a proportionate reduction in the award. Concerns about meeting Cost Sharing obligations should be communicated to the awarding agency as soon as the issue is known.
  5. Only costs that are allowed by the award are eligible for Cost Sharing. Any exceptions must be documented and approved by the federal agency.

There are no exceptions to the mandatory or voluntary cost share provisions included in the award. Voluntary uncommitted cost share is not linked to a Sponsored Award in the University's accounting records and are not reported to the Sponsor. If mandatory cost share is committed after the award acceptance, then the PI should work with Sponsored Programs Administration to change the terms and conditions of the award.

Roles and Responsibilities

Schools/Departments/Unit Administrators

  • Review award documents, program specific guidelines, and agency requirements to determine any Cost Share requirements.

  • Confirm that funds are available for Cost Sharing as committed or provide an alternate source of funding to meet the obligations if adequate funds are not available.

  •  

    Obtain approval when necessary.

  •  

    Notify appropriate offices if there is a change in total Cost Sharing amount or in Cost Sharing source.

  •  

    Monitor Voluntary Committed Cost sharing through verifiable UMB records throughout the entire award period.

  •  

    Maintain Cost Sharing documentation for In-Kind Contributions.

 

  • Provide Cost Sharing expense amount to SPAC when reporting to the federal government.

SPAC Team

  • Establish Cost Sharing source code for the collection of Cost Sharing expenses system.
  • Report Cost Sharing funds provided by the department to the federal government.

 

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