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Cost sharing is that portion of total project costs that are paid from sources other than the sponsor in order to complete the project’s statement of work. Cost sharing is typically in the form of actual cash expenditures and/or commitment of effort. Cost sharing for federal projects should be from non-federal funds. Cost sharing could be mandated by the sponsor, voluntary committed, or voluntary uncommitted.

Matching is a similar concept where the University is required to proportionally match funds that are provided by the sponsor. Match may be in the form of actual cash expenditures or may be “in-kind”, which is the value of non-cash contributions to the project.


Mandatory cost share is required by the sponsor as a condition of receiving an award and is usually included in the proposal. This type of cost share is a condition of eligibility and a proposal review criterion. It is required to be tracked and reported to the sponsor. The amount of the mandatory cost share must be reflected in the Proposal Development (PD) document (in the Kuali Research system) and a cost share budget must be provided to the Office of Sponsored Programs (OSP). This budget can be created in the Budget Module of the PD document or attached to the PD document.

Voluntary committed cost share is not required by the sponsor as a condition of receiving an award. It’s a quantifiable commitment of costs included in the proposal to be contributed by the University and it becomes a binding commitment to the University upon award. For example, if Professor Jones included in his proposal that he would be working 50% of his time on the project, but only requested the sponsor pay 20% in the proposed budget, the excess, 30% (50% - 20%) is considered voluntary committed cost sharing. A description of the voluntary committed cost share should be included in the Custom Data tab of the PD document in the Proposal panel. If costs are quantified, a budget may be requested by OSP to show calculation of costs.

Voluntary uncommitted cost share is not required by the sponsor as a condition of receiving an award. It is incidental to the project and it is not budgeted or pledged in the proposal nor legally obligated. This type of cost share does not have to be documented, tracked or reported to the funding agency, and it is not subject to effort reporting requirements.


Cost sharing pledges are a real commitment of limited university resources. When cost sharing is specified and/or quantified in the proposal narrative, budget, or budget justification, the University is committed to the cost sharing, even if not required by the Sponsor. As a result, cost sharing should only be included in a proposed budget, narrative or budget justification when absolutely necessary. Some examples of when cost sharing may be appropriate include:

  • When mandated by the sponsor
  • When needed to accurately reflect the level of effort required to conduct the project, or
  • When intended to otherwise make the proposal appear more competitive

Please note that many federal agencies that used to require cost sharing have reduced or eliminated the requirement and instead are basing their funding decisions on the technical merit of the proposal. Also, some federal agencies, such as the National Science Foundation, now prohibit the inclusion of voluntary cost share in proposals.

EXPENSE TRACKING - What type of expenses can be considered cost share?

Federal regulations regarding cost sharing are found in 2 CFR part 200 section 200.306 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.  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 cost sharing or matching when such contributions meet all of the following criteria:

  1. Are verifiable from the non-Federal entity’s records;
  2. Are not included as contributions for any other federal award;
  3. Are necessary and reasonable for accomplishment of a project or program's objectives;
  4. Are allowable under 2 CFR part 200 section 200.306 Subpart E – Cost Principles;
  5. Are not paid by the Federal Government under another Federal award, except where specifically authorized by Federal statute;
  6. Are provided for in the approved budget when required by the Federal awarding agency;
  7. Conform to other provisions of 2 CFR part 200 section 200.306, as applicable.

Unrecovered indirect costs may be included as part of cost sharing or matching only with prior approval from the Federal awarding agency.

2 CFR part 200 section 200.306 Subparts (d) thru (h) delineates specific rules for valuation and documentation for volunteer services, donated supplies, property, buildings, and equipment. Contact the Office of Sponsored Programs or the Office of Contract and Grant Administration to discuss any items that, in your opinion, fall within the preceding classifications.

Cost sharing expenses must be documented, allowable and auditable project costs. As a result, if you anticipate cost sharing in your project, it is important to select a category of expense that can be easily documented. In almost all cases, it is easiest to document salaries (and the related fringe benefits and overhead) than any other category of expense. Salary cost sharing is documented via MSU's effort reporting system, which is done twice yearly. Exceptions to the salary cost sharing rule are made for equipment grants where the documentation is also very easy. Due to the difficulty of maintaining auditable records for cost shared supplies and/or services, these items should not be used.


National Science Foundation (NSF) has a specific cost sharing policy that prohibits voluntary committed cost sharing.  See link for more information concerning the proposal submission process.


If you have any questions regarding the above policy, please contact OSP at 355-5040.

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