Effective Date: March 1, 2011
Revision Date: December 26, 2014
PDF Version: Cost Sharing Policy
Cost sharing is any project cost that is not reimbursed by the sponsor to support the scope of work defined by the sponsored (federal or non-federal) award. Cost sharing is funded by Harvard or, in some cases, a third-party resource, generally a non-federal sponsor.
Reason for Policy
- OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Sections 2 CFR 215.23(a)(5), 200.29, & 200.306
There are three types of cost sharing, two of which are required to be tracked and reported.
- Mandatory Cost Sharing: Project costs that are not paid by the sponsor and are required as a condition of the award. Mandatory Cost Sharing must be tracked and reported.
- Voluntary Committed Cost Sharing: Costs specifically pledged on a voluntary basis and specifically included in the award budget. Voluntary Committed Cost Sharing must be tracked and reported.
- Voluntary Uncommitted Cost Sharing (VUCS): Costs not required by the sponsor or included in the award budget. VUCS does not need to be tracked or reported. Cost sharing that is not included as part of the submitted proposal or subsequent award is considered voluntary uncommitted cost sharing and is not covered by this policy.
Harvard strongly discourages cost sharing unless such a commitment is required by the sponsor. When there is documented evidence that the commitment is necessary to ensure the competitiveness of the Harvard proposal, school officials may allow these commitments by approving them in writing and managing the committed resources.
Who Must Comply
All individuals involved with the administration and conduct of sponsored award activities, including central and departmental sponsored project administrators, principal investigators, and other research personnel.
Expenses incurred to meet cost-sharing commitments requires the same accounting, financial, legal, and regulatory burdens as costs on Harvard sponsored programs. Cost-shared expenses must be in compliance with the following:
- University sponsored programs expenditure policies
- Any additional terms specified by the sponsor
- Costing policies disclosed and approved by the federal government in Harvard's Disclosure Statements (DS-2s)
- U.S. Federal agency guidelines or non-federal program guidelines, as appropriate.
- U.S. Office of Management and Budget Circular (OMB) Uniform Guidance, especially Section 200.306, which requires that cost sharing funds are a) verifiable from the University's records, b) not included as contributions for any other federal award, c) necessary and reasonable for the accomplishment of the project or program objectives d) are allowable under Subpart E Cost Principles, e) not paid from another federal award, and f) included in the approved budget when required by the Federal awarding agency.
SOURCES OF COST SHARING CONTRIBUTIONS:
University Cost Sharing
Commitments that are paid from University funds using gift, endowment, or other non-sponsored sources, as represented by the 000001- 054999 and 300000-699999 fund ranges.
Sponsored Cost Sharing
Commitments that are paid from non-federal sponsored awards at Harvard, as represented by the fund range 200000-299999. Prior approval must be obtained from authorized official of the cost sharing source. These types of commitments must be tracked manually by the department managing the award. Note that expenditures on a federal sponsored project may not be used to meet any cost sharing requirements.
In-kind Cost Sharing
Third party non-cash contributions of time, talent, or resources from Harvard or donated by third parties for which Harvard is responsible. Third-party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, or goods and services directly benefiting and specifically designated for the project or program.
Note: In certain cases, sponsored cost sharing commitments are presented in proposals to sponsors before those cost sharing funds are secured. In the event that the anticipated cost sharing funds are not available, the school, department, or center will be responsible for arranging an alternate source of the required cost sharing. If no alternative cost sharing can be identified and the sponsor is unwilling to renegotiate the terms of the cost share, Harvard may be forced to decline the award.
Types of Expenditures that can be Cost Shared
Cost-sharing commitments can be met using direct or indirect costs that are allowable, allocable, reasonable, and consistently accounted for by the University. Since all cost-shared expenditures must be verifiable from University records, the use of companion accounts (see Definitions section) is required for all cost-shared direct expenses that can be coded using a sponsored activity value with a non-sponsored fund value. If tracking via companion accounts is not possible, the school must track the cost sharing manually.
This policy describes two categories of cost sharing expenditures: Section A includes direct costs (effort, equipment, and other direct expenses) and Section B includes indirect costs (unrecovered overhead on sponsored expenditures, overhead on cost-shared University resources, and costs normally considered indirect).
Note that there is often more flexibility with cost sharing on non-federal awards.
A. Direct Costs
1. Faculty Effort or Research Staff Salary
PIs can commit to expend faculty or research staff effort on a sponsored program without charging commensurate salary to the sponsored fund. Such a commitment of effort binds the University to contribute research staff or faculty time to the project and to record salary expenditures, including fringe benefits, in a manner that makes the expenditure verifiable from University records. Like all committed effort, cost-shared faculty effort must be effort-reporte
Costs representing salaries over regulatory caps, such as the National Institutes of Health salary cap, cannot be used to meet a cost sharing commitment.
If the purchase of new equipment is necessary for the project or the sponsor mandates the purchase of new equipment, then the acquisition cost of specific equipment may be offered as cost sharing. Purchase and acquisition must occur during the period of performance of the project, and procedures must be in place to ensure that the depreciation on such equipment is not included in the indirect cost rate calculation.
Existing equipment cannot be offered as cost sharing, since the depreciation of Harvard-owned equipment is included in the Harvard's indirect cost rates and the equipment was not purchased for use on the project. Rather than committing the use of Harvard-owned equipment as cost sharing, proposals should characterize the equipment as "available for the performance of the sponsored agreement at no direct cost to the project.
3. Other direct costs
Most other costs that could be charged (allowable, allocable, reasonable, and consistently treated) to a sponsored project can be cost-shared. The following are examples of other direct costs that may be cost-shared:
- Travel expenses
- Laboratory supplies
- Equipment items that do not meet the capitalization threshold (currently $5000)
B. Indirect Costs (Facilities and Administrative Costs)
Indirect costs may be offered in a proposal to meet cost sharing requirements imposed by the sponsor, but they are not considered to be cost sharing in any other situations. There are three ways to cost-share indirect costs. Note that none of these cost-shared indirect costs are recorded in Harvard's General Ledger - they will be calculated and reported manually by OSP.
1. Unrecovered overhead on sponsored expenditures
The amount of indirect costs not recovered from a sponsor due to a sponsor funding an award at a rate below Harvard’s negotiated indirect cost rate.
2. Overhead on cost-shared University resources
The amount of unrecovered indirect costs that are associated with the direct cost sharing on an award.
3. Indirect cost expenses treated as direct cost sharing (non-federal awards only)
Costs of items that Harvard normally considers indirect (such as depreciation, administrative support, rent, etc.).
Principal Investigators (PIs)
Responsible for representing cost sharing correctly in the budget and the scope of work for each sponsored program in accordance with Harvard policies, and for identifying Harvard or third-party resources to be used to meet cost-sharing commitments. Upon award, PIs are responsible for ensuring that cost-shared commitments are fulfilled and that cost-shared expenses are posted to the correct accounts.
Responsible for minimizing cost-sharing by ensuring that commitments are not made in proposals unless required by the sponsor. Departments should provide their cognizant central office (OSP for the "University Area," Office of Finance for HMS, Office of Financial Services for HSPH) with details of the account codings for cost-sharing accounts, should ensure that shared costs are incurred in the companion accounts provided to their cognizant central office, and should ensure that the same resources are not offered as cost sharing on more than one project. Since non-sponsored companion accounts are not visible to OSP financial teams, department officials should assist OSP by providing appropriate reports, as necessary. In cases of cost sharing involving indirect cost recovery, such as unrecovered indirect costs or indirect costs on cost-shared University resources, the department and OSP must work together since the Harvard General Ledger will not allocate indirect costs to non-sponsored funds. Departments should also work with their cognizant central office when costs normally considered indirect, such as rent or telephone costs, are calculated and considered as cost sharing. In the case of donated services used for cost sharing, the department is responsible for determining and documenting the value of those services for review by their cognizant central office. ["Department officials" are administrators who work closely with PIs and other administrators to manage sponsored awards. In schools without departments, these responsibilities will be fulfilled by School officials or other local-level officials as appropriate.]
Responsible for reviewing proposal narratives for cost-sharing commitments, for minimizing cost-sharing commitments, and for providing dean’s approval to the cognizant central office, as required by school policy. School officials are responsible for managing the effort reporting process for committed cost sharing and for ensuring that unallowable costs, such as salaries over regulatory caps, are not counted toward cost-sharing commitments.
Cognizant central office (OSP (University Area), SPA/OOF (HMS), and SPA/OFS (HSPH))
Responsible for reviewing proposals to minimize commitments of Harvard resources and for reviewing the appropriateness of accounts from which cost sharing has been pledged. The pre-award offices are responsible for ensuring that cost-sharing commitments are approved by responsible officials in the schools. OSP is responsible for initiating cost-sharing reporting, obtaining documentation of costs incurred to meet cost-sharing commitments, and for including cost-sharing expenses in indirect cost calculations, as appropriate.
Sponsored Expenditure Guidelines
FAS Commitment of Effort in Sponsored Research Proposals Memorandum )http://www.fas.harvard.edu/~research/policy/effort/effort_jk.html)
OMB Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title02/2cfr200_mai...)
OMB Circular January 5, 2001 "Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost Sharing and Tuition Remission Costs" (http://www.whitehouse.gov/omb/memoranda/m01-06.html)
Cost Sharing Form_Dec 2014.xls
Unrecovered Overhead on Sponsored Expenditures
Contacts and Subject Matter Experts
Office for Sponsored Programs
School financial administrators
FAS Research Administration Services
Cost Sharing -- Project costs not reimbursed by the sponsor to support the scope of work defined by the sponsored award (Uniform Guidance §200.29).
Committed Effort -- Percentage of a researcher's time that has been pledged to a project, regardless of whether the effort is funded by the sponsor or through cost sharing.
Companion Accounts -- Accounts that record cost-sharing amounts, often coded using the sponsored activity value with a non-sponsored fund value in the Harvard chart of accounts.
In-kind Cost Sharing – Third party non-cash contributions of time, talent, or resources from Harvard or donated by third parties for which Harvard is responsible. Third-party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, or goods and services directly benefiting and specifically designated for the project or program.
Mandatory Cost Sharing -- Project costs that are not borne by the sponsor, but are required as a condition of the award. Mandatory cost sharing may be a certain percentage or amount, or may be in the form of contributions of specified items or activities (e.g., provisions of equipment).
Matching -- For the purposes of this Policy, "matching" is a synonym for "cost sharing".
Over-the-cap Cost Sharing -- Portion of a faculty or staff member's salary that exceeds a regulatory maximum imposed by the sponsor, eg. NIH salary cap.
Overrun Cost Sharing -- Costs incurred to complete a sponsored project that exceeds the amount awarded by the sponsor. These costs must be included in the direct cost base for indirect cost calculations.
Sponsored Cost Sharing -- Commitments that are paid using non-federal sponsored awards at Harvard, as represented by the fund range 200000-299999
University Cost Sharing -- Commitments that are paid using University funds such as gift, endowment, or other non-sponsored sources, as represented by the 000001- 054999 and 300000-699999 fund ranges.
Unrecovered Overhead -- F&A not collected by the University when a sponsor does not pay the full negotiated F&A rate. In some cases, unrecovered overhead may be used to fulfill a sponsor's cost-sharing requirement.
Voluntary Committed Cost Sharing -- Project costs specifically pledged on a voluntary basis in the proposal’s budget or the award and that becomes a binding requirement of the award [Uniform Guidance §200.29]. Voluntary committed cost sharing becomes mandatory once the award is made and must be added to the direct cost research base for indirect cost calculations.
Voluntary Uncommitted Cost Sharing (also referred to as VUCS) -- Cost sharing that is not included as part of the submitted proposal or subsequent award is considered voluntary uncommitted cost sharing. Voluntary uncommitted cost sharing does not need to be tracked or reported.
7/25/13 – Added to OSP website in PDF format
12/2/14 – Updated references for the Uniform Guidance
Note: This policy will be revised in FY2015.