Responsible Office: Office for Sponsored Programs
Date First Effective: March 1, 2011
Revision Date: February 26, 2018
PDF Version: Cost Sharing Policy Effective 2/26/18
Harvard University has established the following policy for the management of cost sharing to comply with the requirements of the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) and federal agency policies and procedures. Additionally, any non-federal sponsor cost share requires similar diligence to recognize the commitment and maintain appropriate documentation which provides evidence of a cost sharing commitment. Therefore, all committed cost sharing is subject to this policy.
Cost sharing is any project cost that is not reimbursed by the sponsor to support the scope of work defined by the federal or non-federal sponsored award. Cost sharing, also known as matching, is funded by Harvard or a third-party, which is generally a non-federal resource.
Harvard strongly discourages cost sharing, unless such a commitment is required by the federal or non-federal sponsor. All committed cost sharing must be tracked and may require reporting.
Reason for Policy
Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Sections 2 CFR 200.306 (“Uniform Guidance”) states “Under Federal research proposals, voluntary committed cost sharing is not expected. It cannot be used as a factor during the merit review of applications or proposals, but may be considered if it is both in accordance with Federal awarding agency regulations and specified in a notice of funding opportunity.” Voluntary cost sharing should not be included in a federal proposal.
Cost sharing expenditures must adhere to the same accounting, financial, legal, and regulatory requirements as direct cost expenditures on sponsored awards and must comply with the following:
- Federal or non-federal sponsored award terms and conditions
- Federal regulations including restrictions for procurement and airfare
- University and school/tub-level sponsored policies and guidelines
- Donor restrictions
For federally-funded sponsored awards, Uniform Guidance Section 200.306 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.”
Failure to appropriately document cost sharing commitments from verifiable official University records could result in audit findings and require the return of funds to the sponsor.
Who Must Comply
All Principal Investigators (PIs) and administrators at Harvard University within all schools, units, divisions, University-wide initiatives, and centers who are involved with the administration and conduct of sponsored awards must comply with this policy.
Types of Cost Sharing
Mandatory Committed Cost Sharing: Costs required as a condition of the award which must be tracked and may require reporting. This type of cost sharing is required by the Sponsor and must be included in the proposal.
Voluntary Committed Cost Sharing: Cost sharing specifically pledged by Harvard on a voluntary basis which is quantified in either the proposal budget and/or narrative and becomes a binding requirement of the award, must be tracked, and may require reporting.*
Voluntary Uncommitted Cost Sharing: Costs and effort that are not included as part of the submitted proposal or upon acceptance of the award. This does not need to be tracked or reported.
Over-the-Cap Salary: The portion of a faculty or staff member’s salary and associated fringe benefits that exceed regulatory maximum imposed by the sponsor (e.g., National Institutes of Health and Department of Defense salary cap). Over-the-cap salary cannot be used to meet a mandatory or voluntary committed cost sharing requirement, since it is considered an unallowable cost to the sponsor. This should be tracked via companion account for effort reporting.
In-Kind Cost Sharing: In-kind cost sharing are contributions wherein the value can be readily determined, verified, documented, and justified but where no actual cash is transacted in securing the good or service comprising the contribution. When applicable, an estimated value of the in-kind cost sharing should be determined and documented based on the fair market value at the time of the accepting award. In-kind cost sharing must be tracked manually by the department/local unit managing the award.
Refer to Appendix A for sources of cost sharing and types of expenditures which can be cost shared.
Refer to Appendix B for definition and applicable use of a companion account.
Refer to Appendix C for guidance on required documentation.
* Note: When a PI decides to use other funding source(s) to fulfill a proposed and budgeted effort commitment, that effort must be treated as voluntary committed cost sharing for both effort reporting and inclusion in Facilities and Administrative rate calculation purposes; however, reporting to the sponsor is not required.
Roles and Responsibilities
The following roles and responsibilities are defined by this University policy. Please consult the Harvard University Cost Sharing Procedure Guide for more information. Implementation guidance may vary by school/tub.
PI & Department/Local Level Managing Units are responsible for the following:
- Identifying the type of committed cost sharing and ensuring the cost share budget includes expenditures that are allowable, allocable, reasonable, and consistently accounted for in accordance with University and sponsor policies
- Entering the cost sharing commitment in GMAS
- Obtaining school/tub approval and signatures from the appropriate school authority prior to proposal submission
Upon receipt of award and during the award period
- Upon request from the submitting office (Office for Sponsored Programs (OSP) or Sponsored Programs Administration (SPA)), determining if there have been any changes in the proposed cost sharing commitment (e.g. increased or decreased amount)
Notifying submitting office and updating University records when there is a change in cost sharing source:
- From University to other sponsored funds
- From other sponsored to University funds
- From one sponsored fund to a different sponsored fund
- Monitoring the committed cost share through verifiable University records throughout the entire award period
- Using companion accounts with a sponsored activity and subactivity value with a non-sponsored fund, when required
- Providing cost sharing information to OSP Research Finance Team for reporting, if required by the sponsor
- Upon closeout, providing cost share information and confirming the cost sharing commitment has been met and coordinate with OSP Research Finance to resolve any cost sharing discrepancies
- Assuming any financial loss if cost sharing commitments are not met and sponsor does not approve a reduction of cost sharing commitment
School/Tub Level Officials are responsible for the following:
- Reviewing proposal for cost sharing commitments and providing dean’s/designee’s approval
Upon receipt of award and during the award period
- Confirming that funds are available for cost sharing as committed or requesting that the department/local level managing unit provide an alternate source of funding to meet the commitment if adequate funds are not available
- Working closely with department/local level managing unit and PI to monitor committed cost share through verifiable University records throughout the entire award period
- Upon closeout, coordinating with the department/local level managing unit and OSP Research Finance Team to resolve any cost sharing discrepancies
Submitting Offices (OSP/SPA) are responsible for the following:
- Reviewing proposals for cost sharing commitments and determining if the proposed cost sharing is allowable and in compliance with sponsor and University policies and ensuring the appropriate school-level approvals for cost sharing sources are obtained
Upon receipt of award and during the award period
- Determining whether there have been any changes to the proposed cost sharing commitments
- Confirming with the department/local level managing unit that committed cost sharing funds are available
- Requesting a renegotiation of the cost sharing commitment from the sponsor if cost sharing obligation cannot be fulfilled (Note: If the sponsor is unwilling to renegotiate the cost sharing terms of the award, the University may be forced to decline the award.)
OSP Research Finance Team is responsible for the following:
During the award period and at award closeout
- Confirming that the cost share has been met and complies with University and sponsor policy
- Coordinating with department/local level managing unit to address and clarify potential cost sharing issues and, if necessary, resolve with school/tub-level officials
- Reporting cost share commitment to sponsor, if required
- Sponsored Expenditure Guidelines
- Effort Reporting Policy
- Sponsored Financial Reporting and Close Out Policy
- OMB Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards
- Memoranda 01-06 -- Clarification of OMB A-21
- National Institutes of Health (NIH) Salary Cap Summary
- Federal Acquisition Regulation: Limitation on Allowable Government Contractor Employee Compensation Costs (2016) - Applies to federal contracts only
- Harvard University Cost Sharing Procedure Guide
- School Specific Cost Share Procedures:
- Harvard University Cost Sharing Form (HUCSF) (applicable to University area only)
- Recording Cost Sharing Commitment in GMAS Job Aid
- Cost Sharing FAQs
- Cost Transfer Preparer Checklist
Contacts and Subject Matter Experts
Office for Sponsored Programs:
- Pre-award: Marrybell Ramos, Cynthia Martini
- Post-award: Min Xiao
School and Local Subject Matter Experts:
- FAS Pre-award: Jennifer Lech, Mandy Ellenwood
- FAS Post-award: Marina Magid
- HGSE: Helen Page
- HMS: Rita Bergemann
- SEAS: Pamela Baker-Webber
- SPH Pre-award: Kristie Froman
- SPH Post-award: Judy Lo
- HKS: Carrie Kachoria, Charlene Arzigian
- HDS: Krista Carmichael
7/25/13 – Added to OSP website in PDF format
12/2/14 – Updated references for the Uniform Guidance
3/8/2017 –Changes represent a major revision.
Reason for the Policy updated, Types of Costs Sharing updated, Basic Considerations section deleted, Sources of Cost Sharing moved to new Appendix A, Types of Costing moved to new Appendix A, Roles and Responsibilities section updated to include life cycle of cost sharing responsibilities, Related Policies removed and new added, Related Documents removed and new added, Resource section added, Forms section removed, Definitions section removed, Appendix B Decision Chart for Cost Sharing Companion Account Coding added, Appendix C Cost Sharing Documentation Decision Chart added.
11/30/2017 - Added clarification that subactivity is part of the cost sharing companion account.
2/28/2018 - Added clarification to “Reason for Policy” that cost sharing expenditure rules must comply with federal regulations including purchasing and airfare
SOURCES OF COST SHARING CONTRIBUTIONS
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 Contributions (or Matching Funds)
Commitments that are paid from non-federal sponsored awards at Harvard, as represented by the fund range 200000-299999. Prior approval or authorization must be obtained from non-federal sponsor providing the cost sharing commitment. These types of commitments must be tracked manually by the department or local unit managing the award.
In-Kind Cost Sharing: In-kind cost sharing are those contributions wherein the value can be readily determined, verified, documented, and justified but where no actual cash is transacted in securing the good or service comprising the contribution. When applicable, an estimated value of the in-kind cost sharing should be determined and documented based on the fair market value at the time of the accepting award. In-kind cost sharing must be tracked manually by the department/local unit managing the award.
Subrecipient Cost Sharing: Commitments, expenses, or in-kind cost sharing made by subrecipients where Harvard is the prime awardee. Cost share is included in the subrecipient’s proposal and documented in the subaward agreement. These types of cost sharing commitments cannot be tracked in Harvard’s systems; therefore, the commitments must be verified manually by the department or local unit managing the award through subrecipient invoices.
COST SHARING EXPENDITURES TYPES
Cost sharing commitments can be met using direct or indirect costs that are allowable, allocable, reasonable, and consistently accounted for in accordance with University and sponsor policies.
A. Direct Costs
- Committed effort: Salary and fringe benefits associated with faculty and staff committed effort. Note that over-the cap salary, or salary paid to an individual in excess of a sponsor-designated limit, cannot be used to meet a cost sharing commitment.
Other direct costs: Direct costs that are considered allowable on a sponsored award could be cost shared. Some examples include the following:
- Travel expenses (Note: Cost sharing for a federal award must comply with federal travel regulations including lowest economy airfare and the Fly America Act as outlined in the University Travel Policy.)
- Laboratory and other supplies
- Consultant costs and other professional services
- Equipment items that do not meet the capitalization threshold
The purchasing of goods and services as cost sharing expenses must comply with federal procurement requirements including use of the vendor justification form and debarment certification, as outlined in the University Procurement Policy.
Equipment: Moveable, tangible personal property with a useful life of one year or more and a per-unit acquisition cost of $5,000 or more. Capital equipment includes scientific equipment, fabrications, and software. Capital equipment is recorded on the University’s general ledger as a capital asset and expensed to the appropriate capital equipment object code.
Existing capital equipment cannot be offered as cost sharing. Rather than committing the use of existing Harvard-owned equipment as cost sharing, proposals should characterize the equipment as "available for the performance of the project at no direct cost to the sponsored award.”
B. Indirect Costs or Facilities and Administrative (F&A) Costs
Indirect costs or F&A are costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, instructional activity, or any other institutional activity.
Indirect costs may be offered in a proposal to meet cost sharing requirements imposed by the sponsor and must be approved by the sponsor in order for the amount to be included as part of a cost sharing commitment. Specifically, in the case of a federal award, the federal agency’s approval can be based on the acceptance of a budget that clearly includes F&A as part of cost share or a specific approval by the agency. Without such approval the indirect costs cannot count toward cost sharing requirements.
The amount of indirect costs not recovered from a sponsor due to a sponsor funding an award with an indirect cost rate below the University’s federally negotiated F&A rate. This type of unrecovered overhead cannot be included as part of cost sharing or matching without the prior approval of the sponsor.
Overhead on cost shared University resources
When direct costs using the University funds are included as cost sharing commitments, the associated indirect cost is not visible in General Ledger. Overhead on cost shared University resources may be included as part of the University cost sharing commitment only if it is approved by the sponsor.
Decision Chart for Cost Sharing Companion Account1 Coding
|Mandatory Committed Cost Sharing||Voluntary Committed Cost Sharing||Voluntary Uncommitted Cost Sharing||Over-the-Cap Salary|
|University Contributions are: University Funds (gift, endowment, or other unrestricted non-sponsored sources in the fund range of 000001-054999 and 300000-699999)||Required2||Required2||Not required||Required2|
|Sponsored Contributions are: Non-federal sponsored awards (in the fund range of 200000-299999)||Not required||Not required||Not required||N/A|
|In-Kind Cost Sharing is: Non-cash contribution of goods and services from the University or donations from third parties||Not required||Not required||Not required||N/A|
1 Companion Account – An account that record cost -sharing amounts, often coded using the sponsored activity and subactivity value with a non-sponsored fund value, in the Harvard chart of accounts.
2 There may be exceptional cases in which a companion account cannot be used to track cost sharing. Therefore, a detailed listing must be provided at interim reporting periods and at award closeout.
Cost Sharing Documentation Decision Chart
The committed cost sharing on the sponsored awards must be recorded in GMAS at the proposal stage and be updated throughout the award lifecycle for compliance monitoring and cost sharing reporting:
- HMS/SPA and SPH/SPA: Cost sharing at proposal submission and award stage can be directly documented and approved through the GMAS cost sharing module. A HUCSF is not applicable in the Longwood area.
- OSP Submitting Office: The initial proposed cost sharing can be directly entered in GMAS without completing a HUCSF; however, a HUCSF is required for revisions to proposed and awarded cost sharing commitment in GMAS. The form serves as each school’s official documentation to OSP to update the cost sharing commitments in GMAS over the life of an award. See Decision Chart below.
|HUCSF Form (University Area Only)||At Proposal (Form Type "P")||At Award Setup (Form Type "A")||Revision(s) to Cost Sharing during award (Form Type "R")|
|Mandatory Committed Cost Sharing||Only required when changing information in the cost sharing module in GMAS1||Only required if cost sharing is different from proposal2||Only required if a change is made to the cost sharing source type or increases or decreases in cost sharing2|
|Voluntary Committed Cost Sharing||Only required when changing information in the cost sharing module in GMAS1||Only required if cost sharing is different from proposal2||Only required if a change is made to the cost sharing source type or increases or decreases in cost sharing2|
|Voluntary Uncommitted Cost Sharing||Not required||Not required||Not required|
|Over-the-Cap Salary||Not required||Not required||Not required|
1 The proposed cost sharing is directly entered in GMAS by the department/local level managing unit. If the proposal request in GMAS is locked and routed to OSP for review and submission, and the correction is required for the proposed cost sharing, OSP will require the signed HUCSF submitted by the departments to update the proposed cost sharing information in GMAS.
2Not required when a PI decides to use other funding source(s) to fulfill a proposed and budgeted effort commitment. That effort must be recorded as cost sharing for both effort reporting and inclusion in Facilities and Administrative rate calculation purposes; however, reporting to the sponsor is not required.
Refer to Appendix A for description of cost sharing types.