What is Cost-share or Match?

Cost-share (also called “match“) is the part of the federally-sponsored project or program that is not paid for by the federal government.

“Cost sharing or matching means the portion of project costs not paid by Federal funds (unless otherwise authorized by Federal statute). See also § 200.306 Cost sharing or matching.”

From 2 CFR Part 200 (aka the Uniform Guidance) § 200.29 Cost sharing or matching

Examples of Cost-sharing

Here are some examples of a cost-share or match for a federally sponsored project or program:

• The portion of cash, labor, and property used to support the federal project paid by the organization and NOT the federal government
• The value of third-party property donations contributed to the project not charged to the federal government
• Volunteer services provided by third-parties as long as that labor is necessary and integral to the federally sponsored program
• The difference between an organization’s negotiated indirect cost rate and a lower predetermined indirect rate required by the federal award

Cost share cannot come from federal sources (like another grant) unless the underlying statute expressly authorizes the use for a match.

How to Value Cost-share or Match?

Valuation of cost share or match is covered in 2 CFR Part 200 (aka the Uniform Guidance) in section § 200.306 Cost sharing or matching.

Here are some helpful tips for determining the value of cost-share or match for federal awards:

• The value of donated buildings and land cannot be more than the fair market value at the time of donation. AND the value must be established by an independent appraiser (for example, a certified real property appraiser or General Services Administration representative) and certified by a responsible official of the award recipient as required.
• The value of donated services by third parties, including both skilled and unskilled labor, must be valued at the rate for similar work. Document the rate paid by the grant recipient for its employees, or if there is not a similar position at the organization, at the rate for those skills in the local area. (Valuation is NOT the hourly rate of the volunteer, but the hourly value of the activities done by the volunteer.)
• The value of donated equipment can’t be more than the fair market value of equipment of similar age and condition at the time of donation.
• The value of the donated property from third parties, such as supplies, can’t exceed the fair market value of the donated property at the time of the donation. (Base the valuation on the current value, not what they paid for it when they bought it.)

Grant recipients should expect a lot of scrutiny of any cost share and match based on contributed labor, materials, or equipment.

In other words, a non-cash match requires more effort from the grant recipient to show the federal funder that the cost-share is appropriately valued.

And that means you must get your documentation of the cost share or match valuation in place BEFORE the auditors come to visit.

What are Other Rules for Cost-Share?

There are additional rules for cost-share or match in the Uniform Guidance section § 200.306 Cost sharing or matching including the following:

• The contributions must be verifiable from the organization’s records
• The cost-share can’t be counted as a match on any other Federal award
• The contributions must be necessary and reasonable for achieving the objectives of the federally sponsored project or program objectives
• The contributions must represent the types of costs that would be allowable under 2 CFR Part 200 Subpart E—Cost Principles.
• The match must be included in the approved budget when required by the federal funding agency.
• The contributions can’t originate from federal sources unless the federal statute authorizes the funds to be used for cost-share.

Beware, as cost-share is an area where there have been a lot of abuses by grant recipients and have a history of questionable or insufficient documentation of the costs used in the match.

So, preparation is the key when it comes to staying out of trouble with your grant when it comes to meeting your cost-share requirements.

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Author:

Lucy Morgan CPA, MBA

CEO, Compliance Warrior

Author of “Decoding Grant Management-The Ultimate Success Guide to the Federal Grant Regulations in 2 CFR Part 200” The 2nd Edition is now available on Amazon in Paperback and Kindle versions.