Cost Sharing

 

This document was produced jointly with the UNO Strategic Technology Planning and Implementation Group and the UNO Office of Research and Sponsored Programs. Additional input was received from a variety of sources prior to publication, including but not limited to Academic Affairs, Financial Services, University Computing & Communications, and Academic Deans.

The following is meant to provide a guide to both newcomers as well as experienced grant applicants on the topic of cost sharing, its basic purpose within grant applications, and its availability at UNO. In all instances below, further direction can be obtained in consultation with the Office of Research. This review is meant to create an awareness of how cost sharing can be used as an effective device to increase your chances of success with external funding requests. In particular, this document is oriented toward those applications which are primarily technology related.

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What do we mean by "cost sharing" or "matching funds"?

When applying for external funds to perform research or a sponsored project the total cost of the project is considered to have at least two components: that portion which will be covered by an external private entity or public agency (federal, state or local); and that portion which is covered by the University (sometimes in conjunction with an external third party). The portion covered by the University (sometimes in conjunction with an external third party) is considered to be cost sharing or matching revenues, and is one type of indicator of the University's commitment to the project.

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Are cost sharing dollars "real"?

Cost sharing dollars are absolutely "real" and must be "audit-able." Thus, UNO cannot allow for any proposal to be released from the University without having signature approvals for all categories of cost sharing revenues. Cost sharing can take the form of an actual cash contribution (most common) and/or an in-kind contribution (rare). An example of cash cost sharing is faculty time available to use in a specific project. An example of in-kind contributions would be labor and equipment dedicated to a project by a private business, when the University is applying for federal or private foundation revenues. In the case of the latter, the source would have to provide a statement as to the value they attach to this contribution.

Cost sharing (or matching funds) is usually expressed as a combination of direct costs and indirect costs. Any institutional contribution in the direct costs column, would also have indirects calculated on that portion. The indirects calculated on the institutional match are considered In-Kind Cost Sharing. The combination of the (Institutional Direct Costs) + (Institutional Indirect Costs) constitute UNO's total cost sharing or matching funds contributed to a project. Additionally, in some instances (either because of an agency restriction or private foundation policy) UNO is not able to collect its full Federally Negotiated Indirect Rate (now referred to as Facilities and Administrative (F&A) costs) on a project. For instance, U.S. Department of Education training grants may be restricted to an 8% Indirect rate. In these instances, UNO is permitted to count the remaining uncollected portion as matching funds, because it is cost sharing that portion of facilities and administrative costs (e.g. cost of Purchasing, Human Resources, Payroll). This portion of institutional contribution is considered In-Kind Cost Sharing.

In all cases, approval for any cost sharing from any source is reflected by signatures on the UNO Routing Form (available for downloading). In cases of cash, an account number must be indicated. The funds remain in the original account until an award is made, and it is only expressed on this form for tracking purposes. For in-kind services, provided the correct signatures are obtained, no account code is required.

When an award notification is received, the Office of Research and Sponsored Programs Accounting make the stated cost sharing available to the PI by removing funds from the account promised on the routing form, opening a new account and assigning a number. The PI is notified of his/her new account. The stated cost sharing must be spent in the manner prescribed in the proposal during the same dates as the award. If an award is less than the original funding request, the university may reduce its cost share commitment in proportion to the sponsor's reduction in funding, unless the funder stipulates that cost sharing must remain at one hundred percent.

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Is cost sharing mandatory in order to get funding?

Many funding sources express their intent to solicit matching funds as either mandatory (i.e. usually a minimum required percentage) or voluntary (i.e. recommended, but there is no absolute requirement in order to receive the funding). In studying actual funding patterns of agencies, it is clear that it is more and more the expectation that some form of cost sharing should occur in order to be competitive. In other words, even if there is not a designated mandatory requirement, the amount of cost sharing can influence an award when all other factors are considered equal. Cost sharing is often regarded as an indication of the institution's commitment to a project. Thus, we sometimes refer to the degree of cost sharing as leveraging to increase the competitiveness of any given
grant application.

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Is there a norm or recommended level that is preferred with cost sharing?

In many federal grant programs from major funding sources like National Science Foundation and the National Institutes of Health, mandatory or absolute cost sharing percentages have been reduced or dropped as a specific requirement. However, the exception for most federal agencies, technology-related grants, which continue to account for a larger and larger share of our grant funding efforts, generally have mandatory requirements of a minimum 33% cash match, and recommended at around 50%. We consider a grant to be primarily "technology-related" if 50% (or more) of the external funding source support goes toward the purchase of computer and/or other technology or research-related instrumentation. With some agencies, the required amount may even be higher, such as the National Endowment for Humanities (Challenge Grants) which require 75% match. The message is that if we are asking for federal funding to do major technology purchases, the federal agencies expect the university to help share the cost of these programs. This is reflected in who successfully obtains these awards, as well as agency guidelines.

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How much time does it take to gain cost sharing commitments?

As you'll see below, the levels and complexity of cost sharing matching funds may vary extensively. In no case should one ever assume agreement to any funds unless an approval signature has been obtained, no matter what prior agreements exists on prior projects. Each funding request is unique. Thus even if there was a prior arrangement on the same proposal now being resubmitted to the same agency or a new agency, a new approval must be obtained. Some of the sources listed at the very end of this document are extremely complex arrangements, and should begin with discussions with one's Dean. These types of complex efforts would be required for instance, if one were pursuing a "centers and institutes grant," or some very high level, extensive equipment or instrumentation.

It is important to recognize that any commitments mentioned in the proposal narrative that carry financial obligations, must also be identified in the Routing Form with proper approval signatures supporting them. On other less complicated projects, it is recommended that you contact the appropriate approval source approximately 1 month prior to the application deadline; and no less than 2 weeks prior to the deadline. By allowing as much lead time as possible you are limiting the possibility of having to completely restructure your budget totals at the very last minute, if your request is not approved. As mentioned earlier, no approvals should be assumed; each request is considered individually.

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Potential Sources of Cost Sharing for UNO Projects

From year to year, the precise amounts and the protocols for requesting these funds as part of external funding requests may vary. However, this list and these short definitions will allow both experienced and new funding applicants to understand what is potentially available. These are generally listed in the order which they might be requested. In other words, there is no formal rule as to how many of these (if any) could potentially be leveraged on any one individual project. In some instances the use of one source precludes the use of another. In general this list is here to allow for more informed discussions, as you approach the appropriate University administrators with your cost sharing requests.

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1. Faculty Time To Be Dedicated to the Project

This is the most common form of cost sharing at UNO, and is an expectation on most projects, those which are technology-based as well as those which are not. For instance, a request to fund summer salary for a lead Principal Investigator would not be considered very seriously by most research funding sources, if the faculty member has no available time at all during the academic year to devote to the project. The most common way that we calculate potential faculty time for projects is that we consider every full time faculty member's time divided into equal units (generally 4); and decisions governing how much of that time is to be allocated to research, teaching and community service is determined by one's Chair and/or College Dean. Thus, as an example, if one is teaching two courses per semester, for accounting purposes it is agreed that there are potentially two "units" available for other duties, or, 50% of one's time (i.e. for research, other scholarly activities, academic committees, community service, etc.).

When applying for a grant, provided your Chair and Dean are in agreement, you may be able to request part or all of the remaining time as an investment in the project, as a primary form of cost sharing. Sometimes this "available" time may also be broken into smaller increments if that is reasonable and appropriate for the project, i.e. hour, day, week or month. We use 180 days or 1,440 hours to represent one full time academic year. For fiscal appointments, we use 260 days or 2,080 hours to represent full time. In all cases above, the base is the faculty salary (either academic or fiscal); and whatever salary figures are derived must have fringe calculated in addition to these are expressed as two separate line items on the budget. You may want to check UNO's current fringe rate.

Type of cost sharing: Cash

Required Approvals: Dean and/or Chair, with a General Fund account number representing the salary line

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2. Office of Research - Revenues from Indirects

It is appropriate to reinvest money the University receives from funded research into future research projects. The Office of Research makes every effort to redistribute these funds into projects in an equitable fashion, taking into account College and Dean priorities, broad scale directions of the university, potential for launching other successful efforts, and other factors as appropriate.

Once approval has been obtained from the Office of Research for cost sharing, it will most often permit these funds to be applied toward the following budgetary items: travel, supplies (which includes original software licenses), equipment and/or instrumentation, installation, shipping and handling. In addition, the Office of Research will consider assisting with: graduate student stipends, and UNO tuition; and in rare instances, funding for a portion or all of a research associate. Cost sharing for technology/instrumentation maintenance will be provided subject to a written agreement concerning use, to be negotiated at the time of approval between the Office of Research and the P.I. Maintenance can include such items as equipment parts, labor associated with maintenance, and software upgrade licenses. The level of cost sharing from the Office of Research is usually based on the total cost of the project, the amount of future Indirects the project will generate, and the other cost sharing which is being committed from other sources (most often, faculty time; and occasionally some cash from another source).

Type of cost sharing: Cash

Required Approvals: Vice President, Research and Sponsored Programs

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3. University Computing & Communications Funds (UCC) for Capital Developments

In technology-related projects, a large portion of UCC-effort cannot be counted as additional cost sharing because UCC Operations and Maintenance efforts are already included in the calculation of our Federally Negotiated Indirect Rate Agreement. However, there are sometimes exceptions to this, when some of UCC effort can legitimately be claimed as matching revenue.

First, there are instances where no indirects are allowed from the funding source. In these cases, if the project is primarily technology-based, we are not accurately reflecting the proper UCC effort on these projects if we collect no portion of Indirect. Thus, an appropriate percentage of effort is applied to these project matching direct costs, to compensate for the effort that is not recovered because indirects are not allowed.

Secondly, there are UCC-efforts which are primarily new Development and/or Capital Improvements projects, efforts which are separate and distinct from standard Operations and Maintenance. Examples of these costs can include associated faculty development technical training, infrastructure building, system installation, etc. and other components which are in addition to Operations and Maintenance, when new systems are acquired through grants. Thus, an appropriate percentage of effort associated with the above list of activities, and would be calculated as project matching direct costs, to reflect the proper UCC costs associated with the project. Thus, UCC efforts may be legitimately calculated in terms of associated direct costs, and claimed as cost sharing when these two exceptions apply.

Type of cost sharing: Cash

Required approvals: Associate Vice President, UCC

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4. Federal Funds Cost Shared on State Projects

Some research institutes and other efforts at UNO are comprehensively or primarily funded with federal dollars. If these federal funds are going to be available during the stated project term in the proposal, they may be committed as leveraging for state dollars, in state funded competitions, for example at the Board of Regents. The best example of this is the BoRSF (8G) program, where federal funds might be leveraged within a proposal which is appropriate and eligible within the specific BoRSF (8G) program guidelines.

Type of cost sharing: Cash

Required approvals: Chair and/or Dean, in conjunction with the appropriate federal program officer (a letter authorizing this commitment would be required)

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5. State Funds Cost Shared on Federal Projects

In instances where state funding has been obtained, with permission those funds might be leveraged for a larger, project to be funded with federal funds. These instances are less common because within BoR 8G for instance (in the Research Competitiveness Program), the PI most often is required to relinquish those funds when federal funding is achieved, because the entire goal of the program is to make the PI nationally competitive. But a more likely scenario might be if a PI obtains a BoR 8G (ITRS) grant, he/she might be able to leverage those funds with a federal funding source, the NSF GOALI program for instance which has similar goals and requirements.

Type of cost sharing: Cash

Required approvals: Chair and/or Dean, plus appropriate state funding source program officer (a letter would
be required)

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6. Other Specialized Funding: Student Technology Fees (STF)

In some instances, there are base project funds available which have the potential to achieve much broader goals by leveraging those for additional federal funds. The Student Technology Fees (STF) under appropriate circumstances, could be used to leverage for much larger funds to achieve their mandated goals, that is to promote teaching and other scholarly projects that will directly benefit our students on a much broader scale. In all instances, these projects will only be considered for cost sharing provided they clearly meet the legal mandate of the STF. This type of request should go through appropriate channels prior to the Provost.

Type of cost sharing: Cash

Required approvals: Provost/Executive Vice President for Academic Affairs

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7. Other Specialized Funding: Start Up Funds for New Faculty

Due to specific priorities that a College may have, some new tenure track faculty may be allocated a certain level of funds which are guaranteed upon entry, and are available until exhausted to be used for research needs or to leverage on proposal applications. The use of these funds (where available) must be considered very carefully because they are usually designated to help the new researcher set up his/her required research facilities. Thus, some of these funds are usually spent immediately for this purpose. However, depending upon one's requirements, it may be possible to space these expenditures over a period of 2-3 years, in which case a portion of these funds might be available for cost sharing on projects that might get funded in year 2 or 3 of the new investigator's term at UNO. In most cases, Office of Research will not consider cost sharing requests from new investigators who have start up funds available for leveraging.

Type of cost sharing: Cash

Required approvals: Chair and/or Dean (with appropriate General Fund account code)

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8. Private Funds

Commitments from entities external to the University can represent allowable and viable sources of potential leveraging, usually for larger federally-funded projects. The private funds can be in three forms.

First, they might be in the form of a gift from a benefactor, in which case it is important to understand the benefactor's restrictions in terms of when the funds will be available, and whether he/she wishes to impose some restrictions or goals on the funds.

Secondly, private funds may also come from business and/or industry who view this type of leveraging for federal capital as a means to accomplish goals they could not otherwise afford. The NSF GOALI program is a good example of how this concept might be applied.

Thirdly, they may be from a private foundation with specific goals, restrictions, etc. and one which is knowledgeable of the concept and willing to leverage for additional federal revenues to achieve more.

In any case the private funds must be available in the year the federal funding would actually be received. Thus, given the required funding cycle lead times, the private source must be willing to commit the funds for possibly as long as three years to warrant the kind of front end negotiation and effort which would occur to make the
project successful.

Type of funds: In-kind or cash

Required approvals: At UNO, the Provost (usually in concert with a Dean and the UNO Development Office).

From the private source, a ranking official from the private organization must agree in writing, and this written commitment will be submitted to the funding agency.

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