Cost Sharing

A. POLICY

This policy provides guidelines for proposing, reporting, and documenting cost sharing for sponsored projects. It is the policy of the University to minimize, if not eliminate, all Voluntary Committed Cost Sharing to the maximum extent possible to preserve University resources and maintain a fair base for the Facilities & Administrative (F&A) rate calculation.

B. PURPOSE

The purpose of this policy is to ensure University compliance with 2 CFR §200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards). This policy establishes standards for the consistency, verifiability, and allowability of matching funds provided to sponsored programs.

C. DEFINITIONS

• Uniform Guidance (2 CFR 200): The federal framework for grants management.
• Allocable (2 CFR 200.405): A cost is allocable if the goods or services involved are chargeable or assignable to a project in accordance with the relative benefits received.
• Cost Sharing (Match): The portion of project costs not paid by Federal funds (unless otherwise authorized by Federal statute).
• Mandatory Cost Sharing: Required by the sponsor as a condition of the award and specified in the Notice of Funding Opportunity (NOFO).
• Voluntary Committed Cost Sharing: Pledges made in the proposal (budget or narrative) that were not required by the sponsor but are considered legally binding and auditable upon award. Per 2 CFR 200.306, this is not expected in Federal research proposals.
• Voluntary Uncommitted Cost Sharing: Effort or resources contributed to a project beyond the amount committed in the proposal. This is not auditable or reported to the sponsor.

D. FEDERAL CRITERIA FOR COST SHARING (2 CFR 200.306)

To be acceptable as cost sharing, all contributions (including cash and in-kind) must meet 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 the accomplishment of project objectives.
4. Are allowable under Subpart E—Cost Principles of the Uniform Guidance.
5. Are not paid by the Federal Government under another award, except where authorized by statute.
6. Are provided for in the approved budget when required by the Federal awarding agency.
    

E. DISTINGUISHING COST SHARING TYPES

1. Unrecovered Indirect Costs (F&A)

Unrecovered indirect costs, including indirect costs on cost-sharing direct costs, may only be included as part of cost sharing or matching with the prior approval of the Federal awarding agency.

1.1 Unrecovered indirect costs associated with sponsored research at NJIT constitute a direct loss of institutional liquidity and a tangible subsidy of the research project. Because F&A costs represent real, audited expenditures such as high-performance computing infrastructure, lab utilities, and specialized research compliance, any 'under recovery' represents a monetary lost-opportunity cost. 

1.2 NJIT determines these costs by applying its federally negotiated rate of Modified Total Direct Costs to the project. Under recovery occurs when a sponsor pays less than this negotiated rate, forcing NJIT to bear the financial burden of the Facilities (F) and Administrative (A) components required to sustain the project.

2. In-Kind (Third-Party) Contributions

Values for third-party in-kind contributions (such as volunteer services or donated equipment/space) must be established in accordance with 2 CFR 200.306(e)-(j). Documentation must include a written statement from the donor verifying the fair market value.

3. Faculty/Staff Effort

The most common form of cost sharing is cash, calculated as a percentage of salary and fringe benefits for time spent on the project. This must be documented through the University’s time and effort reporting or compensation tracking system to ensure no "double counting" of effort across multiple awards.

F. DOCUMENTATION AND REPORTING

• Auditable Record: All cost-shared expenses must be tracked in the University’s accounting system with the same rigor as direct-charged expenses.
• Valuation of Services: Volunteer services must be valued at rates consistent with those paid for similar work within the University. If the required skills are not found within the University, rates must be consistent with those paid for similar work in the local labor market.
• Valuation of Property: If a third party donates equipment or space, the value must not exceed the fair market value of the property at the time of donation.

G. PRIOR APPROVALS FOR COST SHARING

Cost sharing represents a firm financial commitment to university resources. Therefore, prior approval requests are not initiated or provided by the Office of Research. Instead, Faculty are mandated to seek primary direction and authorization from their Departmental Chairs and Deans before a proposal is finalized.

H.  ROLES AND RESPONSIBILITIES 

Mandatory Pre-Submission Process:

1. Faculty Consultation: Faculty must engage Departmental Chairs and Deans to identify the source, type, and amount of funds.
2. Written Authorization: Documentation of the Chair’s and Dean's written approval and verification that funds are currently available must be obtained.
3. Fund Restriction: Verified cost-sharing funds may be required to be held in a restricted account to ensure they are preserved for the project’s duration.
4. Formal Documentation: These verified commitments must be recorded on the designated Cost Sharing Form provided by the Office of Research and signed by the appropriate Chair and Dean prior to submission to the Office of Research.
    

Office of Research (OR):

The responsibility of OR is strictly limited to administrative oversight. OR will review the submitted documentation to ensure the cost-sharing levels are:

• Validated by the previously obtained Chair/Dean signatures and restricted fund verification, and Consistent with both University financial policy and specific sponsor mandates.