PrintWhen the University bears a portion of the costs of a sponsored project (by purchasing equipment or supplies for the project from University resources, or by committing faculty or staff effort to the project at no cost to the sponsor) it is considered cost sharing.
Cost sharing may be either mandatory (when a sponsor requires a certain portion of the costs to be paid by other funds) or voluntary (when no such requirement exists). "Voluntary" cost sharing nonetheless becomes "mandatory" if offered in a proposal and accepted by the sponsor.
Policies and operational guidelines
A university-wide Cost Sharing Policy went into effect on 3/1/11. The Policy defines "University cost sharing" and "sponsored cost sharing." gives examples of the types of direct and indirect costs that may be offered as cost sharing, and outlines the roles and responsibilities of all parties. The Policy also contains a useful glossary and links to the Cost Sharing Form, a Frequently Asked Questions document, and a Procedures document.
Cost sharing has programmatic, administrative, and financial consequences for FAS and, as a general rule, is strongly discouraged unless required by the sponsor. (Such a requirement will typically be indicated in the program announcement.) Voluntary commitments to cost share (a) reduce the flexibility PIs have to conduct other research, when their effort is pledged to specific projects; (b) increase the requirements for auditable recordkeeping; and (c) have an adverse effect on the University's recovery of indirect (Facilities and Administrative) costs. The value of any voluntary cost sharing that is committed in proposals is added to the denominator (the "research base") of the fraction used to calculate the University's Federal indirect cost rate, so unnecessary cost sharing ultimately decreases our indirect cost recovery.
This does not mean that PIs should not spend time on research projects where they receive no salary from the sponsor, nor does it mean that the University should not contribute resources toward the performance of projects funded extermally. It simply means that explicit commitments to cost share should not be included in proposals unless required by the sponsor.
Recognizing that the inclusion of cost sharing in the research base for the indirect cost calculation provides a disincentive to PIs' spending time on research, the Office of Management and Budget issued a Clarification in January of 2001 stating that voluntary uncommitted effort expended on sponsored research did not have to be included in the research base. To take advantage of this clarification, the FAS now encourages PIs to describe their participation in research projects in terms that do not commit them to specific percentages of effort; their time is expended as before, but considered "uncommitted." Suggested language for use in proposals can be found at "Commitment of Faculty Effort on Sponsored Research Proposals" on this site.
Certain Federal agencies discourage voluntary cost sharing as well. A recent clarification from the NSF states:
"Unless a program solicitation specifically requires cost sharing, proposers should: not include cost sharing amounts on line M of the proposal budget;or not exceed the cost sharing level or amount specified in the proposal."
Once a grant is awarded, all proposed cost-sharing amounts become mandatory and are subject to audit. We are required to report, both during the course of the project (via faculty effort reports) and at the end (as part of the Final Financial Report), on committed contributed effort and any other mandatory cost sharing.
To assist in the recordkeeping for this reporting, the University has a Cost Sharing Form that must be signed by the PI, approved by the Dean's designee, and submitted to the Office for Sponsored Programs at the proposal stage and also at the termination of an award. The form requires that you specify the nature of the cost-share (i.e., contributed effort, funds from another source, equipment from another source, etc.); and the Harvard account number and the amount of direct cost committed, or the percentage of faculty effort to be contributed.
Cost sharing form
Download Cost Sharing Form (Excel spreadsheet)
