What is Cost Share and how do you calculate it?

What is cost share?

Some federal programs require non-federal cost share to show that the state/institution is also invested in the work. Cost share can be actual additional cash resources or “in-kind”. While the federal programs prefer actual resources, most cost share is in-kind. In-kind cost share is committing resources that exist already, most commonly time and effort, but also equipment or facility usage fees or other items that are covered by non-federal resources.

In-kind cost share for tenure-track professors at research institutions

For tenure-track professors at state research institutions, in-kind cost share is easy to provide. Most of these faculty have 9 or 10-month appointments that are something like 40% teaching, 40% research, and 10% service. That 40% time working on research is supported in the department budget with state funds and therefore can be used as cost share, if they will be spending time during the academic year on the proposed research project. This in-kind cost share must be approved by the department head, and an individual cannot commit more time in cost share than they have for their research appointment time especially if they are committing cost share to several projects within the institution.

In-kind cost share for tenure-track professors at smaller institutions

Even for those at non-research institutions who don’t have any research appointment time can commit cost share. The best way is to get released from teaching a course they would normally teach, so they can spend that time on a research project instead. This is called “release time”. Sometimes getting released from a course is not possible, unfortunately. In discussion with their department head, these faculty can still create an agreement about time they can spend on the research project. Some non-course examples of release time include committees, office hours, service, and scholarship.

Cash cost share

Some institutions will believe strongly in a research project and the benefit it will provide, and will commit cash cost share that can be invested in project needs, for items like travel, summer salary, and/or equipment and supplies. If there is no restriction in the program solicitation*, it doesn’t hurt to ask the institution if cash cost share is available.

*Researchers from Montana State University cannot ask for cost share from the institution for any NASA EPSCoR proposals without approval from NASA EPSCoR director Angela Des Jardins. This is due to the high level of cost share MSU already provides the program.

How do you calculate cost share?

First, what are Facilities and Administration costs (sometimes called Indirect Costs, or IDCs)? F&A costs are charged by all institutions for the services required to support research activity, unless F&A are specifically prohibited by an opportunity. Facilities costs are for items like building use and utilities. Administrative costs are for items like institution services and sponsored project administration. Most institutions have a federally negotiated F&A rate. Talk to someone in your grant administration if you don’t know the F&A rules at your institution.

It helps to work backwards to calculate cost share. How much cost share is required? What is the amount in direct costs that is needed?

All institutions across the country are allowed (any always do) to charge “funny money F&A” on cost share. Funny money F&A are F&A costs charged on cost share, just like F&A are charged on the requested budget. The reasoning is that if the funds were actually being spent like on the requested side, the funds would also need to be charged F&A.

Therefore, the amount of cost share in direct costs is less than the total needed. For example, if you are required to commit 15% cost share for a $60,000 requested budget, you need $9,000 total (separate from the $60,000). If the F&A rate for the institution is 45%, then the cost share direct costs (if there is no equipment** or tuition, which are not charged F&A) is $9k/1.45 = $6,207.

**The standard equipment definition is a single item costing more than $5k, or a group of items that are all needed to make the tool work that together cost more than $5k. However, intuitions are allowed to set their definition of equipment individually, so check with your office of sponsored programs if you’re not sure.

Research time example. Let’s assume a $60,000 Requested Budget that requires 15% cost-share => $60,000 x 0.15 = $9,000 in cost share.

• First calculate F&A costs for your institution; for this example we will use 45%
• $9,000/1.45 = $6,207
• $9,000 - $6,207 = $2,793 is the IDC or F&A for the $9,000 for your institution (assuming no tuition or equipment).
• $6,207 is how much you as the researcher have to show as time (direct costs), however, you also receive benefits. You can contact your HR department for an approximate percentage. Most are around 37%.
• $6,207/1.37 = $4,531 => $4,531 is how much salary (time) you need to commit towards the research project. $6,207 - $4,531 = $1,676 is what you receive in benefits.
• Take your 9-month salary and find your weekly pay, for this example we will use $70,000.
• $70,000/9-months/4.5 weeks = $1,728 your weekly pay.
• Next, take your salary commitment for the project of $4,531 and divide it by your weekly pay to find your time commitment.
• $4,531/$1,728 = 2.6 weeks of your time.
• Therefore, to meet the $9,000 in cost share, you commit 2.6 weeks of your time to work on the research project during the academic year.
• Brief example of the cost share budget:

Institution cash cost share and in-kind equipment usage fees example. Starting with the same need for $6,207 in direct costs, say your institution committed $4,000 in cash for you to spend how you’d like (you put this toward travel to a conference for you and a student and $1,000 in supplies). That leaves $2,207 (again, assuming that none of the cost share is spent on equipment or tuition). You don’t have research appointment time and can’t get release time, but you do have an expensive PCR machine that your institution bought on another non-federal award. If someone external to the institution were to ask to use the machine, your institution would charge them $60/hour to use it. You will be using the machine for 40 hours – so you can include 40*$60 = $2,400 in cost share. Brief example cost share budget:

Total                                  $9,280

Other advice

• Even for simple budgets, getting everything sorted out often takes more time than you’d think. Start early. Cost share typically has to be approved by several entities.
• Talk to your institution’s office of sponsored programs about any questions. Don’t assume.
• For Montana NASA EPSCoR and Montana Space Grant faculty grants, we’re happy to help answer questions. Most other entities are happy to help also.