Cost sharing is when the University takes responsibility to expend its own funds on behalf of a sponsored award. Cost sharing come thre three varieties: involuntary committed (mandatory), voluntary committed, and voluntary uncommitted.
Involuntary committed (mandatory) cost sharing occurs when the sponsored program requires financial support for the project from the awarded institution as a condition of the award. This can be in many forms such as a matching contribution or a percentage of certain costs. The specific formula should be described in the solicitation notice. The proposal budget must clearly show how the University will meet its obligation.
Voluntary committed cost sharing is when the proposing institution volunteers and commits to bear a specific portion of the costs of the project when it is not required. To volunteer matching funds, percentages of costs, or other similar contributions is rare and often discouraged by many funding agencies. If allowed, the volunteered cost sharing should be detailed in the budget or project narrative as appropriate. NSF prohibits the use of voluntary committed cost sharing on its awards.
For the two types of committed cost sharing, the difference is in the motivation while the administrative handling is the same for both. Either form of committed cost sharing requires Division/Department approval.
Voluntary uncommitted cost sharing is when the University volunteers to provide extra resources to the project in ways not detailed in the proposal budget. This could be in cash or in kind, but there is no obligation to track this extra support in the award accounts, with one exception. The exception is when the PI chooses to expend some unspecified amount of effort more than what was detailed in the proposal. This is usually the case when the PI is not requesting salary from the award, and so is providing his/her effort for free. Per University policy, the PI must demonstrate effort on any award even when no salary is taken. In order to demonstrate this, a cost sharing account is created to capture nominal effort such as 0.5 months per academic year (more than 0.5 months requires Division/Deaprtment approval). Voluntary uncommitted cost shared effort should not be included in the proposal budget, but should be on a report of current and pending support. There is no requirement to document other extra support from the PI or the University (e.g. un-reimbursed business trips, donating materials to the project) and it requires no approval.
The 0.5 month effort cost sharing situation only comes up when the PI is taking $0 salary from an award during any one project year (summer and academic year included). If a PI with an academic appointment is taking $0 salary in summer salary, but is committing effort and drawing salary from a grant during the academic year, then that would be a salary recovery situation. Salary recovery is essentially the opposite of cost-sharing since the grant is being charged for salary amounts the University would normally pay. Salary recovery situations require neither cost sharing accounts nor any other special accounting. It is, however, good practice to indicate whether the PI's effort is summer or academic year in a proposal's budget justification and it must be detailed in the PI's current/pending report.
Unless explicitly prohibited in the solicitation and/or the award documentation, a PI must receive some direct salary from an NSF award to demonstrate effort, therefore the 0.5 month voluntary cost sharing is not allowed by NSF. However, we will continue the practice with other agencies until further notice.