• Cost Sharing Procedures

HKS Cost Sharing Basics

What is cost sharing?

Cost sharing is defined as any project cost not borne by the sponsor, whether it be the expenditure of University or third-party funds, to support the scope of work defined by a sponsored award (both federal and non-federal awards). There are two types of cost-sharing:

1. University Cost Sharing:  This occurs when project costs are not borne by the sponsor, but are paid for from University funds using gift, endowment, or other non-sponsored sources, as represented by the 000001-054999 and 300000-699999 fund ranges.

An example of University Cost Sharing would be if a proposal states that “Professor X will oversee the project and devote 7% his time to this effort, which will be covered by other funding sources” and the other funding source is an unrestricted endowment account.

2. Sponsored Cost Sharing: This occurs when cost sharing commitments are met using existing sponsored grants and contracts at Harvard.  Usually non-federal sponsored grants are used, as represented by the 200000-299999 fund range.

An example of Sponsored Cost Sharing would be if your proposal states that “Professor X will oversee the project and devote 7% his time to this effort, which will be covered by other funding sources” and the other funding source is a nonfederal sponsored fund.

Please note that Harvard discourages cost sharing commitments because such commitments burden Harvard with financial and administrative responsibilities, while limiting the academic and programmatic flexibility that University resources are intended to provide. Cost sharing requires the maintenance of detailed records that are subject to audit, and cost sharing has the potential to affect negotiated indirect cost rates adversely.

When are cost sharing forms required?

Cost sharing forms should be submitted at proposal submission, but are required at award notification before an award can be set up. Please contact RAO and/or your OSP representative to ensure that all appropriate documentation is submitted.

What type of costs should be cost-shared?

Cost sharing commitments can be met using direct or indirect costs that are allowable, allocable, reasonable, and consistently accounted for by the University. The best type of expenses to cost share are direct expenses such as lab supplies, equipment items that do not meet the capitalization threshold, and travel. All cost sharing must be in compliance with the following:

• University sponsored programs expenditure policies


• Any additional terms specified by the sponsor


• Costing policies disclosed and approved by the federal government in Harvard’s Disclosure Statements (DS-2s)

There are certain items that are not recommended for cost sharing.  

• Capital equipment purchased with Harvard resources cannot ordinarily be offered as cost sharing, since the depreciation of Harvard-owned equipment is included in the University’s indirect cost rates.


• For cost sharing on federal awards, any costs that would not be allowed on federal sponsored awards cannot be cost-shared.


• Costs that are paid by the federal government cannot be used to meet cost-sharing requirements on other federal awards unless authorized by federal statute.


• Costs representing salaries over regulatory caps.

Do we need to document cost sharing?

Yes. Expenses incurred to meet cost sharing commitments bring the same accounting, financial, legal, and regulatory burdens as costs on Harvard sponsored programs. Therefore, cost sharing requires the maintenance of detailed records. School and department officials are responsible for regular monitoring of cost sharing commitments throughout the grant period.

What are companion accounts and how do you use them?

A companion account is an account that records cost shared expenses. It is created by using a sponsored activity value with a non-sponsored fund.

An example of the use of a companion account is as follows:

You have a federal award whose main account has fund 123456, activity 234567, and subactivity 0001. Your cost shared expenses will be charged to the non-sponsored account with fund 000123, with the same sponsored activity/subactivity combination (234567-0001). Therefore, your companion account coding would be Tub-Org-Object-000123-234567-0001-Root.

At reporting stage and/or award close-out, OSP will contact the department/center to obtain a GL Detail Listing Report for all cost sharing transactions using sponsored and/or non-sponsored funds for the reporting period. Since all cost-shared expenditures must be verifiable from University records, the use of companion accounts allows for easy identification of cost shared expenses.

Companion accounts are required for all university cost shared direct expenses (see definition of University Cost Sharing above. Tracking expenses via companion accounts is not possible, however, with Sponsored Cost Sharing because it is not valid in Harvard’s General Ledger to use a sponsored activity with a different sponsored fund value. In these instances, the department/center must track the cost sharing manually.

Do we need to document effort reporting for salaries that are cost shared?

Yes. Salaries for faculty and staff that are cost shared must follow effort reporting and salary certification guidelines. Cost shared faculty expenses are already included in the current annual effort reporting processes. Changes to the monthly salary certification process will follow and notification will be included at a later date.

What happens if I cannot meet my cost sharing commitment as original determined?

If a project includes a requirement for cost sharing, it is important that the account be monitored closely to ensure that the PI meets those requirements. If there is a concern that s/he will be unable to meet the committed amount, the sponsor must be contacted as soon as possible to request a budget modification or an amendment to the award.

Your OSP representative, RAO, and/or OFS should be involved in this communication. If you have not met the cost sharing requirements, and the sponsor is unwilling to renegotiate the award, the project is at risk of being deemed non-compliant by the sponsor and may force us to return the funding. In addition, funds charged to the sponsored project, may need to be moved to the companion account as the cost sharing commitment must be met before the sponsored commitment is met.

Are cost-shared expenses auditable?

Yes, cost-shared expenses are auditable and follow the same guidelines regarding retaining documentation as sponsored awards.

For more information about auditing sponsored awards, please refer to: http://vpf-web.harvard.edu/osp/managing_an_award/auditing.php?expandable=3.