Cost Share and Match Requirements

Cost share and matching requirements are conditions attached to certain federal grants and cooperative agreements that obligate the recipient to contribute a specified amount of non-federal resources, cash, in-kind services, or third-party contributions, toward the total project cost as a condition of the award.

What are Cost Share and Match Requirements?

When a federal grant includes a cost share or matching requirement, the recipient must fund a defined percentage or ratio of the total project cost using non-federal resources. For example, a 20% cost share means the recipient must contribute $0.25 of its own resources for every $1 of federal funds received. A 1:1 match means the recipient must contribute $1 of non-federal resources for every $1 of federal funding.

Cost share contributions may come from the recipient's own funds, third-party in-kind contributions, or volunteer services. All cost share contributions must meet the same standards as federal expenditures: they must be verifiable from the recipient's records, necessary and reasonable for the project, allowable under applicable cost principles, and not already counted as cost share on another federal award. Unrecovered indirect costs may be used to meet cost share requirements if not prohibited by the program.

Some programs set mandatory cost share requirements in their authorizing statute (such as certain SBA programs and many DOE programs). Others make cost share voluntary but competitively advantageous, applications that offer more than the minimum required cost share may receive higher evaluation scores under the merit review criteria.

Under 2 CFR Part 200, recipients must maintain auditable records of all cost share contributions throughout the award period. Failure to meet the committed cost share is a material grant non-compliance that can result in reduction of the federal award amount or repayment of a proportional share of federal funds.

Why Cost Share Requirements matter for government contractors

Many DOE, NSF, and DoD applied research grants require substantial cost share, sometimes 50% of total project costs, making them accessible only to organizations with significant own-fund budgets or strong industry partner commitments. Understanding cost share requirements upfront prevents surprises during award negotiation.

Example

An advanced manufacturing company applies for a DOE Manufacturing Demonstration Facility grant that requires 20% recipient cost share. The company proposes a $2.5 million total project budget: $2 million federal funds and $500,000 in non-federal cost share. The company plans to meet the cost share through $300,000 in direct cash contributions (equipment and materials purchased with company funds) and $200,000 in value of engineering staff time contributed by an industry partner. The application includes letters of commitment from the industry partner documenting the in-kind contribution.

Frequently Asked Questions

Can federal funds from another award be used to meet cost share?

No. Under 2 CFR Part 200.306, cost share must come from non-federal sources unless the other federal statute or regulation specifically authorizes the use of federal funds for matching. Using one federal award to match another is prohibited in the vast majority of programs.

What happens if the recipient falls short of its committed cost share at the end of the award?

Failure to meet the committed cost share is treated as a compliance finding. The agency may reduce the final federal award payment proportionally, require repayment of a portion of federal funds already received, or apply both remedies. Recipients who anticipate difficulty meeting cost share commitments should contact the agency early to discuss options.

Is volunteer time an allowable cost share contribution?

Yes, if documented properly. Volunteer services may count as in-kind cost share at the rate that would be paid for similar work in the relevant field, provided the services are necessary for and directly benefit the project and the contribution is documented with contemporaneous records of time spent and the applicable wage rate.

Can cost share be waived?

Some agencies have authority to waive cost share requirements for small businesses or for applicants in certain circumstances. SBIR and STTR programs generally do not require cost share. For programs with mandatory statutory cost share, waiver authority is limited or unavailable.