Cost Share and Matching Requirements

Cost share is the portion of project costs not paid by federal funds. Matching refers to required levels of cost share. A contribution counts only if it is verifiable in the recipient’s records, allowable under federal cost principles, and not counted toward any other federal award.

Current figures — verified 2026-08-11

Item	Value	Source
National estimated value of volunteer time	$36.14 per hour (2025 data, released April 2026) — a blended national estimate, not the federal valuation standard	Independent Sector
De minimis indirect cost rate, used to compute unrecovered indirect	Up to 15 percent of modified total direct costs	2 CFR 200.414(f)
Nonprofits holding three months or less of cash	52 percent; 18 percent held one month or less	Nonprofit Finance Fund, 2025 State of the Nonprofit Sector Survey

These figures change. Verify against the linked source before relying on them. Report an outdated figure

Key takeaways

• Cost share offered voluntarily becomes binding once it is accepted.
• Federal funds cannot match other federal funds absent statutory authority.
• In-kind contributions are valued by rules, not by market convenience.
• Undocumented match is disallowed match, repayable in cash.
• A match requirement is a legitimate reason to decline an opportunity.

What is cost share on a grant?

Cost share is the portion of project costs not paid by federal funds or contributions, and the term includes matching, which refers to required levels of cost share (2 CFR 200.1). Within budgets and grant finance, cost share is the part of the project the applicant promises to pay for out of other resources.

Cost share is a commitment, not a gesture. Once cost share is written into an approved budget, the recipient owes it in the same way it owes programmatic performance. Failure to deliver the committed amount can trigger a proportional reduction in the federal share, a disallowance, or a repayment demand at closeout, even when every programmatic outcome was achieved.

Cost share also carries an arithmetic ambiguity that costs organizations real money. A notice stating that applicants must provide a twenty-five percent match can mean a quarter of total project cost or a quarter of the federal award, and the two readings differ substantially on the same project. Federal statutes more often express the requirement as a ceiling on the federal share, but the safe practice is to get the calculation basis confirmed in writing before submission.

Cost share obligations follow the award through its life. Amounts are reported, audited, and reconciled at closeout, and the total budget for purposes of rebudgeting limits includes the cost share (2 CFR 200.308).

What are the three kinds of cost share?

Three kinds of cost share exist, and they differ in whether the commitment is required, offered, or merely described. The distinction determines whether the amount becomes legally enforceable.

• Mandatory cost share is required by statute or program regulation. The requirement is stated in the notice of funding opportunity, and an application that does not meet it is out of compliance.
• Voluntary committed cost share is not required, but is offered in the proposal and written into the approved budget. Once accepted, voluntary committed cost share is binding and auditable in exactly the way mandatory match is.
• Voluntary uncommitted cost share is effort or resources beyond what was quantified in the budget. Voluntary uncommitted cost share is not tracked, not reported, and not enforceable.

The middle category is where organizations create liabilities they never needed. The Uniform Guidance discourages the practice from the funder side as well: voluntary committed cost sharing is not expected under federal research proposals and cannot be used as a merit review factor absent specific authority, and “Federal agencies are also discouraged from using voluntary committed cost sharing as a factor during the merit review of applications for other Federal financial assistance programs” (2 CFR 200.306(a)). Some agencies go further; NSF states that it “generally does not allow voluntary committed cost sharing in its proposals” (NSF, Proposal Budget).

A fourth term, leveraged resources, is not cost share at all. Leveraged resources are the assets that surround and support a project — an existing facility, a partner’s separately funded staff, a concurrent grant — described in the project narrative without being quantified in the budget. Described narratively, those resources stay uncommitted and non-binding. Quantified in the budget, the same resources become an enforceable obligation.

What sources can be used as cost share?

Cost share may come from the recipient’s own cash, third-party cash contributions, or third-party in-kind contributions of property and services. Every contribution must meet seven acceptance criteria before a federal agency will count it (2 CFR 200.306(b)).

The seven criteria are that the contribution is verifiable from the recipient’s or subrecipient’s records; is not included as a contribution for any other federal award; is necessary and reasonable for accomplishing program objectives; is allowable under the federal cost principles; is not paid by the federal government under another federal award except where a federal statute expressly authorizes it; is included in the approved budget when the agency requires it; and conforms to other applicable provisions of the Uniform Guidance.

The fifth criterion is the one most often violated by accident. Federal funds generally cannot match other federal funds. A handful of programs carry statutory authority permitting it, and those exceptions are named in the authorizing statute rather than inferred from silence. Community Development Block Grant and Community Services Block Grant funds are the commonly cited examples, and the authority should be verified in the program’s own statute before it is relied upon.

Two further prohibitions close the remaining loopholes. A cost may not be used to meet cost sharing requirements on more than one federally financed program (2 CFR 200.403(f)). And an unallowable cost cannot serve as match, because a cost that cannot be charged to a federal award also cannot be counted as the non-federal share of one. Salary above a statutory salary cap, alcohol, lobbying time, and entertainment are unallowable in both directions.

Unrecovered indirect costs are a legitimate and widely underused source. Unrecovered indirect costs, including indirect costs on the cost share itself, may be included as part of cost sharing with the prior approval of the federal agency or pass-through entity (2 CFR 200.306(c)). An organization whose negotiated rate exceeds a program cap is already absorbing the difference; approval converts that absorption into countable match. The mechanics of rates and bases are covered in indirect cost rates and the de minimis option.

How are in-kind contributions valued for cost share?

In-kind contributions are valued under specific rules rather than at whatever number is convenient. The table below states the valuation rule for each common category of in-kind cost share under 2 CFR 200.306.

Contribution	Valuation rule
Volunteer services	Rates consistent with those paid for similar work by the recipient; allowable fringe may be added
Services donated by another organization’s employees	The employee’s regular rate of pay, plus allowable fringe and indirect costs
Donated supplies	Fair market value at the time of donation
Donated equipment, buildings, or land used during the award	Depreciation, unless the agency approves fair rental or fair market value
Donated land and buildings	Fair market value at donation, established by an independent appraiser and certified

Volunteer time is where most valuation errors occur. A national blended estimate of volunteer time value is published annually and circulates widely (see current figures above), but that estimate is not the federal valuation standard. The federal rule ties the rate to the work performed and to what the recipient pays for similar work, or to the local labor market where the recipient competes if it employs no one in that role.

Worked example — valuing volunteer time two ways. The national blended figure below comes from the Current figures callout above and is subject to change; the wage and fringe figures are illustrative and would come from the organization’s own payroll records.

COMMITMENT: 12 volunteers × 4 hours/month × 12 months = 576 hours

METHOD 1 — national blended rate (not defensible as match)
  576 hours × $36.14                          =  $20,816.64
  Fails the "similar work by the recipient" test

METHOD 2 — Uniform Guidance method (defensible)
  Work performed: intake and clerical support
  Recipient's own Program Assistant wage         $22.00/hour
  Allowable fringe at 28%                        $ 6.16/hour
  Loaded rate                                    $28.16/hour
  576 hours × $28.16                          =  $16,220.16

  A licensed volunteer therapist, 40 hours in her
  normal profession, valued separately at the
  local market rate of $65/hour × 40           =  $ 2,600.00
  ─────────────────────────────────────────────────────────
  TOTAL DEFENSIBLE IN-KIND MATCH               =  $18,820.16

The two methods differ by several thousand dollars on the same volunteer hours, and only the second survives audit. Local market rates for the third-party comparison can be documented from federal wage data such as the Bureau of Labor Statistics Occupational Employment and Wage Statistics program, printed and dated at the time the budget is built.

How do you document cost share so it survives audit?

Cost share documentation must meet the same standard as documentation for federal dollars, because cost share is audited on the same basis. The governing criterion is that contributions be verifiable from the recipient’s or subrecipient’s records (2 CFR 200.306(b)), which means the general ledger, not a spreadsheet maintained by the program director.

Six records make a cost share claim defensible. Signed time records for volunteers showing date, hours, and task. A written basis-of-rate memo pairing the task with a job description and a payroll record or dated public wage data. Countersignature by the volunteer or the partner organization. A dated donation acknowledgment with a fair market value determination for donated goods. An appraisal and certification for donated property. And a general ledger account that accumulates cost share separately so the total can be reported without reconstruction.

Undocumented match is disallowed match. When an auditor cannot verify a claimed contribution, the recipient owes the shortfall in cash, which is the moment when an in-kind commitment turns into a cash liability. Organizations with thin liquidity are the least able to absorb that outcome, and thin liquidity is common in the sector (see current figures above).

Tracking is a recurring administrative cost in its own right. Donated staff effort requires the same personnel activity documentation as paid effort, which means time records incorporated into the official records of the organization. The obligation is covered further in time and effort documentation.

Should a match requirement stop you from applying?

A match requirement should be treated as a gate in the pursuit decision, not as a detail to resolve later. The test is whether the organization can name the source, document the value, and afford the tracking before the proposal is submitted.

Four questions decide it. Can the match be named specifically, with a person or an organization attached to it rather than a category? Is the source allowable, non-federal, and uncommitted to any other award? Can the amount be documented to audit standard for the full period of performance? And can the organization survive the outcome if a third-party contribution fails to materialize in year two?

A match plan that answers all four is real. A plan that names “in-kind volunteer support” with no volunteers identified, or “donated space” with no lease, appraisal, or depreciation schedule, is aspirational. Aspirational match is the most common reason organizations discover a cash liability at closeout.

Declining an opportunity over a match requirement is a legitimate, defensible decision, and it belongs in the same framework as every other pursuit decision — see the go/no-go decision. An organization that repeatedly declines matched opportunities has learned something about its balance sheet, and the fix is an operating reserve strategy rather than a bolder application (National Council of Nonprofits, operating reserves).

What goes wrong with cost share and matching?

Six failure patterns account for most cost share problems, and every one of them is created during proposal development rather than during performance.

• Volunteering a match nobody asked for. Voluntary committed cost share converts into an enforceable obligation once accepted, usually without buying any competitive advantage.
• Misreading the match calculation. A percentage of total project cost and a percentage of the federal award produce different obligations from the same notice sentence.
• Double-counting a contribution. The same donated services are claimed as match on two awards, which the acceptance criteria prohibit outright.
• Using federal funds as match. Another federal award is used as the non-federal share without statutory authority permitting it.
• Valuing volunteers at a national blended rate. The rate is not tied to similar work performed by the recipient, so the valuation fails on review.
• Tracking match outside the accounting system. The claim cannot be verified from the organization’s records, so the amount is disallowed and becomes repayable in cash.

A seventh pattern is structural rather than procedural: treating in-kind match as free. In-kind contributions generate no cash, but they generate valuation work, documentation work, tracking work, and audit exposure. An organization that accepts a large in-kind match commitment is accepting an administrative cost it has not budgeted for.

This article is general information about federal cost sharing rules, not accounting, tax, or legal advice. Confirm the treatment of a specific match commitment with your accountant, your auditor, and the awarding agency.

Frequently asked questions

Does offering cost share improve an application’s score?

Usually not. For federal research applications, voluntary committed cost sharing cannot be used as a merit review factor absent statutory or regulatory authority, and agencies are discouraged from using it as a factor in other programs. Where a notice does score cost share, it says so explicitly.

Can a subrecipient’s contribution count as the prime recipient’s match?

Yes, when the contribution meets all seven acceptance criteria and is documented in the subrecipient’s own records. The prime recipient remains responsible for verification, which means the subaward agreement should state the match amount, the documentation required, and the reporting cadence.

What happens if the committed match is not met?

The awarding agency may reduce the federal share proportionally, disallow costs, or demand repayment at closeout. Programmatic success does not cure a match shortfall, because the commitment is a term of the award rather than a performance target.

Are unrecovered indirect costs really countable as match?

Yes, with prior approval from the federal agency or pass-through entity. Unrecovered indirect costs, including indirect costs on the cost share itself, may be included as cost sharing under the Uniform Guidance. The approval must be requested, not assumed, and it is easiest to obtain when it is proposed in the application budget.

How is donated space valued?

Space donated for use during the award is valued at depreciation, unless the awarding agency approves a fair rental charge or a fair market value approach. Space or land donated for acquisition under the award is valued at fair market value established by an independent appraiser and certified by a responsible official.

Is a program income contribution the same as cost share?

No, though program income can be applied to meet a match requirement when the award specifies the cost sharing method for program income. Program income arises from the funded activity itself and carries its own disposition rules, so treating it as match requires an explicit basis in the award terms.

Related topics

• Budgets and Grant Finance — the hub covering cost categories, indirect rates, match, allowability, and grant cash mechanics
• The Anatomy of a Grant Budget
• Indirect Cost Rates and the De Minimis Option
• Allowable, Allocable, and Reasonable Costs
• The Go/No-Go Decision

Sources

1. Electronic Code of Federal Regulations, 2 CFR § 200.306, Cost sharing or matching. https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR8feb98c2e3e5ad2/section-200.306 (accessed 2026-08-11)
2. Electronic Code of Federal Regulations, 2 CFR § 200.1, Definitions (Cost sharing). https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-A/section-200.1 (accessed 2026-08-11)
3. Legal Information Institute, 2 CFR § 200.403, Factors affecting allowability of costs. https://www.law.cornell.edu/cfr/text/2/200.403 (accessed 2026-08-11)
4. Electronic Code of Federal Regulations, 2 CFR § 200.308, Revision of budget and program plans. https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR8feb98c2e3e5ad2/section-200.308 (accessed 2026-08-11)
5. Electronic Code of Federal Regulations, 2 CFR § 200.414, Indirect costs. https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E/subject-group-ECFR4c1052b9e28b95f/section-200.414 (accessed 2026-08-11)
6. Electronic Code of Federal Regulations, 2 CFR § 200.307, Program income. https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR8feb98c2e3e5ad2/section-200.307 (accessed 2026-08-11)
7. Electronic Code of Federal Regulations, 2 CFR § 200.430, Compensation—personal services. https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E/subject-group-ECFRed1f39f9b3d4e72/section-200.430 (accessed 2026-08-11)
8. U.S. National Science Foundation, “Proposal Budget,” cost sharing policy. https://www.nsf.gov/funding/proposal-budget (accessed 2026-08-11)
9. Independent Sector and Do Good Institute, University of Maryland, “Value of Volunteer Time.” https://independentsector.org/resource/value-of-volunteer-time/ (accessed 2026-08-11)
10. U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics. https://www.bls.gov/oes/ (accessed 2026-08-11)
11. Nonprofit Finance Fund, 2025 State of the Nonprofit Sector Survey (n=2,206). https://nff.org/wp-content/uploads/NFF-2025-Survey-Report.pdf (accessed 2026-08-11)
12. National Council of Nonprofits, “Operating Reserves for Nonprofits.” https://www.councilofnonprofits.org/running-nonprofit/administration-and-financial-management/operating-reserves-nonprofits (accessed 2026-08-11)