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Cost Share, Cost Match – What’s the difference?

Aug 1

Written by: Grants Office, LLC
Wednesday, August 1, 2018  RssIcon

By Elizabeth Evans

For many grant funders, requiring that their applicants leverage personal funds towards a proposed project is an effective way to guarantee that their grantmaking dollars have a greater impact. Doing so increases the total amount of monies spent on the propose initiative, effectively making their investment go further. This tactic also ensures that the applicant entity “has some skin in the game”. After all, it’s easy to propose a risky venture when you’re spending someone else’s cash! However, if you’ve also had to pay out of pocket for the initiative, its much more likely that you’re going to want to guarantee the proposed project’s success.

What do these awardee investments look like though? Normally they assume one of two formats: the cost-share, and the cost-match. Which version is used will depend on the specific funder and grant program, but what is important to know is that they do not mean the same thing… even if you occasionally see them used interchangeably. Following we’ll define both cost-share and cost-match, and even provide you with some examples. That way next time you see these words used in a grant program solicitation you’ll know exactly what the funder expects!

 

Cost-Share

Cost share is a general term for when the grant awardee must also provide funding towards the proposed project. As stated earlier, some grantmakers expect the grantee to show their commitment to the proposed project by sharing in its costs. Typically, we see a cost share presented as percentages.

For example: “Applicants must provide 50% of the total project cost from non-federal sources.”

It may help to think of cost share percentages instead as fractions, or parts of the whole. In the above example the funder expects that the total cost of the project be split in one-half between themselves and the awardee.

 

Cost-Match

Cost match is a type of cost share, so, you may occasionally see the two terms used interchangeably. This can often lead to confusion for grant seekers, particularly as they attempt to figure out the math for their project budget. The trick is not to overthink things! In this instance, the name gives the funder’s expectation away – the grantmaker would like the grantee to “match” the funding request. Cost matches are typically presented in the form of a ratio.

For example: “Applicants must provide a 1:1 match of non-federal funding for each grant dollar requested”.

Again, in this instance the funder and the awardee are still sharing in the total project cost, but the framing for how these amounts should be calculated is different. In this case, the funder expects that the awardee put forth an amount equal in value to what the funder has granted.

 

Doing the Math

Did you know that the two previously provided examples describe the same total project budget? It’s true; a 50% cost share and a 1:1 match are exactly the same! The easiest way to approach these calculations is by framing everything around the total project amount, regardless of what the grant award may be. From there, all that is required is a bit of simple arithmetic.

For example: You are proposing a project that will take $100,000 to complete. Grant Funder A requires a 50% cost share for any project they award. Grant Funder B requires a 1:1 cost match for any project they award. Since 1:1 cost matches and 50% cost shares are the same thing, regardless of which funder you approach, your request should be for $50,000 of support. The funder will then provide the funds ($50,000) for the other half of the total project cost ($100,000). Below is how that math works out.

Grant Funder A offers a grant of $50,000 and requires that the applicant share 50% of the total project cost.

$50,000 grant award ÷ .50 (i.e. 50% of the total) cost shared between the two parties = $100,000 total project cost.

Grant Funder B offers a grant of $50,000 and requires that the applicant matches the awarded funds 1:1.

$50,000 grant award + $50,000 cost match = $100,000 total project cost. In this case, both the grant award and cost match amounts must be equal to adhere to the 1:1 requirement.

 

In most instances the grant funder won’t tell you what your total project budget should be. Instead they’ll provide only a maximum funding amount and the required cost share or match contribution that awardees must have prepared prior to award. Knowing this, let’s look at another example.

Grant Funder A offers a grant of $750,000 and requires that the applicant share 25% of the total project cost. This means that the funder will provide 75% of the total project cost.

$750,000 grant award ÷ .75 (i.e. 75% of the total) cost shared by the funder = $1,000,000 for the total project cost. If the total project cost will be $1,000,000, subtract the $750,000 grant award to find that you must provide $250,000 in cost share.

Grant Funder B offers a grant of $750,000 and requires that the applicant matches the awarded funds 1:3 (i.e. 1 awardee dollar for every 3 grantor dollars invested in the project).

$750,000 grant award ÷ 3 (i.e. 3/1 of the total project) proportion of contribution by the funder = $250,000 cost match is need from the awardee. Then add the $750,000 grant dollars to the $250,000 cost match to figure out that you’re proposing a $1,000,000 total project.

 

But, what about when the math isn’t so strait forward? This time, we’ll hold the grant awards constant and change the amount expected of cost share or match between the two funders. We’ll also determine the total project based on the funds shared or matched by the applicant rather than by the funder. What would the calculations look like then?

Grant Funder A offers a grant of $900,000 and requires that the applicant share 10% of the total project cost.

$900,000 grant award ÷ .9 (i.e. 90% of the total) cost shared by the funder = $1,000,000 for the total project cost. If the total project cost will be $1,000,000, subtract the $900,000 grant award to find that you must provide $100,000 in cost share.

Grant Funder B offers a grant of $900,000 and requires that the applicant match the awarded funds 2:1 (i.e. 2 awardee dollars invested for every 1 grantor dollar invested in the project).

$900,000 grant award x 2 (i.e. 2/1 of the total grant award) proportion of the contribution by the awardee = $1,800,000 cost matched is need from the awardee. Then add the $900,000 grant dollars to the $1,800,000 cost match to figure out that you’re proposing a $2,700,000 total project.

 

The Devil is in the Details

It’s important to note that not all grant programs will require a cost share or match. If the grant program you’ve targeted does, make sure to double check what the funder’s expectations are related to the share or match. Some funders may require only monetary resources to be leveraged, while others will also consider the estimated value of in-kind donations. In other cases, cost shares or matches may only apply to the non-capital portions of the budget or the direct costs. These variances will determine how much each party is putting into the initiative as well as the possible total project budget.

 

·         The federal government defines cost sharing or matching as “a portion of the project or program costs not borne by the federal government” and therefore covered by some other source. Source: OMB Circular A-110: https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-110.pdf

·         For additional information on cost sharing and matching, see Funded Volume 7 Issue 2 from May 2017. We feature a great Q and A about making the match. LINK

·         Cost share or match calculations are tedious, but don’t have to be scary! If you ever get confused or start to get turned around, ask a friend to check your numbers!

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