Version 1.

April 2012


2






3

Table of Contents

The content of this publication is the property of Counterpart International. It cannot be distributed or used
outside of Counterpart without prior permission.

I. Introduction ................................................................................................................................................. 5
Objective ......................................................................................................................................................... 5
Scope .............................................................................................................................................................. 5
II. Cost Share: Definition and Implications ...................................................................................................... 6
What Is Cost Share? ....................................................................................................................................... 6
Definition and Criteria ..................................................................................................................................... 6
Leveraging vs. Cost Share ............................................................................................................................. 6
Cost Share Is a Contractual Commitment ...................................................................................................... 9
Implications ..................................................................................................................................................... 9
Our donor will monitor cost sharing very closely. ....................................................................................... 9
Cost sharing has a very serious financial impact on the organization. ....................................................... 9
Cost share expenses are subject to audit. ................................................................................................. 9
Cost share problems will hurt our reputation. ............................................................................................. 9
Sources of Cost Share: Cash and In-Kind ...................................................................................................... 9
Sources ......................................................................................................................................................... 10
Sources of Cash Cost Share ........................................................................................................................ 10
Sources of In-Kind Cost Share ..................................................................................................................... 11
Examples of sources of third-party in-kind cost share are: .......................................................................... 11
What is not cost share, what can be questioned and why: .......................................................................... 11
III. Managing Cost Share Commitments .................................................................................................... 12
Cost Share Management: From Cradle to Grave ......................................................................................... 12
Go/No-Go Stage ............................................................................................................................... 13
Proposal Development ..................................................................................................................... 13
Cost Share Calculation Sheet ........................................................................................................... 14
Cost share budget and budget narrative .......................................................................................... 14
Project Work Plan ............................................................................................................................. 15
IV. Cost Share Accounting and Reporting ................................................................................................. 15
Valuation and documentation of in-kind cost share ...................................................................................... 15
Cost Share Documentation and Tracking ..................................................................................................... 19
Cost Share and Sub-Grantees ................................................................................................................. 19
Monitoring, Reporting and Documentation ............................................................................................... 19


4

Audits ........................................................................................................................................................ 21
Timing ....................................................................................................................................................... 21
Booking In-Kind Cost Share (including cash cost share provided by sub-recipients): ............................. 22
Applying NICRA to Cash Cost Share ....................................................................................................... 22
Renegotiating With the Funder ................................................................................................................. 22
Leveraging Documentation and Tracking ................................................................................................. 23
I. APPENDIX A1: GLOSSARY OF COST SHARE TERMS ........................................................................ 24
II. APPENDIX A2: LINKS TO USEFUL WEBSITES ..................................................................................... 26
III. APPENDIX A3: FREQUENTLY ASKED QUESTIONS (FAQ) ............................................................. 27
IV. APPENDIX A4: COST SHARE COVER and CLEARANCE SHEET (A4A) ......................................... 32
IV. APPENDIX A4: COST SHARE COVER and CLEARANCE SHEET (A4B) ......................................... 33
V. APPENDIX A5: SAMPLE COMMUNITY COST SHARE CONTRIBUTION FORM ................................. 34
VI. Appendix A6: Sub-Grantee Self-Certification ....................................................................................... 35
VII. Appendix A7: Cost Share Calculation Worksheet ................................................................................ 36
VIII. Appendix A8: Cost Share Status Monitoring Checklist ........................................................................ 37
IX. Appendix A9: SubGrantee Cost Share Report Template ..................................................................... 38
X. Appendix A10: Cost Share vs. Leveraging ............................................................................................... 39





5

I. Introduction
Counterparts growing portfolio includes a large commitment in cost sharing. With very limited
access to unrestricted funding, Counterpart has used its presence in country and relationship with
local organizations to meet its cost sharing obligations. This document will guide and provide
critical tools to enable the program development and implementation teams to meet cost sharing
requirements. In case you still have some questions, Counterpart has set up a designated email
address for cost share issues: compliance@counterpart.org.

Objective
The objective of this document is to provide guidance to Counterparts Chiefs of Party, proposal
development teams and project management teams regarding cost share. In this document, you
will find:
1. A definition of cost share;
2. Sources of cost sharing;
3. Managing cost share and roles/responsibilities;
4. Accounting and reporting cost share; and
5. How to account for and report cost share effectively.
We also are offering for use by project implementation teams to develop their cost sharing strategy
as proposals are developed and in follow-up, reporting and monitoring during project
implementation.

Scope
Project teams should use this document as a resource. It will not replace our agreements and
contractual requirements, donor rules and regulations, and cost principles. This document shall be
revised and updated periodically to reflect changes in rules, regulations and cost principles.


Lessons Learned
1. Record cost share when it happens!
2. Dont delay securing cost share obligations till the end of the project.
3. Include cost share activities in the projects work plan.
4. During the PD phase, use broad language and avoid specifics (e.g., project X will
obtain x amount in cost share from media outlets rather than radio/television stations).
5. Ensure there is language (preferably an annex) in any sub-award agreement that
makes explicit reporting and supporting documentation requirements, allowable cost
share (2CFR215.2) and other relevant information.
6. Seek AO/AOTR approval if you will acquire cost share from sources not outlined in
your projects budget or cooperative agreement.
7. Ensure cost share allocation methodology meets U.S. government standards and
requirements.




6

II. Cost Share: Definition and Implications
What Is Cost Share?
Sharing (matching) in project costs gives the sense of ownership and partnership in meeting costs.
It underscores Counterparts mission to build up the work of our local partners. Though not always
required by donors, it is often requested to illustrate the involvement and commitment of the prime
recipient, sub-grantees, beneficiaries and other parties in program ownership and sustainability.
Due to financial implications, cost share sections of the proposal must be carefully planned,
worded, presented with sufficient details in the budget and monitored. Once incorporated into an
award, cost sharing is a contractual obligation.
Definition and Criteria
The definition of cost share or matching is fairly simple: the portion of project or program costs not
borne by the federal government (See: 2 CFR 215.2).
Only contributions that meet all the following criteria can be accepted as cost share:

1. Are verifiable from the recipient's records;
2. Are not included as contributions for any other federally assisted project or program;
3. Are necessary and reasonable for proper and efficient accomplishment of project or
program objectives;
4. Are allowable under the applicable cost principles;
5. Are not paid by the federal government under another award, except where authorized by
federal statute to be used for cost sharing or matching;
6. Are provided for in the approved budget. For USAID awards, if cost share is claimed from
sub-recipients, that fact must be clear in the project proposal and budget, or the
agreement officer must provide written approval during implementation; and
7. Conform to other applicable provisions in 2 CFR 215.23.

Cost share cannot come from federal sources. (This includes equipment originally purchased with
U.S. federal sources.) If an item was purchased by U.S. government funds, that designation never
expires regardless of how many times ownership changes. In addition, according to the cost
principles that apply to Counterpart (2 CFR 230), to be allowable under an award, costs can be
counted only once. A cost must not be included for any other federally financed program in any
period.
Items cannot be used more than once as cost share. For example, a grantee that receives a
UNHCR grant and uses it as cost share or match for a U.S. government-funded program through
NDI cannot use the same grant as cost share for a Counterpart program. Also, if it uses the
UNHCR grant as cost share for one Counterpart grant, it cannot use it again for another
Counterpart grant. (I.e., Grantee X cannot use a car purchased with UNHCR funds as cost share
for a grant from Counterpart on I-PACS I and again on I-PACS II.)

Leveraging vs. Cost Share
Cost share can be leveraging, but not all leveraging is cost share. An in-depth discussion of
leverage exceeds the scope of this guidance document, but we realize that these two terms are
often confused.


7

Leveraging represents all of the non-USG resources that are expected to be applied to a program.
A portion of these resources may meet the cost share eligibility criteria listed above and as a result
can be considered cost share.
But leveraging can also include resources that third parties (not the recipient organization or sub-
recipients) bring to the program, or actions that also contribute to the program objectives. Third
parties may include the host government, private foundations, businesses and individuals.
Resource leveraging may include services, property or anything of value that can be measured in
some form that permits evaluation of the contributions impact on achieving desired results.

Examples of Leveraging Activities
In Afghanistan, the Swiss Agency for Development and Cooperation funded the transfer of
program materials through our USAID-funded I-PACS partners to reach the specific youth
audience. This is leveraging. The STEP civic education program, backed by USAID, funded
and created civic education manuals and training for voters. The Swiss agency paid for the
materials to be distributed to Afghan youth through our network of I-PACS partners. The
delivery of civic education materials to youth was outside both project agreement scopes and
budgets.
In Kyrgyzstan, our initial network of Civil Society Support Centers was expanded through
resources leveraged from UNHCR. It funded the establishment of centers in key communities
with high numbers of refugees, and we used those centers to collect information about
refugee populations. The Counterpart centers also delivered our USAID package of services
to promote civil society development. This is leveraging, as it contributed in spirit to our
original project goal, though it did not immediately cover activities budgeted through our
cooperative agreement.
In Azerbaijan, Counterpart used USAID grant funding to support civic engagement at the
municipal level. In response to citizen input garnered through our project, we leveraged
significant funds from municipal governments for community development and improvements
in social service delivery. This is leveraging, as the goal of our program was citizen
engagement, not infrastructure improvement but the results clearly supported our broader
civil society goal.


Although cost share becomes a contractual requirement when it becomes part of Counterparts
agreement with the donor and budget, leverage is not a budgetary requirement in the contract and
mustnt be included in the budget. As a result, the accountability for leveraging is less stringent.
In cases when the U.S. government allows for the option, it is generally preferable that Counterpart
propose leveraging instead of cost share. However, it is important to know exactly how to
demonstrate leveraged contributions in the program report.







8

Cost Share vs. Leveraging: Pros and Cons
Cost Share Leveraging
Criteria (must meet all points): Criteria (must meet at least one point):
Are verifiable from the recipient's records;
Are not included as contributions for any other
federally assisted project or program;.
Are necessary and reasonable for proper and
efficient accomplishment of project or program
objectives;
Are allowable under the applicable cost
principles;
Are NOT paid by the federal government under
another award, except where authorized by
federal statute to be used for cost sharing or
matching;
Are provided for in the approved budget;
Conform to other applicable provisions in 2
CFR 215.23.
Non-U.S. government resource applied to the
program;
Resources that third parties bring to the
program, or to actions that also contribute to
the program objectives, without necessarily
providing them to the recipient or sub-
recipients;
May include services, property or anything of
value that can be measured in some form that
permits evaluation of the contributions impact
on achieving desired results.
Pros Pros
It can be viewed favorably by the donor and
may provide a competitive advantage in
winning a proposal;
It can be used to secure the buy-in and support
of beneficiaries and other in-country
stakeholders;
It can expand the reach of a program and help
achieve program objectives;
In assistance programs (CAs and grants), it is
a way of claiming ownership over program
interventions by Counterpart.
It can be viewed favorably by the donor and
may provide a competitive advantage in
winning a proposal;
It can be used to secure the buy-in and support
of beneficiaries and other in-country
stakeholders;
It can expand the reach of a program and help
achieve program objectives;
It does not constitute a financial commitment
by Counterpart to the donor.
Cons Cons
It constitutes an auditable financial
commitment by Counterpart to the donor;
If sources of cost share are ultimately deemed
unallowable or are unachievable, Counterpart
may be forced to repay the donor from its
unrestricted funds, or the donor might reduce
our overall funding.
Requires a great deal of time to bring together,
distracting project staff from other activities;
Could be misinterpreted as cost share unless
clearly specified;
May involve entering into additional
agreements with the sources of leveraging that
expose Counterpart staff to additional work.


9

Cost Share Is a Contractual Commitment
When Counterpart signs an award with the federal government that includes cost share, the
organization is contractually obligated to provide the cost share from nonfederal sources. This is
true even if any or all of the cost share is projected to come from third-party sources, such as sub-
grantees. Cost share is not compulsory. We may choose to offer cost share for technical or
strategic reasons, but it is our choice. Where we have committed to it, meeting our cost share is
critical to remaining compliant with the terms and conditions of our agreements with our donors.

Implications
Our donor will monitor cost sharing very closely.
Each projects Agreement Officers Technical Representative (AOTR) is responsible for monitoring
our financial reports to ensure that the organization is making progress toward meeting the
required cost sharing. If Counterpart is not making adequate progress, the AOTR must bring this to
the attention of the Agreement Officer (AO) and initiate discussions with the recipient to resolve the
issue.

Cost sharing has a very serious financial impact on the organization.
If Counterpart fails to meet its cost sharing obligations, the Agreement Officer has the authority to:
Reduce the amount of incremental funding in the following funding period;
Reduce the amount of the agreement by the difference between the expended amount and
what the recipient agreed to provide as cost share;
If the award has expired or been terminated, the funder may request the recipient to refund
the difference in cost share obligation not met by Counterpart.
Any of these actions will impose a financial burden on Counterpart should the organization not
have other financial resources to pay for such deficiency, as is typically the case.

Cost share expenses are subject to audit.
Cost share expenses that are disallowed can also result in the refunding of donor money and/or
reduction in funding for the project.

Cost share problems will hurt our reputation.
As with any other contractual requirement, failing to meet cost sharing requirements will affect
Counterparts performance references and undermine our chances of getting funding from the
federal government.

Sources of Cost Share: Cash and In-Kind
The federal government accepts cash and in-kind contributions as cost share. Both cash and in-
kind contributions must meet the criteria listed above in order to be acceptable. Cash cost share
means that Counterpart uses nonfederal funds to cover the costs included in the budget of one
award. Cash cost share effectively means that money is coming in to Counterpart.


10

In-kind contributions (2CFR215 calls them third-party in-kind contributions) are goods or services
procured by third parties with nonfederal funds and used in support of project activities.
Unless approved by the CEO or VP of Finance, Counterpart DOES NOT provide cash
contributions as cost share from Counterparts own funds.

Sources
Counterpart can obtain cash and in-kind cost share from various sources:
Cash Third Party In-Kind
Acceptable:
Donations;
Separately funded project(s)
with parallel scopes
(nonfederal).
Unacceptable:
Existing unrestricted resources;
Unrecovered indirect costs.
The value of goods and services that are
specifically identifiable and provide direct support
to one or more activities in the scope of work.

Examples are: third party staff time, use of
equipment or space, and donation of supplies or
other inputs for activities, or goods to be distributed
to beneficiaries. Most local partner cost share falls
within this category. Equipment donated from a
previous USG-funded project is not acceptable.

This list is illustrative. Sources of cost share are acceptable for the federal government if they meet
the criteria listed on page 6.

Sources of Cash Cost Share
Existing projects funded by nonfederal sources: Activities already funded by any non-USG
donor can be eligible as cost share if they meet the criteria listed above and were incorporated into
our scope of work for a USG-funded project. Expenses can be considered as cost share from the
start date of the USG project; expenses incurred prior to this date cannot count as cost share.
Projects obtaining nonfederal donations/funding to augment or expand their scope will have
indirect costs applied to them and will be tracked with a separate project number. For example, if
Counterpart had a grant from UNICEF that supported activities of a USAID project, the funds from
UNICEF could be counted as cost share.
New funds from nonfederal sources: New funds from non-USG donors that are able and willing
to fund a portion of a project that appeals to their interests. For example, if we have a youth
empowerment project in Tajikistan a private donor might make a donation to Counterpart to pay for
a portion of the small grants for local youth organizations. These funds would be a source of cost
share. As long as these new funds clearly supported the same scope of activities, additional
approvals from USAID would not be needed. Please consult compliance if you have questions on
how NICRA would be applied in this case.



11

Sources of In-Kind Cost Share
In-kind contributions come from third-party sources and can include any goods or services
procured with nonfederal resources that support the scope of work of the project. We need to make
sure that we understand how each item of in-kind cost share meets the eligibility criteria listed
above and therefore will be acceptable for the federal government.
We need to understand that, by definition, we need to rely on third parties to provide in-kind cost
share. As a result, there is a larger degree of uncertainty, because third parties may not be able to
meet our expectations. Moreover, they may provide goods or services that are not acceptable as
cost share to the federal government. Here is where program management and accounting
become crucial to keep us safe! (Read the section on cost share management and accounting for
more details.)
All in-kind cost share must be properly valued. Refer to the section on page 15 for a more detailed
discussion about this topic.

Examples of sources of third-party in-kind cost share are:
Contributions by our local partners or sub-grantees. Counterpart can use eligible cost
share provided by our sub-grantees to meet the cost sharing requirements with the federal
government on cooperative agreements. One notable exception is sub-grantee assets they
acquired with USG resources, which cannot be counted as cost share.
Volunteer time, such as consultants that agree to donate some time to provide technical
assistance to our local partners, or free training services. Volunteer services have to be
defined in the consultants scope of work and pre-approved by the appropriate signatory
within Counterpart. Acceptable language could include consultant agrees to work 7 days at
$500/day and volunteer 5 additional days.
Donated goods or inputs in support of program activities. Donated goods can be used
to support program activities or be distributed to beneficiaries as part of the program.
Examples of these are supplies, training materials, computers, medical supplies, etc.
Use of facilities, equipment or supplies. If a third party allows Counterpart to use I
facilities, equipment or non-expendable supplies to conduct project activities, our donor
may accept the value of their use as cost share. For example, if the local government
allows us to use its training center, we can use the value of the use of the center as cost
share. In this case, the cost share is the value of using the training center for one day. If an
organization allows Counterpart to use a vehicle to support project activities, we can report
as cost share the value of using the vehicle for a given period. (Claiming the full cost of
purchasing the vehicle is not acceptable.)

What is not cost share, what can be questioned and why:
Unallowable costs. As we discussed earlier, costs have to be allowable in order to be
eligible as cost share (see 2 CFR 215.23). We have to follow the cost principles that apply
to Counterpart (2 CFR 230) to determine which costs are allowable. For example, the
procurement of alcoholic beverages or military equipment cannot be used as cost share. It
is important to note, however, that source/origin/nationality restrictions do not apply to cost
share, and otherwise restricted goods can also be acceptable.
Trade discounts. Discounts are not allowable as cost share in U.S.-funded awards
because according to the cost principles that apply to Counterpart (2 CFR 230), purchase
discounts shall be credited to the federal government. For example, if Counterpart uses


12

project funds to purchase 10 computers and the vendor offers a 10 percent discount, this
cost reduction should be credited to the federal government and cannot be considered cost
share. However, if the vendor donates one computer, the fair market value of this computer
(if needed and used for the project) is allowable as cost share. Often, pharmaceutical drugs
are purchased at a significant discount and paid for using USG funds. In this case, too, the
discount does not qualify as cost share.
Costs from one USG project cannot be used as cost share for another USG-funded
activity. For example, if vehicles, computers and other equipment were purchased under a
federal award, you cannot consider a use allowance for the computers as cost share. We
cannot use commodities donated by USDA as cost share for a project funded by USAID.

The same principle applies to sub-grantees. Special attention must be devoted to ensuring that
Counterpart sub-grantees do not, unknowingly, propose any building, equipment or other
resources as cost share if the acquisition of those items was initially funded by USG sources. A
common misapplication of cost share occurs when a project previously funded by USG sources
ends and the residual assets are proposed as cost share in another USG-funded project. An
example of a residual asset could be supplies such as printing paper, pens, pencils, etc., that were
bought during a project and not completely used by its end. These items cannot be used as cost
share in another project because they were originally bought by USG funds.


III. Managing Cost Share Commitments
Meeting cost sharing requirements is crucial to demonstrate ownership and build our already
strong reputation. In addition to that, failing to meet our cost share requirements in one project can
have a devastating impact on the finances of the organization. Thus, we need to make sure to
define clear roles and responsibilities for each team to work toward this goal.
Cost Share Management: From Cradle to Grave
Cost share is an integral part of our proposals and agreements, and we have to make sure to
identify cost share and manage it from project inception until closeout. We can use the cost share
calculation sheet (included as an appendix to this guideline document) for this purpose.
The graph below reflects our exposure as an organization throughout the award cycle. Our risk
exposure is very low during the go/no-go process and increases as we find partners and invest in
proposal development. Our risk exposure finds its peak with the signature of our agreement with
the donor. At that point, we commit to a cost share requirement but, as the project hasnt started
yet, we have limited information and resources in hand to meet our commitments. Our risk goes
down as we make contributions to the project, account and report our cost share.
The annual work plan and semiannual reports are good opportunities to report unexpected
changes in conditions that are relevant to the project, and also to propose adjustments to our cost
sharing strategy. We have an opportunity to open dialogue with our donor and, if needed, request
a budget modification.
If Counterpart doesnt make sufficient progress toward meeting cost sharing requirements, our risk
for disallowance and reduction of funding skyrockets.


13

Graph 1: From Cradle to Grave
GO/ NO GO
Proposal
Development
Agreement
Work Plan
Accounting
and Reporting
Final Report
Risk increases as the
end of project
approaches and the
organization hasnt
met cost sharing
requirements
Risk decreases as we
account for and
report cost share
R
I
S
K
PERIOD OF PERFORMANCE

Go/No-Go Stage
We have only very preliminary information at this stage. Being overly optimistic at this point
can have a significant cost implication for the organization. In order to make a reasonable
decision at this point, we have to be able to answer, at least, the following questions (and
include them in the PDC memo):
Is the donor requiring cost share?
How much cost share can we responsibly propose?
If cost share is not a required component, then we should present any contributions on
behalf of Counterpart as leveraging.

Proposal Development
Our proposal will define the organizations cost share requirements. In our cost proposal,
we will have to define (at a minimum):
Types of cost share;
Sources;
Amounts (and valuation, in case of in-kind contributions);
J ustification: how the proposed cost share will support the proposed program
objectives, scope of work and activities.

What types of cost share can we propose, and how realistic are they?
At this point, we can start to develop our cost share strategy by using the Cost Share
Calculation Sheet to list the sources of cost share and the estimated amount. This sheet is
not intended to be an exact prediction, but rather a good exercise to help program
designers have a solid understanding of the commitment they are putting on the


14

organization. This will also serve as an important historical reference for implementers on
the project.

Cost Share Calculation Sheet
The proposal team will use the Cost Share Calculation Sheet for this purpose and
attach it to the budget for green team review.
From this cost sharing strategy, it should be clear that the proposal meets the
following standards:
o Clear and easy to understand;
o Realistic;
o Conservative estimates;
o Some degree of Counterpart control over the sources of cost share;
o Evidence of commitment to providing cost share:
Sub-grantees budgets;
Letters of Support from third parties showing commitment to make in-
kind contributions.
o If we will be expecting cost share from TBD subs, indicate it will be a
requirement in the competitive RFA process,

The cost share strategy is an integral input to the cost proposal and should be attached to
the cost proposal for review. It should also be transferred over to the program team, for
adequate follow-up during implementation. It is important to be clear with partners and sub-
grantees from the very beginning if they will have a cost share requirement and how they
intend to meet it. This should be a two-way discussion, and the proposal should not include
a target that our subs cannot achieve.

Cost share budget and budget narrative
The Cost Share Calculation Sheet has to be incorporated into the budget, using the cost
share column in the budget template. Each cost share line has to be clear and show what
activity will be supported by cost share, the type of cost share (cash or in-kind) and the total
amount.

The budget narrative has to be concise and clear and make the distinction between cash
cost share and in-kind contributions. The budget narrative has to express the total value as
a percentage of the overall budget. The narrative has to explain how cost share was
estimated listing the proposed sources, activities (uses of the resources) and total amounts.
It has to be clear, as well, how Counterpart will be able to document each source of cost
share.

Why does this section have to be concise and clear? First, because we want to convey a
clear idea to our donor of what resources we propose to contribute to the project and
demonstrate to the maximum extent possible that our cost sharing plan is realistic. In
addition, during project implementation, this paragraph will be our reference point to
determine if the proposed in-kind contributions meet the eligibility criteria listed above (be
included in the budget, pre-approved and support the program objectives).


15


If the proposal includes leverage in addition to cost share, leverage and cost share have to
be described in separate paragraphs. The paragraph about leverage has to detail the
nature of leveraging, estimated amount, method used to estimate value, and parties from
which such leveraging is to be accessed. The paragraph on leveraging in the proposal
should also clearly state that Counterpart will not track leveraging efforts in its financial
reports but rather compile program reports to indicate the level of leveraging accessed and
how it enhanced the program being implemented by Counterpart.

Project Work Plan
At the work plan stage, the project team will have time to follow up with the entities that
proposed to provide contributions to the project and confirm their commitment and the
timeframe for those contributions. The project team will update the Cost Share Calculation
Sheet, project cost share contributions for the period and forecast and explain funding gaps
(if any). These gaps must be communicated to the executive team for follow-up.


IV. Cost Share Accounting and Reporting
This section focuses on valuation and documentation of eligible in-kind cost share.

Valuation and documentation of in-kind cost share
The two key principles to value in-kind cost share are fair-market value and consistency.
Fair-market value should always be the reference point for determining complete cost share
value. Always consider what the price for the cost share contribution would be if purchased
on the open market. In other words, what would it cost if it weren't free? The cost share
value should always be based on an amount very close to the fair market value of the
contribution in the project setting.
A second key principle of cost share valuation is consistency. The method used for valuing
the cost share contribution must be consistent with the method used by the donor in
computing value of a like item using its own policies and practices. When its necessary to
use an exchange rate, use a rate calculated on a date as close as possible to the date
when the expense was made.

Below are some of the most common types of in-kind cost share and how they are typically valued:
Volunteer services may be furnished by professional and technical personnel,
consultants and other skilled and unskilled labor. They can be counted as cost share if the
service is an integral and necessary part of an approved project or program. According to
2CFR215.23.d., rates for volunteer services shall be consistent with those paid for similar
work in the recipient's organizations. In those instances in which the required skills are not
found in the recipient organization, rates shall be consistent with those paid for similar work
in the labor market in which the recipient competes for the kind of services involved. In
either case, paid fringe benefits that are reasonable, allowable and allocable may be
included in the valuation.


16


Support document required: documentation of how much labor is provided and how the rate
has been determined. Ideally, the amount of labor is documented using signed time sheets
showing the hours worked. If donated labor is provided by the community and beneficiaries,
a sign-up sheet that shows names and signature for each day of service may be sufficient
to document attendance. Valuation of the amount should be based on the prevailing local
rate that would have been paid had the services been hired.

Examples:
Counterpart awards a small grant to a youth organization to paint park benches. Grantee
goes out and recruits volunteers to do the painting. The grantee should conduct a survey of
how much a painter makes in the appropriate labor market and use that for all of the
volunteer painters. If a doctor volunteers to paint, the rate at which the doctors time is
valued is at a typical painters rate, not at his or her professional rate.

Grantee XYZ receives funds to protect the environment and finds a volunteer to be a
bookkeeper. The grantee has three other bookkeepers. The volunteers time should be
valued at the average rate of the other three bookkeepers.

Volunteers (Interns): If the activity of a volunteer or an unpaid intern benefits the project
purposes and goals, the time devoted by the volunteer or intern should be documented on
a time sheet (just like regular employees). The rate to use for valuation should be what the
Counterpart office would have paid had it hired the volunteer or intern, based on the
prevailing local pay rate.

Donated employee time: If another company furnishes the services of an employee,
these services shall be valued at the employees regular rate of pay (plus an amount of
fringe benefits that are reasonable, allowable and allocable, but exclusive of overhead
costs), provided that these services are in the same skill for which the employee is normally
paid. For a USG-funded activity, the employees salary must not be covered under any
other U.S. government-funded project and not counted as cost share on another USG
activity.

Documentation required: Ideally, the organizations time sheet shows the hours worked and
a rate calculation provided by the employer of how the time should be valued. If the
organization lacks time sheets or has confidentiality concerns about releasing information,
the organization may provide a letter attesting to the total level of effort. This number must
be confirmed by the recipient. If the employing organization cannot provide information on
either rate of pay or level of efforts, please consult with the VP, Finance and Compliance to
determine a methodology to assess the value of cost share.

Example:
ABC law firm tasks an associate to analyze media law in Egypt. Cost share would be the
amount that ABC pays the associate, which can include its standard fringe rate. The cost
share is not the rate at which the law firm bills out the associate, however. Counterpart
should request from ABC an accounting of the time that the associate spent on the project


17

and the pay rate of the associate. The amount of time must be verified by project staff (a
Counterpart employee or the recipient of the services). If ABC is unwilling to provide the
rate of pay, Counterpart should document that position and then may use the market rate
for hiring an attorney. This rate should be an unloaded rate, or otherwise what the individual
might report as salary for tax purposes.

Donated supplies: Donated supplies may include items such as expendable equipment,
office supplies, or workshop and classroom supplies. Value given to donated supplies
included in cost share shall be reasonable and shall not exceed the fair-market value of the
supplies at the time of the donation. The donated supplies must be necessary and
reasonable for accomplishment of project objectives. Note that the donated supplies
become eligible for cost share only after utilization (not while kept in storage).

Documentation required: a letter or form on donation being made, including the valuation of
the donated supplies. Ideally, the letter or form would be signed by both the donor and the
recipient. If the donor is unable or unwilling to provide a letter, the Counterpart office that
receives the supplies may document the receipt and determine the value. If this cost share
is being provided to a sub-recipient, care should be taken when booking the cost share.
Counterpart should ensure that the goods or services were received and that the cost was
not part of a claim for funds. In such circumstances where cost share is provided by a sub-
grantee, a self-certification by the sub-grantee may be necessary to ensure that the sub-
grantee was informed to ensure that the sources of cost share are not traceable to another
USG-funded activity or claimed by the sub-grantee as cost share and reported to other
donors. (See sample of self-certification in attachment A6.)

Example:
A company donates paint to Grantee ABC so the grantee may paint park benches. Grantee
ABC should get a letter from the donating company or contract between parties (transfer of
title) stating that the donation has been made and the value of the donation. If this is not
available, the grantee could prove that the paint was donated by proving that the benches
were painted and that the cost of the paint was not included in a financial report. If the letter
does not have the valuation, then the grantee should obtain quotes (three quotes if the
estimated value is over $5,000) that state the value of the donated paint. The quotes could
come from a magazine or printed catalog or a local store. If the quotes are oral, please
include all information such as date, company called and person talked to, and sign and
date the page.

Donated equipment and space: Donated equipment may include such items as loaned
or rented equipment, use of space, buildings and land. The value of donated equipment
shall not exceed the fair-market value of equipment of the same age and condition at the
time of donation. The value of donated space shall not exceed the fair rental value of
comparable space as established by an independent appraisal of comparable space and
facilities in a privately owned building in the same locality. The donated equipment must be
necessary and reasonable for accomplishment of project objectives. It must not have been
purchased by any other USG project funds, and there must be verification that it was used
for project purposes.



18

Documentation required: Same as supplies above.

Example:
Grantee XYZ receives a donated car from a private company. The car will allow the grantee
to further the goals of their project. The grantee should get a letter from the donor clearly
stating what has been donated. The grantee should then value the donation by obtaining
written cost estimates for the same car from reputable dealerships. Under USG rules, the
entire current value (depreciated for use, if the equipment is not new) may be used as cost
share if the purpose of the award/sub-award is to provide additional capacity to implement
project activities. If, however, the equipment is being used to support activities but is not the
subject of the award, unless specifically authorized by the USG Agreement/Grant Officer,
only the use of the equipment may be booked as cost share (either a use allowance or
depreciation). The phrase not the subject of the award means the purpose and objective
of the award was not to procure such equipment and make it available for the project.
Please contact the VP, Finance and Compliance if you need further clarification.

Cash contributions: Cash donations may include funding from donors able and willing to
fund a portion of the project. This includes project costs financed with cash contributed or
donated to the grantee by other non-USG organizations (may include public international
organizations, foreign governments and institutions, private organizations or individuals).
Note: Counterpart books cash received from a sub-grantee as in-kind, but the sub-grantee
needs to follow the rules of cash cost share.

Documentation required: Letter from the donor to the grantee documenting the amount of
cash donated and date received by the grantee, a copy of the bank statement showing the
credit, and the financial report showing how the funds were expended. The value of the cost
share is limited to that portion of the contribution that is expended on the project. If the
donor of the contribution does not require financial reporting, cost share should be reported
in the same manner cash expenses are reported.

Examples:
A private company gives Grantee LMN $5,000. The cash contribution will allow the grantee
to conduct additional research to further the goals of their project. The grantee should get a
letter from the donor clearly stating how much cash was donated and documentation that
the funds were received. This letter can be used as Counterparts cost share
documentation. Grantee LMN should also provide a copy of the final financial report to the
donor.

Additional examples:
Donated per diem, or not taking the full amount of eligible per diem. In this case, the
donated amount of per diem should be documented on the expense report showing the
allowable amount of per diem, the actual amount of per diem taken, and the difference as
donated per diem. The per diem must be donated voluntarily by the traveler. If the project
has a policy of a discounted per diem in place, then this CANNOT be considered cost
share. The expense report should be signed and authorized just like any other expense


19

report; but with a memo stating that unclaimed portion of per diem is being accounted for as
cost share.

Donated airfare. If airfare expense is paid by a third party (and should have been paid
out of the project funds had it not been for the third party paying for it), it is eligible as cost
share. Documentation should be obtained from the third party stating the amount of airfare
paid and an attestation that the sources were not USG funds.

Cost Share Documentation and Tracking
Cost share tracking is as important as tracking the expenditure of donor funds for project purposes.
Often, emphasis is placed on burn rate and pipeline analysis for direct costs (expenditures) paid
using donor funds and not enough attention is given to cost share status.
An important tool in tracking and monitoring cost share status is the periodic financial report that
shows actual and budgeted amount. Program managers and COPs should periodically review the
budget line item impacted by cost share and follow up with the project accountant for updates and
clarifications. However, the primary responsibility for ensuring meeting of cost share rests with the
COP and the program managers and coordinators. The role of the project accountant is to review
the adequacy of the support documents and record the value of cost share received and incurred.
In preparing project work plans, program managers and program coordinators are advised to
ensure that project activities and results impacted by cost share budget are also included in the
work plan to alert parties responsible for generating the cost share input that such input (cash or in-
kind) is expected for program implementation as stated in the work plan.
Cost Share and Sub-Grantees
Given that a large percentage of its cost share comes from sub-grantees, Counterpart places a
strong emphasis on proper communication with and training and monitoring of sub-grantees
throughout the life of the project. If cost share is part of a sub-grant, Counterpart staff should:
Inform sub-grantees at the beginning of their award about what does and does not
constitute appropriate cost share;
Monitor sub-grantees for compliance on cost share issues at least quarterly;
Record cost share on a timely basis as it is accumulated;
Ensure all cost share is received and documented before the final payment is disbursed;
and
Document sub-recipient cost share records.

Monitoring, Reporting and Documentation
High-quality cost share documentation greatly reduces the risk of audit disallowances.
Documentation is considered to be high quality when the following guidelines are met:
Documentation should come from a reliable source (e.g., directly from the contributor or
vendor);
Documentation should include detailed information on value (number of units, rates, etc.)
and when the good or service was delivered;
Periodic financial reports used for documentation of project collaborations should be
supported by an annual organizational audit of the contributor. This means the sub-grantee


20

records should be audited or, at a minimum, the records should be verified during a
monitoring visit. Such verification includes tracing the amount reported by the sub-grantee
as cost share to sub-grantee accounting records and support documents on a sample
basis.

Examples of Cost Share Documentation include:
Evidence of cash receipt (sources, deposits, etc.);
Evidence of cash outlays (purchase orders, receiving reports, receipts, canceled checks,
etc.);
Volunteer services (time and effort reporting to the extent feasible and valuation
documentation);
All third-party in-kind contributions require: 1) method of valuation; and 2) documentation of
receipt of good or service. If the Counterpart field office receives shipment of in-kind goods
for use as cost share, the shipping documents and valuation basis should be provided by
the CHAP team. COPs and project accountants should follow up with the CHAP team to
obtain such documentation for timely processing of the transaction in the accounting
records.

Cost Share Documentation Table
Cost Share Documentation Needed
Volunteer Time Time sheets are ideal, when available;
A letter attesting to the total level of effort, total
hours and how the rate was calculated;
Proof of verification of rate valuation.
Donated Employee Time Time sheets are ideal, when available;
A letter attesting to the total level of effort, total
hours and how the rate was calculated;
Proof of verification of rate valuation.
Donated Supplies, Equipment or Space Letter or form that includes the valuation of the
donated supplies, equipment or space;
Ideally, the letter is signed by both the donor
and the recipient;
Proof of verification of rate valuation.
Cash Contributions Letter from the donor to the grantee
documenting the amount donated and date
received;
A copy of the bank statement showing the
credit; and
The financial report showing how the funds
were expended.



21


Sources of Documentation Help:
Counterpart Cost Share Cover and Clearance Sheet (see Appendix A4)
Sample Community Cost Share Contribution Form (see Appendix A5)
Sample Cost Share Calculation Worksheet (see Appendix A7)
Sample Cost Share Status Monitoring Checklist (see Appendix A8
Sample Sub-Grantee Cost Share Report Template (see appendix A9)
Comparables (comparisons of market prices for the costs in question)
IRS Publication 561 (helps to determine the value of donated non-cash property)
www.independentsector.org

Audits
Specific to cost share, auditors will review Counterparts records to see whether it is following its
own stated cost share procedures and whether cost share is in compliance with the primary
funders regulations. In general, auditors will review Counterparts records to determine the
following:
The propriety of proposed or completed transactions;
Whether all transactions have been recorded;
Whether all transactions have been adequately documented;
Whether they have been reasonably and accurately valued; and
Whether transactions are accurately recorded in the accounts and in the statements drawn
from the accounts.

Timing
It is important that Counterpart record cost share on a timely basis as it is accumulated. As noted in
the introduction, if Counterpart is not making adequate progress toward its cost share commitment,
the amount of future obligated funding may be reduced or delayed. Also, recording of cost share
after the Counterpart fiscal year has closed is not possible. If additional time is needed to obtain
documentation for cost share activities that occurred in one fiscal year, those costs can be booked
in the next fiscal year provided there is sufficient documentation. Therefore, all effort must be made
to follow up, document and record cost share transactions in the accounting records in the period
the cost share transactions occurred.
In addition, there are other practical considerations to take into account in order to avoid delay in
monitoring and recording of cost share transactions. It may be difficult or impossible to gather
proper documentation toward the end of a project. For example, staff time will be devoted to
numerous closeout activities. Also, if sub-grantee agreements have closed, Counterpart has little
contractual recourse in motivating sub-grantees to provide cost share documentation.
Progress toward meeting cost share requirements must be reviewed on a periodic basis and at a
minimum annually. As a practical matter, Counterpart reviews the progress on USG awards when
preparing interim reports to the funder.



22

Booking In-Kind Cost Share (including cash cost share provided by sub-recipients):
Cost share should be reviewed by program staff (in the field and at HQ) to ensure that the benefit
of the cost was received by the project.
If the in-kind good is received by Counterpart, Counterpart must review or produce the valuation
document. It is usually easier to produce this document in the field, since typically the field has a
better understanding of the fair-market value.
Support documentation for cost share must be compiled by field project staff, approved by the
Chief of Party or his/her designee, reviewed by HQ program management and finally given to HQ
accounting for final calculation and approval. The HQ accountant will then instruct the field
accountant to enter the approved amount into quickbooks in the field. These approvals and
processing are all noted on the cost share clearance form.
The first step of booking cost share reported by a sub-recipient is to ensure that the same cost
share has not been booked previously. Project accountants can do this by reviewing a cost share
report from our accounting system. Once the cost share has been booked, a copy of the entire
backup (including invoices if required by the award) should be stored with the journal entry in
finance files. This will be the file of record for Counterpart.

Applying NICRA to Cash Cost Share
If Counterpart accesses non-USG funding, a separate project number will be set up once the
agreement is fully executed. Allowable expenditures (not budget commitment) funded by this non-
USG source will be reported as cost share. Counterpart needs to ensure full cost recovery
regardless of the funding source. Therefore, we have to budget for indirect costs in accordance
with our NICRA Letter regardless of the funding source (even if these nonfederal funds are being
used as cost share).Indirect costs applied to non-USG donations can still count as cost share.
Examples of Cost Share Cash
Contribution
NICRA
Required?
Why?
Chevron donates $50,000 to our
Counterpart office in Kazakhstan for
the purchase of equipment that will
directly benefit our current USAID
program.
Yes If Counterpart takes control of the funds
and makes decisions on choosing
vendors, providing financial reporting,
etc., we must charge NICRA.
Chevron directly purchases $50,000
in equipment for our USAID program
in Kazakhstan. Chevron provides
documentation for the purchase to
Counterpart to be used as cost share
for the program.
No Counterpart does not take possession of
the funds.

Renegotiating With the Funder
In general, Counterpart prefers to take a conservative approach to how much cost share it commits
to generating on any of its projects. Yet sometimes external factors can interfere with Counterparts
ability to generate the cost share specified in its award. This can include anything from the closing
of a key partner or political and economic instability in a program country. Counterpart can attempt


23

to renegotiate its cost share requirement with the funder to lower its commitment. This should only
be undertaken in coordination with the VP, Finance and Compliance.
If the funder reduces or increases the proposed amount of the award, the committed cost share
may need to be adjusted accordingly, particularly if the award budget reduction requires a change
in the Scope of Work. Any adjustment to cost share should be correctly stated in the award.
Technically, Counterparts cost share is automatically reduced if the estimated amount of funding is
reduced.

Leveraging Documentation and Tracking
Since leveraging is not subject to the formal financial processes of cost share, the process for
documenting and tracking leveraging is much simpler. As described above, the project field office
should collect documentation toward the leveraging activities. This can be aggregated into a simple
spreadsheet. Before these additional leveraged funds get reported to USAID in the programmatic
quarterly report, the documentation should be reviewed by HQ program managers. Ideally, this
would be done on a monthly basis. At minimum, it should occur quarterly, before the quarterly
report is submitted.

Lessons Learned
1. Record cost share when it happens!
2. Dont delay securing cost share obligations till the end of the project.
3. Include cost share activities in the projects work plan.
4. During the PD phase, use broad language and avoid specifics (e.g., project X will obtain
x amount in cost share from media outlets rather than radio/broadcasting stations).
5. Ensure there is language (preferably an annex) in any sub-award agreement that makes
explicit reporting and supporting documentation requirements, allowable cost share
(2CFR215.2) and other relevant information.
6. Seek AO/AOTR approval if you will acquire cost share from sources not outlined in your
projects budget or cooperative agreement.
7. Ensure cost share allocation methodology meets U.S. government standards and
requirements.



24

I. APPENDIX A1: GLOSSARY OF COST SHARE TERMS
Allowable refers to costs that are:
Verifiable from records;
Necessary and reasonable (toward accomplishing the objectives of the program award);
Included in the budget approved by the funder;
Conform to other applicable administrative requirements (e.g., Counterparts policies and
procedures);
Not counted as cost share on more than one USG-funded activity (for federally funded
programs);
Allowable under the applicable cost principles (for federally funded programs); and
Not paid by the U.S. government (for federally funded programs).

Amendment: An authorized modification to an approved application or award.
Award: Counterparts signed agreement (i.e., the prime award) with the main funder.
Cost share: All allowable costs, incurred by a recipient, and the value of the contributions made by
third parties in accomplishing the objective of the award. (Cost share may also be referred to as
matching funds.)
Disallowed costs: Any charges to the approved grant that the funder has determined to be
beyond the scope of the purpose of a grant, excessive, or otherwise unallowable. Grantees
receiving an A-133 audit, or its equivalent, may have their costs questioned by auditors. The Grant
Officer (either from the awarding agency or the Prime Recipient, in the case of a sub-grant) must
review the A-133 audit report and make a determination whether to allow or disallow the cost.
Fair-market value: An estimate of what a knowledgeable, willing and unpressured buyer would
pay for the good or service in a specific marketplace.
Geographic code: a three-digit number that for USAID administrative purposes identifies
geographic entities such as countries, territories, regions and subregions.
Leveraging: Leveraging represents all of the non-USAID resources that are expected to be
applied to a program. Cost share is a subset of leveraging.
Mandatory cost share: Cost share that is a written requirement by the donor.
Nationality: SON (Source/Origin/Nationality) restrictions require suppliers of commodities to be
either an individual who is a citizen or lawfully admitted permanent resident of a country in the
authorized geographic code or a corporation organized under the laws and with a place of
business in a country in the authorized geographic code. Suppliers of service need to be
individuals who are citizens and have a place of business in a country in the authorized geographic
code; privately held companies owned by a citizen of a country within the geographic code and
having its principal place of business there; or corporations or partnerships that are more than 50
percent owned by citizens of a country within the geographic code. SON does not apply to cost
share.
Origin: A USAID term that refers to the country where a commodity is produced or where the
manufacturing, processing or major/substantial assembling of components takes place.
Reasonable: Being within the bounds of common sense; not excessive or extreme. A cost is
reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent
person under the circumstances prevailing at the time the decision was made to incur the costs.


25

Restricted goods: Goods that shall not be procured without the prior approval of the USAID
Agreement Officer. They include:
Agricultural commodities;
Motor vehicles;
Pharmaceuticals;
Pesticides;
Used equipment;
U.S. government-owned excess property; or
Fertilizer.
Prior approval will be deemed to have been met when: (i) the item is of U.S. source/origin; (ii) the
item has been identified and incorporated in the program description or schedule of the award
(initial or revisions), or amendments to the award; and (iii) the costs related to the item are
incorporated in the approved budget of the award. Where the item has not been incorporated into
the award as described above, a separate written authorization from the Agreement Officer must
be provided before the item is procured. The same prior approval must be received for restricted
goods to count as cost share.
Source: A USAID term that refers to the country from which a commodity is shipped to the
cooperating country, or the cooperating country itself if the commodity is located there at the time
of the purchase.
Third parties: Entities other than Counterpart. These may be partner organizations, beneficiary
organizations (NGOs, universities, media outlets, etc.), or any organization or individual that is
providing support (cash, goods or services) toward the program.
Verifiable: Able to be proven or confirmed by an outside party.



26

II. APPENDIX A2: LINKS TO USEFUL WEBSITES

The regulations regarding cost share for non-USG organizations:
http://www.usaid.gov/policy/ads/300/303mab.pdf
(pages 73-77)
http://www.washingtonwatchdog.org/documents/cfr/title22/part226.html
http://www.whitehouse.gov/omb/circulars_a122_2004/#b37

Documentation Help:
www.independentsector.org




27

III. APPENDIX A3: FREQUENTLY ASKED QUESTIONS
(FAQ)
This FAQ is meant to complement the main Cost Share Guidance document. The questions and
answers below are clustered into three main categories:
I. Whats Allowable
II. Calculating and Processing Cost Share
III. Documentation

If your question isnt addressed here, or if you simply require additional clarification, please contact
the VP, Finance and Compliance for further guidance.
I. IS IT COST SHARE?: QUESTIONS ON WHATS ALLOWABLE
A. What can I count as a cost share contribution?
Nonfederal expenditures by Counterpart or sub-grantees that are allowable under 2
CFR 230 (OMB A122) and support the project design.
B. Can contributions from U.S. embassies (or USG-funded implementer), whether in-
kind or cash, be included as cost share under a federal award?
No. Cash or in-kind cost share cannot be from the U.S. government.
C. I have a consultant who is willing to work for a reduced rate. May I count the
difference between the rate I am paying and the rate the consultant normally receives
as cost share?
No. Discounts are not allowable as cost share in USG awards, even though
volunteer services by professional personnel, consultants and others may be
counted as cost share if the service is a necessary part of an approved project or
program. If the consultant volunteers services, you can offer to pay expenses to a
volunteer and still count the labor as cost share. (See page 15 of the Cost Share
Guidance document for more information)
D. If Counterpart shares its computer for a program and only half of its use would
benefit the project, does only half of the related charge (of the computer) be counted
as cost share?
Yes. The principle that costs must be allocated extends to cost share. Please
ensure that the computer was not initially purchased using federal funds.
E. Can Counterpart or a sub-recipient use its employees salary to meet cost share
requirement?
If the employees labor benefits the project and is not paid for by the funder or used
as cost share on another project to that funder, the salary would be considered cash
cost share. (For federal awards, the funder would be the U.S. government, not the
specific agency that sponsors the project.) Note, however, that in the United States
(and many other countries) an employee cannot volunteer time to the employer.


28

F. I know rates for an individual volunteering his or her services must be consistent
with those paid for similar work in the recipient's organizations. What if the required
skills are not found in the recipient organization?
The rates shall be consistent with those paid for similar work in the labor market in
which the recipient competes for the kind of services involved. (See page 15: Cost
Share Accounting and Reporting for more information)
G. The end date on my grant is next week and my local partner just received a grant
from a private foundation. Can I use that grant letter as cost share?
No. While the grant from a non-USG source can be cash cost share, the expense
must be incurred by the end date (not just the date the new funding was received).
Your USG funder may approve a no-cost extension in order to finish securing cost
share. If that option is required, please contact VP, Finance and Compliance.
H. I believe I can get cost share for my project, but it is not part of the approved
program (e.g., the beneficiary is different, the subject matter is slightly different,
etc.). Can I claim this as cost share?
Only if you get the funder to approve a change in the scope or program design.
Remember that among the criteria for cost share are inclusion in the approved
budget and necessary and reasonable.
I. Do USAID source and origin requirements or USG Fly America rules apply to cost
share?
No, because USG source and origin rules only apply to USG funds, not third-party,
nonfederal funds.
J. How do we record cost share based on the use of a vehicle? Should it be a
percentage based on the usage? If so, how is it calculated?
First, we need to distinguish between the donation of a vehicle to a project and the
donation of a vehicles use for a few discrete project activities.
In the first case, do research to see what similar vehicles are being sold for
(especially if its used). Get a couple of samples and take an average. You could
use the newspaper to show how you came to the rate you did.
If its just occasional use of the vehicle, then you could establish a mileage rate (kind
of like what the IRS does). Rotary International has international mileage rates that
you could use:
http://www.rotary.org/RIdocuments/en_pdf/rits_mileage_rates_en.pdf
When using the IRS mileage rate method, keep in mind that the IRS rate includes all
costs for operating the car, including gas, wear and tear, depreciation, etc. The
standard IRS mileage method does not include parking and tolls; you may claim
these deductions on your tax return in their separate categories.



29


II. CALCULATING & PROCESSING COST SHARE: THE INS AND OUTS

A. How often should we collect cost share? Must the cost share amount be included in
the quarterly/semiannual/annual financial reports submitted to the funder? If some
cost share can only be booked at the end of a sub-grant, is that acceptable?
It is best to collect cost share on an ongoing basis. Ideally, cost share would be booked
monthly or quarterly. All cost share reports that are received should be booked in the fiscal
year they are provided. However, if cost share truly cannot be booked until the end of a
sub-grant or program, then that is acceptable. Note, however, that in incrementally funded
awards, failure to make progress on cost share can affect the receipt or size of future
obligations (funding) for the project. In cases where cost share reports could only be
received toward the end of the program, make sure that your program reports provide
progress made with cost share elements and the fact that a full picture and result of cost
share will be reported in whole in the final program performance and financial report. This
will provide status updates to the donor (Agreement Officer or AO Technical
Representative) and help avoid problems in incremental funding.
B. If amounts are denominated in local currency, can we put a U.S. dollar equivalent
based on the exchange rate listed in the Field Office Expense Report (FOER) for the
month during which the contribution is provided?
If in-kind cost share is received by Counterpart in the field, the exchange rate in the FOER
is the appropriate method of determining the exchange rate. If the cost share is received by
a sub-recipient, then the exchange rate the sub-recipient uses to report on Counterpart-
funded costs should be used. If the recipient does not report in U.S. dollars, Counterpart
may use either the FOER rate or a Web site conversion rate to determine the exchange
rate for the purposes of booking cost share. The method and source used for such currency
conversion should be applied on a consistent basis.
C. During the proposal process, I thought I could get cost share from a specific source,
but it appears I cannot. Can I buy that item and provide cost share in another line
item?
In general, as long as the cost is budgeted and is reasonable, allocable and allowable,
funding for that cost can come from either cost share or federal funds. However, for USAID
project contributions by sub-awardees, you must have the approval of your Agreement
Officer/Grant Officer. Your award may place other restrictions on what can be used for cost
share, so be sure to check that as well.

D. A sub-grantee is providing a service or good as cost share. Can Counterpart use the
amount the sub-recipient charges others for that service or goods to value the cost
share?
No. Cost share by a sub-grantee needs to be cash cost share. The cost share would be the
amount it costs the sub-grantee to provide the good or service. For example, if a
broadcaster offered air time, the cost share would be the amount of money it costs the
broadcaster to provide air time, not the amount it would charge a client. However, if a


30

different media outlet that is not a sub-grantee offers to air a program, that can count as in-
kind cost share and should be valued at the market rate for air time.
E. I have tried my best, but I know I will be unable to meet my cost share. What do I do?
This is a problem that needs to be brought to the attention of your practice area leadership
as well as compliance as soon as possible to determine whether a request to reduce cost
share is necessary. A request to reduce the cost share commitment is more likely to be
approved by the donor if the reduction is caused by external factors. If you cannot get or do
not wish to ask for a reduction, there are two options. If you are early in the award, you may
reduce the amount of work you do and only draw down USG money to the proportional
extent that cost share has been secured by Counterpart, as long as this does not affect the
scope and objectives (results) of the program.

III. HOW DO I RECORD IT?: QUESTIONS ON DOCUMENTATION

A. Donated supplies, including expendable equipment, must be reasonably assessed
based on their fair-market value at the time of the donation. What type of backup
document is required for donated supplies?
A letter of donation from the donor and a valuation of the donated supplies by the recipient
is the best backup. If the donor will not write a letter, the recipient may write a receipt or
thank-you letter to document donation. If the recipient has recently purchased the supply,
that price can be used as the value. If not, it is best to get a quote for the donated supplies.
The quotes could come from a magazine, printed catalog, or a Web site or store in the
country of operation.
B. How do we substantiate an oral quote for our records?
We must include all information such as date and time, company called, and the person
who provided the information. The staff person who made the call should sign the note.
C. What is the backup document required for donated equipment?
As with any in-kind donation, you need to document receipt and prove the value of the
donation. This is frequently accomplished by a statement from the donor, but the value
should be verified by the recipient. As with supplies, if the equipment has recently been
purchased, the recipient can use that value for the valuation (less depreciation if the
equipment isnt new). Otherwise, you should try to get quotes. If the equipment is used, it is
best to get quotes on used equipment. If this isnt possible, get quotes for new equipment
and depreciate to arrive at a net current value. Note, however, if the value of the equipment
is over $5,000, you can only count the depreciation or use allowance for the period it is
used on the project as cost share. If the equipment has been used as cost share before,
then that portion of the equipments value cannot be used as cost share a second time.
D. If a sub-recipient intends on using another funder to provide cost share, what would
be the required backup documentation?
Usually, Counterpart requires receipts, a financial site visit or a certified audit to
substantiate the claim of cash cost share. Its best if the budget is designed in such a way
that entire line items are in one of the two funders budgets. That way it is clear that a cost


31

is not covered by both organizations. Necessary documentation would be a letter between
the grantee and the donor documenting the amount of cash donated and date received by
the grantee. A financial report to the donor demonstrating how the grant funds were spent
should also be included. If possible, attach a bank statement showing the receipt of the
funds by the sub-recipient. To ensure that the source of cash being used as cost share is
not USG funds, a self-certification by the sub-grantee may be necessary. However, this
must be verified AND DOCUMENTED by performing analysis of the sub-grantee financial
reports or during a monitoring visit to the sub-grantee office and project site by Counterpart
staff.
E. How do we document pro-bono assistance?
This depends on whether the individual volunteered or whether an organization offered the
services of a paid employee. In the first case, you would ideally get a time sheet and would
value the contribution at the rate the receiving organization pays for the services, or if it
does not hire anyone to do that work, the appropriate local labor rate for the service. If an
organization offers a paid employees time, the contribution is the salary and benefits that
the employee is paid for the hours worked on the projects behalf. In that case, the donor
organization should provide documentation for the amount of time the employee spent and
the salary and benefits the employee received for that time. The receiving organization
should review the amount of time being claimed and determine if it is reasonable.
F. A business has provided employees to us, and we had planned to use that as cost
share, but they are not willing to provide us with salary information. Does that mean
the donation cannot be used as cost share?
If you have documented that the business will not give you the employees salary, you
could substitute the normal rate for that work in the local labor market. However, the time
spent must be documented.



32

IV. APPENDIX A4: COST SHARE COVER and CLEARANCE
SHEET (A4A)

COST SHARE COVER SHEET:
Please check all that apply
1. Volunteer/Employee Time:
Time sheets
Level of Effort letter (includes at the minimum: total hours worked, rate calculation,
manager verification of hours worked)
Proof of verification of rate value
2. Supplies/Equipment/Material goods:
Letter detailing value of goods
Signed by donor
Signed by grantee/vendor
Proof of verification of rate value
3. Cash contributions
Letter from the donor (detailing at the minimum: amount of cash donated, date of
donation, purpose of cash contribution)
Bank statement
Financial report:
Transaction record
Copy of receipts
Invoices
Other (please be
specific)_________________________________________________

4. Other related documents (please be specific):
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________







Note: Please use this cover sheet for each related group of documents that is submitted with the
clearance sheet.


33

IV. APPENDIX A4: COST SHARE COVER and
CLEARANCE SHEET (A4B)








34

V. APPENDIX A5: SAMPLE COMMUNITY COST SHARE
CONTRIBUTION FORM

COMMUNITY CONTRIBUTION
INVOICE/RECEIVING REPORT

Date: Contributed by:

Project Name Labor ,Materials
Description of Contribution
No. Item
Quantity

Unit
Value/Unit

Total Value/

1

2

3

4

5

Total

The following material or service has been received from the community. Please charge to the
projects Community Contribution. Supporting documentation is attached (time sheets, receipts,
etc.)



35

VI. Appendix A6: Sub-Grantee Self-Certification
(For grant proposals. Must be verified through site visits, monitoring and audits not considered
sufficient documentation until verified.)
Program Name
Project Code
Program Country
Program Period (start, end dates)
Sub-Grantee Name

ABC (sub-grantee) hereby self-certifies that it is fully aware and knowledgeable of grant conditions
applicable to this sub-award in regard to cost share. ABC agrees to ensure that cash or in-kind
cost share to be accessed, recorded and reported to Counterpart meet the following criteria found
in 22 CFR 226.23.

Verifiable from records (program and accounting records);
Necessary and reasonable (toward accomplishing the objectives of the program award);
Included in the budget approved by the donor;
Conforms to other applicable administrative requirements;
Not counted as cost share on more than one USG-funded activity (for federally funded
programs);
Allowable under the applicable cost principles (for federally funded programs); and
Not paid by the US government (for federally funded programs

ABC further acknowledges and agrees that in the event the amount of cost share it recorded and
reported becomes disallowed as a result of an audit or monitoring review, it is solely responsible to
provide the resources needed to make up for the disallowed cost share.
ABC also agrees and self-certifies that it will access, record and report cash and/or in-kind cost
share required by this sub-grant in a timely manner through appropriate monitoring on an ongoing
basis, ensuring that the sources of cost share are non-USG funds. It also self-certifies that
amounts and activities reported to Counterpart regarding cost share are adequately documented in
its accounting and program records; and shall be made available for review and/or audit by
Counterpart.

Signed: ABC CEO/CFO ___________ Counterpart CEO/SVP/VP_____________


36

VII. Appendix A7: Cost Share Calculation Worksheet

(Excel sheet, to be posted on intranet)



Source Description Supporting Documentation
Amount
Include only one source per row. Name the entity that
will make the contribution
Describe expenditure line itemand/ or inputs that will be procured
with these funds (quantify number of units and unit cost)
Evidence of cash deposited in
CPI bank account and
subsequent use of funds for
project activities
Cash
Cash Cost Share
Source Description Application Valuation (in-kind) Supporting Documentation Amount
Include only one source per row.
Name the entity that will make the
contribution
Provide a brief description of the in-
kind itemprovided (quantify
number of units)
Specify component and activity
where the in-kind itemis used for
project purposes
Estimated value and method to
determine the value
For Labor: Timesheet for Non-Labor
Tangible Inputs: Letter of donation,
list of items donated, value of items
donated, evidence of items used for
project purposes and verification
that itemwas procured with
sources other than USGfunds.
In Kind
In-Kind Cost Share
Source Amount Description Application Supporting Documentation
Include only one source per row. Name
the entity that will make the
contribution
Leverage
Provide a brief description of the
activity being leveraged
Specify component and activity being
impacted or enhanced by leveraged
activity
Programreport frompartners showing
work done and value
Leverage


37

Program Name
Program/Project Code
Program Country
Program Period of Implementation (start-end date)
Date of Cost Share Status Review
Procedure
Reviewer Note & Observation including
actions for follow up
1
Obtain and review the project financial report. Does it present cost
share actual and budget comparison?
2
If the project financial report does not provide cost share financial
status report, obtain a substitute report from the project
accountant that shows amount of cost share in the approved
budget compared with actual amount recorded and reported.
3
Obtain and review program work plan to verify activities impacted
by cost share element are being included in the work plan.
4
Review program performance report to ensure cost share status is
adequately covered in the report.
5
If cost share is to be provided by sug grantee, perform the
following.
a
Obtain sub grantee financial report to review cost share amount
required in the budget compared to actual amount reported.
b
Has the sub grantee submitted support documentation for the cost
share amount reported?
c
Do the support documents meet the criteria established in USG
regulation (2 CFR 215 or 22 CFR 226 for USG funded program)
d
Plan a site visit to the sub grantee. Inform of such site visit plan
and the need to verify cost share from sub grantee records.
e
Obtain the most recent copy of sub grantee financial report
showing amount of cost share reported.
f
Request the sub grantee accounting staff to provide you support
documents on a sample basis. You can select samples from each
cost share expenditure category.
g
Apply the guidelines provided in "Cost Share Guidelines" to test
the allowability of cost share reported by sub grantee. Prepare a
report/narrative regarding results of such tes.
h
Obtain and review sub grantee financial report (not cost share
finanical report) to verify how such cost share was reported; and to
ensure that the same cost share is not being reported as cost share
to other donors.
Conclusion:
I have reviewed the cost share status of the project as a whole and
sub grantee cost share report and have made the following conclusion
and recommendation.
Program Manager/Coordinator
Chief of Party/Country Director
Count erpart I nt ernat i onal
Cost Share St at us Moni t ori ng Chec k l i st
Appendi x A8
VIII. Appendix A8: Cost Share Status Monitoring Checklist



38

IX. Appendix A9: SubGrantee Cost Share Report
Template
(Excel sheet, posted on intranet)



Cash
In-Kind
Sub Grant ee Name:
Program Name Report Period:
Program/Project Code Report Date
Program Country
Program Period of Implementation (start-end date)
A B C=B-A
Cost Share Expenditure Item Actual Expenditure To-Date Approved Budget Variance
1
2
3
4
5
6
7
8
9
10
Self Certification:
Sub Grantee Finance Officer
Observation/Comment
Count erpart I nt ernat i onal
Sub Grant ee Cost Share Report Templ at e
I hereby certify that the amount of cost share reported above are;
1. I n accordance with the accounting records of ABC and are actual expenditures recorded and are verifiable from our records.
2. Were provided/funded by non U.S.G resources.
3. Are not used/reported as cost share to an entity other than Counterpart I nternational.
Appendi x A9


39

X. Appendix A10: Cost Share vs. Leveraging

Cost Share vs. Leveraging: Two Examples
Example Criteria
Cost share
or
Leveraging?
The host government has
decided to adopt
Counterparts civic education
handbook into its secondary
school curriculum but does
not give direct funds to the
Counterpart program that
produced it.
Cost Share contributions (must meet all
points)
Are verifiable from the recipient's records;
Are not included as contributions for any other
federally assisted project or program;
Are necessary and reasonable for proper and
efficient accomplishment of project or program
objectives;
Are allowable under the applicable cost
principles;
Are NOT paid by the federal government
under another award, except where authorized
by federal statute to be used for cost sharing
or matching;
Are provided for in the approved budget.
Conform to other applicable provisions in
2CFR215.23

Leveraging (if one or more of the criteria are
met):
Non-USAID resource applied to the program;
Resources that third parties bring to the
program, or to actions that also contribute to
the program objectives, without necessarily
providing them to the recipient (or sub-
recipients);
May include services, property, or anything of
value that can be measured in some form that
permits evaluation of the contributions impact
on achieving desired results.

Leveraging
In designing a USAID-
supported civic education
program for Country X,
Counterpart was able to
secure funding from the host
government to develop and
distribute a civic education
handbook to be added to its
secondary school curriculum.
Cost Share contributions (must meet all points)
Are verifiable from the recipient's records;
Are not included as contributions for any other
federally assisted project or program;
Are necessary and reasonable for proper and
efficient accomplishment of project or program
objectives;
Are allowable under the applicable cost
principles;
Are NOT paid by the federal government
under another award, except where authorized
Cost Share
(and
Leveraging)


40

by federal statute to be used for cost sharing
or matching;
Are provided for in the approved budget;
Conform to other applicable provisions in
2CFR215.23.
Leveraging (if one or more of the criteria are met):
Non-USAID resource applied to the program;
Resources that third parties bring to the
program, or to actions that also contribute to
the program objectives, without necessarily
providing them to the recipient (or sub-
recipients);
May include services, property, or anything of
value that can be measured in some form that
permits evaluation of the contributions impact
on achieving desired results.