Insights
Grant Match and Cost Sharing: What Counts and How to Document It
Cost sharing, or match, is the part of a project’s cost that the grant doesn’t pay. On a federal award, the agency must accept cash and in-kind contributions that meet the seven tests in 2 CFR 200.306(b), such as being verifiable in your records and not paid with other federal funds, though a program’s own rule can change them. State, local, and foundation funders set their own match rules, so their terms decide what counts.
What is cost sharing or matching on a grant?
Cost sharing is “the portion of project costs not paid by Federal funds or contributions (unless authorized by Federal statute),” and it includes matching, “which refers to required levels of cost share” (2 CFR 200.1). A 1:1 match means every grant dollar needs a dollar from somewhere else.
Agencies usually sort cost sharing by where the requirement comes from:
- Mandatory: a statute, regulation, or notice of funding opportunity (NOFO) requires it. Head Start, which caps the federal share at 80 percent, is one (42 U.S.C. 9835(b)).
- Voluntary committed: you offer it in your proposal budget. Once the award is made, it “becomes a binding requirement” of the award (2 CFR 200.1).
- Voluntary uncommitted: extra effort you never pledged, such as faculty time above what was agreed (2 CFR 200.306(k)).
Federal agencies can’t weigh voluntary committed cost sharing in research grant reviews unless a statute or regulation allows it and the NOFO says so, and they’re discouraged from weighing it in other programs (2 CFR 200.306(a)). The National Science Foundation (NSF) says it “generally does not allow” voluntary committed cost sharing in proposals (NSF, updated August 19, 2025). The notice of award lists the total approved cost sharing, where there is one (2 CFR 200.211). Our guide to reading a NOFO shows where to find it.
What counts as match on a federal grant?
Under the Uniform Guidance (2 CFR 200), the federal agency or pass-through entity must accept cash and third-party in-kind contributions as match when they meet seven tests (2 CFR 200.306(b)). The contributions must:
- Be verifiable from your records.
- Not be counted as match on any other federal award.
- Be necessary and reasonable for the award’s objectives.
- Be allowable under the cost principles in subpart E.
- Not be paid by the federal government under another award, unless a statute allows it.
- Be in the approved budget, when the agency requires that.
- Follow the rest of Part 200.
Test 4 means a cost that would be unallowable as a grant expense doesn’t count as match either. The Office of Management and Budget (OMB) proposed a rewrite of 2 CFR 200 on May 29, 2026, that would renumber these paragraphs, with the seven tests moving to 200.306(a) (91 FR 32198). It was still a proposal on November 2, 2026, so this post cites the current rule.
Cash match vs in-kind match: what’s the difference?
Cash match is money spent on the project that doesn’t come from the grant, such as your own funds or a foundation gift. In-kind match is the value of property or services given to the project. The federal term is third-party in-kind contributions: non-cash contributions from non-federal third parties, given “without charge,” that benefit the funded project (2 CFR 200.1).
Donated services and property can’t be charged to a federal award, but their value can count as cost sharing (2 CFR 200.434(b)). You can take depreciation on a donated asset only if you don’t also count that asset as match.
Can federal funds be used as match?
Usually not. Under 2 CFR 200.306(b)(5), match can’t be paid by the federal government under another award, unless the statute behind that money allows it.
A few programs do allow it. Community Development Block Grant funds can pay “the non-Federal share required in connection with a Federal grant-in-aid program” that is part of activities the block grant assists (42 U.S.C. 5305(a)(9)). HUD’s Continuum of Care (CoC) rule lets recipients use cash from any source, “including any other federal sources,” except other CoC funds, as long as the source isn’t barred from being used as match (24 CFR 578.73(b)).
How do you value volunteer time and donated items?
For federal awards, volunteer time is valued at what you pay your own staff for similar work (2 CFR 200.306(e)). If no one on your staff does that work, the rate follows your local labor market, and reasonable fringe can be added. When another organization lends you an employee, value the time at that person’s regular pay plus reasonable fringe and indirect costs, as long as the employee does the kind of work they’re normally paid for (2 CFR 200.306(f)).
Many people reach for the national value of volunteer time. Independent Sector’s preliminary estimate is $36.14 an hour for 2025, announced April 21, 2026, with separate state figures (Independent Sector). It isn’t the federal valuation rule, which looks at what similar work pays. Whether another funder accepts it depends on that funder’s guidelines.
Donated supplies count at no more than fair market value when donated (2 CFR 200.306(g)). For donated equipment or buildings you’ll own, if the award isn’t for buying them, usually only depreciation counts unless the award terms allow fair market value (2 CFR 200.306(h)). Donated space can’t exceed the fair rental value of comparable local space, set by an independent appraisal, and loaned equipment can’t exceed its fair rental value (2 CFR 200.306(i)).
Can unrecovered indirect costs count as cost share?
Yes, with prior approval from the federal agency or pass-through entity (2 CFR 200.306(c)). Unrecovered indirect cost is the difference between what you charged the award and what you could have charged at your approved indirect cost rate. A fictional example: your approved rate would allow $40,000 of indirect costs, but the program caps indirect costs at $25,000. With approval, the $15,000 gap can count toward your match. Our de minimis rate post explains indirect rates and their base.
How do state, local, and foundation match rules differ?
Federal rules apply to federal money, including federal money passed through a state or county. State, local, and private funders write their own rules, and some differ sharply from the federal ones. The table shows real examples from each funder’s own rules.
| Funder and program | Match required | What counts, or doesn’t | Source |
|---|---|---|---|
| Federal default (any award with cost sharing) | What the statute, NOFO, or award requires | Cash and in-kind that pass the seven tests; other federal funds only if a statute allows | 2 CFR 200.306 |
| Federal: Head Start | Federal share capped at 80 percent of approved costs | The Secretary can approve a higher federal share | 42 U.S.C. 9835(b) |
| Federal: HUD Continuum of Care | At least 25 percent of grant funds, except leasing funds | Other federal cash can count (not CoC funds); third-party services need an MOU first | 24 CFR 578.73 |
| State: California After School Education and Safety | Cash or in-kind equal to at least one-third of the grant | Facilities or space can cover no more than 25 percent of the required match | Cal. Educ. Code 8483.7(a)(6) |
| Local: City of Madison, Wis., arts grants | Grant is at most 50 percent of project cost; at least half the match is cash | Cash must come from non-City sources; donated labor is valued at the donor’s past pay rate | Madison Arts Commission |
| Local: City of Alexandria, Va., arts program grants (FY2027) | 1:1 cash match | No in-kind counts, and other City funding can’t be used as match | FY2027 guidelines |
| Private: J.E. and L.E. Mabee Foundation | 40 percent of the project raised from other donors before it will consider a request | Borrowed funds, reserves, and government grants don’t count toward the 40 percent | Mabee guidelines |
For state awards that pay you back after you spend, see our post on state grants and contracts.
How do I document in-kind match?
The fair market value of third-party in-kind contributions must be documented and, where feasible, supported by the same methods you use internally (2 CFR 200.306(j)). Donated services should be supported the same way you support regular staff time (2 CFR 200.434(d)). Our post on time and effort reporting covers those records.
These rules point to a file holding, for each contribution:
- A commitment letter or agreement from the donor. HUD’s CoC rule requires a memorandum of understanding (MOU) for third-party services before the grant is executed, with the service, the profession of the people providing it, and the hourly cost (24 CFR 578.73(c)(3)).
- Records of what was given, such as signed hour logs or dated receipts.
- How the value was set, such as the pay rate used or an appraisal.
- Proof it was used on this project during the award period.
California’s Department of Education asks after-school grantees for a similar file (CDE, last reviewed August 24, 2026). Federal rules require award records to be kept three years from the final financial report, with exceptions (2 CFR 200.334), and other funders can set their own periods.
A fictional example of the arithmetic: a nonprofit receives a $200,000 CoC grant with no leasing funds, so it needs at least $50,000 in match (25 percent). It counts $30,000 in county cash. A partner agency provides case management under an MOU signed before the grant agreement: 400 hours at $50 an hour, in line with what the nonprofit pays its own case managers, which is $20,000. Together, that is $50,000. The MOU and the partner’s signed hour logs go in the file.
What if you can’t raise the full match?
It depends on the funder. On a federal award, changing the total approved cost-sharing amount needs prior written approval from the agency or pass-through entity (2 CFR 200.308(f)(7)). If a recipient doesn’t comply with award terms, remedies can include withheld payments, disallowed costs, or termination (2 CFR 200.339). Our post on budget revisions and prior approval covers how revisions work. Private funders set their own terms. Mabee says a grant may be canceled if the rest of the money isn’t raised within one year of the award (Mabee guidelines).
Frequently asked questions
Is cost sharing the same as matching?
Mostly. Under 2 CFR 200.1, cost sharing is the part of project costs not paid by federal funds, and matching means a required level of cost share.
Can volunteer hours count as match on a federal grant?
Yes, if the service is necessary for the program. Under 2 CFR 200.306(e), the hours are valued at what you pay your own staff for similar work, or what the local labor market pays if no one on your staff does it.
Can I use the Independent Sector rate for volunteer time on a federal grant?
The federal rule in 2 CFR 200.306(e) values volunteer time at rates for similar work, not a national average. Independent Sector's $36.14 figure for 2025 is a preliminary national estimate. Whether a state, local, or private funder accepts it depends on its guidelines.
Can the same donation count as match on two grants?
Not on two federal awards. 2 CFR 200.306(b)(2) says match can't be counted as a contribution for any other federal award. Other funders set their own rules.
Do foundations require matching funds?
Some do, in different forms. For its challenge grants, the Mabee Foundation requires 40 percent of a project's total cost to be raised from other donors before it will consider a request, and it doesn't count government grants toward that amount.
References: 2 CFR 200.1, 200.211, 200.306, 200.308, 200.334, 200.339, and 200.434 (eCFR, current through October 29, 2026); 24 CFR 578.73 (eCFR, current through October 29, 2026); 42 U.S.C. 9835 and 42 U.S.C. 5305 (Cornell LII); OMB proposed rule, Regulation for Federal Financial Assistance, 91 FR 32198 (May 29, 2026; still proposed); NSF cost sharing page (updated August 19, 2025); Independent Sector, Value of Volunteer Time (announced April 21, 2026); California Education Code 8483.7 (as amended by Stats. 2018, ch. 265); California Department of Education, ASES match guidance (last reviewed August 24, 2026); City of Madison arts grant guidelines (2026–27 cycle); City of Alexandria Arts Program Grant FAQ and Guidelines (FY2027); J.E. and L.E. Mabee Foundation guidelines (no date shown). All checked November 2, 2026.
This article is general information. It is not legal, tax, accounting, or financial advice, and reading it does not make you our client. Laws, regulations, and funder policies change, so check the cited sources and your own award terms before you act. Aventis West is not a law firm or an accounting firm. For advice on your own situation, talk to a qualified attorney or CPA. See our terms of use.
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