Proposal Budget Cap and Committed Cost Share
A PI is preparing a proposal to a federal sponsor with a $500,000 total cost cap and a required 20% cost share on total project costs. The PI's draft budget totals $610,000 and includes $95,000 of voluntary committed cost share in the form of waived indirect costs and donated equipment. The PI says the cost share is 'just on paper' and can be removed later if the award is made. The sponsor's cost-sharing requirement is mandatory and must be reflected in the proposal. The institution's policy requires cost share to be approved by a dean before submission and tracked if awarded. The deadline is in six days.
1. Identify the errors in the draft budget and explain the consequences of treating cost share as 'on paper.'
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The draft exceeds the cap: $610,000 against a $500,000 cap, and the 20% requirement must be computed on the correct base. If the requirement is 20% of total project costs, the cost share must be at least $100,000 when total costs are $500,000 (cost share divided by total costs equals 20%). The PI's $95,000 is short and is composed partly of waived indirect costs, which may not count as cost share unless the sponsor allows unrecovered indirect costs to be counted and the institution approves that treatment. Donated equipment must be valued correctly and may need prior approval.
Treating committed cost share as 'on paper' is a serious error. Voluntary committed cost share becomes a binding commitment once proposed and, if awarded, must be documented, tracked, and is subject to audit. It cannot simply be removed later without sponsor approval. Unfulfilled commitments can result in disallowance or reduced funding.
2. What steps should you take before submission to bring the proposal into compliance?
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First, rebuild the budget to fit the $500,000 cap, distinguishing total costs, sponsor share, and cost share. Second, compute the required cost share precisely against the sponsor's defined base and confirm which categories qualify, especially unrecovered indirect costs and donated equipment. Third, obtain dean approval for the cost-share commitment per institutional policy, with a written plan for how each cost-share item will be documented and tracked.
Fourth, confirm with the PI and department that the commitment is real and sustainable; if not, reduce or eliminate voluntary cost share that is not required, while preserving the mandatory 20%. Fifth, verify the sponsor's rules on counting unrecovered indirect costs and equipment valuation. Sixth, build a compliance checklist and route the proposal for central review well before the six-day deadline. If the mandatory cost share cannot be met, the proposal should not be submitted as structured.