Non-Federal Share: How to determine your match and value your donations?
Knowing the extent of your participation will give you a clear path towards your objectives and allow you to focus on getting all the contributions needed to accomplish them.
However, keep in mind that getting the contributions needed is only half of the process. It is also fundamental that you have clarity about how to value each donation and all the requirements that must be met so they can be included in your Non-Federal Share.
To help you achieve your goals, we have developed the Non-Federal Share Guide, filled with the requirements, steps and considerations needed to avoid mistakes in the process of determining your Non-Federal Share and valuing the donations you receive so they can be included in it.
Cost Sharing or Matching
When the Office of Head Start awards a grant, each agency is committed to participate to some extent in the cost of the project by matching the Federal funds awarded with Non-Federal funds. This is known as the Non-Federal Share, and it is a contribution of 20 percent of the total project cost.
It is essential that every grantee succeeds in providing the Non-Federal Share by the end of the school year to avoid any disallowance of the allowable federal cost or the loss of the award. Therefore, it is necessary that you know how to calculate your Non-Federal Share, what contributions count to meet this share, how to value them and document them.
To calculate the Non-Federal share, you must divide the total Federal funds by 80% to determine total project costs.
Afterwards, the Federal Portion has to be subtracted from the total project cost and the remainder will be the Non-Federal Match that you will have to provide throughout the year.
For example, if Federal Funds equal $500.000:
$500,000 ÷ 0.80 (80%) = $625,000 (Total Project Cost)
$625,000 – $500,000 = $125,000 (Non-Federal Match).
In reality, the Non-Federal match equates to 25 percent of the federal funds expended, and it can be provided using any combination of cash match, or in-kind contributions.
However, the funds acquired to meet the Non-Federal Share will not count until they are spent on allowable program costs (Cash Match) or used (Donated Goods).
According to 45 CFR § 75.306 of the Head Start Act, for all the cash and third party’s in-kind contributions to be accepted as Non-Federal Match, they must comply with the following criteria:
(1) Are verifiable from the non-Federal entity’s records;
(2) Are not included as contributions for any other Federal award;
(3) Are necessary and reasonable for accomplishment of project or program objectives;
(4) Are allowable under subpart E of this part;
(5) Are not paid by the Federal Government under another Federal award, except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements of other Federal programs;
(6) Are provided for in the approved budget when required by the HHS awarding agency; and
(7) Conform to other provisions of this part, as applicable.
From these requirements, there are three key concepts that should be kept in mind at all times.
If you have any doubts about how reasonable is the cost in which you are about to incur, ask yourself the following two questions:
- Is this cost of a type generally recognized as ordinary and necessary for the operation of the governmental unit or the performance of the Federal award?
- Does this cost comply with the requirements imposed by such factors as: sound business practices; arms-length bargaining; Federal, State and other laws and regulations; and, terms and conditions of the Federal award?
If you find yourself answering these questions affirmatively, congratulations! You have an allowable and reasonable donation that can be included in your Non-Federal Share!
Value of In-Kind and Donated Services
As goods and services are donated, your agency must determine the value of those contributions. Depending on the type of contribution, it can be valued according to different criteria, but in general, it should be based upon the cost of similar services in the program and the local community or their fair market value.
Overall, the most common contributions you will receive are volunteer services. Head Start Parents, professional and technical personnel, consultants and other individuals are allowed to provide their volunteer services, and any amount of time they provide can be included in your Non-Federal Match as the service provided is an integral and necessary part of the program.
According to the Office of Head Start, for a volunteer’s time to be counted as in-kind it must adhere to the following criteria.
The services provided by the volunteer would have to otherwise be allowable costs that would be purchased from a consultant or other individual or provided by salaried personnel.
The duties of the individual must be controlled by the agency.
The value of the service provided by the individual must be measurable and material.
The value must be based upon the service provided by the individual. For example, a dentist who volunteers time to provide dental services to Head Start children should have time valued according to normal compensation for the service provided. If the dentist chooses to volunteer in a different capacity, such as working in the classroom, his service should be valued according to the agency’s current wage scale.