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.