Version 1. April 2012

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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

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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

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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.

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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

RISK

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); Justification: 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

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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).

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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.

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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

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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.

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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

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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

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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.

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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.

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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

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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.

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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.

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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.

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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

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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.

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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.

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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

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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

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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.

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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.

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

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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.)

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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_____________

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VII. Appendix A7: Cost Share Calculation Worksheet

(Excel sheet, to be posted on intranet)

Source Description Supporting DocumentationAmount

Include only one source per row. Name the entity that will make the contribution

Describe expenditure line item and/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 item provided (quantify number of units)

Specify component and activity where the in-kind item is 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 item was procured with sources other than USG funds.

In Kind

In-Kind Cost Share

Source Amount Description Application Supporting DocumentationInclude only one source per row. Name the entity that will make the contribution

LeverageProvide a brief description of the activity being leveraged

Specify component and activity being impacted or enhanced by leveraged activity

Program report from partners showing work done and value

Leverage

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Program NameProgram/Project CodeProgram CountryProgram Period of Implementation (start-end date)

Date of Cost Share Status Review

ProcedureReviewer Note & Observation including

actions for follow up

1Obtain 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.

3Obtain and review program work plan to verify activities impacted by cost share element are being included in the work plan.

4Review program performance report to ensure cost share status is adequately covered in the report.

5If cost share is to be provided by sug grantee, perform the following.

aObtain sub grantee financial report to review cost share amount required in the budget compared to actual amount reported.

bHas the sub grantee submitted support documentation for the cost share amount reported?

cDo the support documents meet the criteria established in USG regulation (2 CFR 215 or 22 CFR 226 for USG funded program)

dPlan a site visit to the sub grantee. Inform of such site visit plan and the need to verify cost share from sub grantee records.

eObtain 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/CoordinatorChief of Party/Country Director

Counterpart InternationalCost Share Status Monitoring Checklist

Appendix A8

VIII. Appendix A8: Cost Share Status Monitoring Checklist

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IX. Appendix A9: SubGrantee Cost Share Report Template

(Excel sheet, posted on intranet)

Cash

In-Kind

Sub Grantee Name:Program Name Report Period:Program/Project Code Report DateProgram CountryProgram Period of Implementation (start-end date)

A B C=B-ACost Share Expenditure Item Actual Expenditure To-Date Approved Budget Variance

123456789

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Self Certification:

Sub Grantee Finance Officer

Observation/Comment

Counterpart InternationalSub Grantee Cost Share Report Template

I hereby certify that the amount of cost share reported above are;1. In 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 International.

Appendix A9

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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 a