Non-Federal Share

PRESENTED B Y: B E LINDA RI NKER, JD S E NIOR A D VISOR, O FFICE O F HE AD S T AR T

belinda.rinker@acf.hhs.gov Play as Slide Show to Use Hyperlinks

Definition of Non-Federal Share

Non-Federal Share: That portion of the

total costs of the program provided by the grantee agency in the form of in-kind donations or cash match received from third parties or contributed by the agency. In-kind contributions must be provided and cash expended during the project period along with Federal funds to satisfy the matching requirements.

Importance of Non-Federal Share

Non-Federal Share: Is a condition of the grant award required by the Head Start Act and applicable regulations. Represents 20% of the programs capacity to provide high quality services to children and families. Reflects the extent to which the program is engaged with and supported by the community. Supports associated Federal funds making up the other 80% of the total grant award.

Sources of Non-Federal Share

project or program and are contributed by non-Federal third parties without charge to the grantee. In-kind contributions may consist of the value of real property and equipment and the value of goods and services directly benefiting the grant program and specifically identifiable to it. In-kind match is counted for the period when the services are provided or when the donated goods are received and used. Cash Contributions: The grantee's cash outlay, which is generated by the grantee or donated by a third party, and is expended to fund allowable program costs. Cash match counts toward the non-Federal share requirement when expended, not when donated to or generated by the grantee.

In-Kind: Property or services that benefit a grant supported

Head Start Act Sec. 640(b) Financial assistance extended under this subchapter for a Head Start program shall not exceed 80 percent of the approved costs of the assisted program or activities, except that the Secretary may approve assistance in excess of such percentage if the Secretary determines that such action is required in furtherance of the purposes of this subchapter.

45 CFR 1301.20(b): The non-Federal share will not be required to exceed 20 percent of the total costs of the program.

Fiscal and Non-Federal Share Citations

45 CFR Part 74.23

45 CFR Part 92.24

Institutions of Higher Education, Hospitals, Other Non-Profit Organizations, and Commercial Organizations
States, Local Governments and Indian Tribal Governments All Grantees Mostly 45 CFR 1301

Performance Standards

Improving Head Start for School Readiness Act of

2007

All Grantees Mostly in Sec. 642

Calculating Non-Federal Share

Method 1: (80/20)
Federal Funds x .25 =

Method 2: General
Federal Funds Federal

Non-Federal Share $2,000,000 (Federal Funds) x .25 = $500,000 (NonFederal Share) Total Grant = $2,500,000

Share = Total Grant Federal Funds = Non-Federal Share $2,000,000 .85 = $2,352,941 $2,000,000 = $352,941

Use with a waiver or NonFederal share over 20%

Criteria for Acceptable Non-Federal Share

To be accepted, all cost sharing or matching

contributions, including cash and third party inkind, shall meet all of the following criteria:

Are verifiable from the recipient's records; Are not included as contributions for any other federallyassisted 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; and Conform to other provisions of this part, as applicable.
45 CFR Part 74.23

Maximizing Non-Federal Share

Develop a written data informed

strategy for generation and use of non-Federal share. Leverage from existing sources of non-Federal share. Identify and develop new nonFederal share opportunities.

Local National

The correct balance of creativity and allowability.

Maximize non-Federal share

already contributed. Convert un-allowable donations to allowable match.

Limitations on Fund Raising

Fund-raising activities allow the program to

generate additional resources that the program would not otherwise be able to afford using only its Head Start grant funds. PI-06-06: Fund-raising Federal Policies. Fund raising and investment management costs. Costs of organized fund raising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred solely to raise capital or obtain contributions are unallowable. Cost Principles, Appendix B (17).

Cost Principle Citations

2 CFR Part 220 Cost Principles for Educational Institutions 2 CFR Part 225 Cost Principles for State, Local, and Indian Tribal Governments 2 CFR Part 230 Cost Principles for Non-Profit Organizations 48 CFR 31 Cost Principles for For-Profit Organizations

Allowable Cost Requirement

Allowable Cost: Third party in-kind contributions

shall count toward satisfying a cost-sharing or matching requirement only where, if the party receiving the contribution were to pay for them, they would be an allowable cost. Allowable costs are determined by the tests of reasonableness, necessity and allocability as defined in Title 2 of the Code of Federal Regulations (2 CFR 220, 2 CFR 225, and 2 CFR 230), commonly called the cost principles.

Allowable Non-Federal Share Costs

count toward satisfying a cost-sharing or matching requirement only where, if the party receiving the contribution were to pay for them, they would be an allowable cost. Cash Contributions: The grantee's cash outlay, which is generated by the grantee or donated by a third party, and is expended to fund allowable program costs. Cash match counts toward the non-Federal share requirement when expended, not when donated to or generated by the grantee.

Allowable Cost: Third party in-kind contributions shall

Donations, non-Federal program income, local and state funds, foundation grants, corporate contributions

Elements of an Allowable Cost

Reasonable for the performance of the award. Allocable to the award. Conform to any applicable limitations or exclusions. For

example:

Consistent with policies and procedures that apply to both

Use of Head Start funds to assist, promote or deter union organizing. Head Start Act, Sec. 644(e). Alcoholic beverages. 2 CFR Part 230, Appendix B(3).

Federally funded and other activities. Accorded consistent treatment. Meet generally accepted accounting principles (GAAP). Not included as a cost or cost sharing for any other Federally funded program. Adequately documented.

2 CFR Part 230, Appendix A(2)

Reasonableness of Costs

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.

Generally recognized as ordinary and necessary. Exemplifies sound business practices, arms length bargaining, complies with laws, rules, regulations and grant awards. Whether the individuals involved acted in meeting their responsibilities with prudence under the circumstances. Significant deviation from established practices of the organization.

2 CFR Part 230, Appendix A(3)

Allocable Costs
A cost is allocable to a particular cost objective, such

as a grant, contract, project, service, or other activity, in accordance with the relative benefits received. A cost is allocable to a Federal award if it is treated consistently with other costs incurred for the same purpose in like circumstances and:

Is incurred specifically for the award. Benefits both the award and other work and can be distributed in reasonable proportion to the benefits received, or Is necessary to the overall operation of the organization, although a direct relationship to any particular cost objective cannot be shown.

2 CFR Part 230, Appendix A(4)

Documentation
Documentation is the process used to maintain

tangible evidence to demonstrate that in-kind and cash contributions claimed as non-Federal share are:

The documentation requirements for non-Federal

allowable under applicable cost principles, and used to support program objectives.

share should be part of the agencys written fiscal policies and procedures. Important for planning, budgeting, allocation, reporting, auditing, triennial monitoring and general fiscal accountability.

Non-Federal Share Areas to Document

Parent In-home Activities

Professional and Medical Services

Adequate Documentation Resources

Values for recipient contributions of services

and property shall be established in accordance with the applicable cost principles. 45 CFR 74.23 and 45 CFR 92.24 PI 12-02: Non-Federal Share Issues Non-Federal Share Narrative on ECLKC Philadelphia Parent Child Center, Inc., DAB Decision No. 2297, December 31, 2009. Applicable Cost Principles and Appendices

2 CFR 220, 2 CFR 225, 2 CFR 230

Volunteers
Volunteer services furnished by professional and technical personnel,

consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient's organization. In those instances in which the required skills are not found in the recipient's 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, fringe benefits consistent with those paid that are reasonable, allowable, and allocable may be included in the valuation. supported by the same methods used by the recipient for its own employees, including time records.

Volunteer services shall be documented and, to the extent feasible,

The basis for determining the valuation for personal services shall be

documented.

Donated Space
The value of donated space shall not exceed the fair rental value

of comparable space.

Established by an independent appraisal of comparable space

and facilities in a privately-owned building in the same locality.

By a certified real property appraiser. The basis for determining the valuation for buildings and land

shall be documented. allowance.

For related parties, may not exceed depreciation or use

Equipment
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 basis for determining the valuation for

equipment shall be documented.

Supplies
Donated supplies may include such items as

expendable property, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing or matching share shall be reasonable and shall not exceed the fair market value of the property at the time of the donation.

The basis for determining the valuation for material

shall be documented.

General Documentation Principles

When recording in-kind contributions, document

the following:

Who is the source be able to demonstrate that the contribution is from an acceptable (non-Federal) donor source. What was donated be able to demonstrate that what is being claimed as match has been used for program purposes. How was the value determined the donor should generally determine the value and it should be based on standard objective sources rather than best guesses. Document the basis for determining value of personal services (wage comparison), supplies, equipment, and donated space (must be independent appraisal). Who verified the information identify a responsible party who is prepared to sign a verification that the information is true and correct. Link to Head Start or Early Head Start program requirements.

Remember To
Develop written non-Federal share policies and

procedures. Use standard processes and forms for collecting information about donations and volunteer time. Make sure to determine fair market value of donated goods and services. Familiarize all staff with requirements. Verify accuracy, completeness and reasonableness.

Managing Non-Federal Share

Document Carefully and Completely
Budget Effectively Monitor Monthly

Disallowance of Non-Federal Share

Funded

Actual

Federal Share: Non-Federal Share: Total Grant Award: Federal Share Spent: Allowed Non-Federal Share: Actual Grant Amount:

$ 800,000 200,000 $1,000,000 $ 800,000 180,000 $ 980,000

Maximum Federal Share

$980,000 x .80 = $784,000

Disallowance

If waiver in place, multiplier changes to reflect actual federal share.

$800,000 - $784,000 = $16,000

Waivers of Non-Federal Share

Grantees must actively seek to generate Non-

Federal Share through in-kind donations and cash match. Grantees facing challenges in generating necessary Non-Federal Share can submit a written request for waiver (reduction) of NonFederal Share.

Can be submitted with the proposed annual budget. May also be submitted during the program fiscal year. Waiver only applies to one budget period.

Waiver requests can be re-submitted for subsequent budget periods.

Waiver Criteria
The lack of resources available in the community that may

prevent the Head Start agency from providing all or a portion of the Non-Federal contribution that may be required. initial years it carries out such program.

The impact of the cost the Head Start agency may incur in
The impact of an unanticipated increase in the cost the Head

Start agency may incur to carry out such program. adversely affected by a major disaster.

Whether the Head Start agency is located in a community The impact on the community that would result if the Head

Start agency ceased to carry out such program.

Head Start Act, Sec. 640(b)(1)-(5)

Questions and Comments