Federal grants often require grant recipients to match a percentage of the federal award with other sources of cash or in-kind (non-cash) resources. A majority of Kentucky nonprofits surveyed by Grant Ready Kentucky find match requirements to be a significant barrier to applying for public funds. Below, we outline the basics of federal grant match requirements and how to meet them.
What is Match?
“Match”, or “Cost-Sharing”, means the portion of project costs not paid by the federal grant or other federal funds. Matches may consist of cash or in-kind donations of time, services, or goods.
Tip: In the United States, a specific set of federal regulations known as the “Uniform Guidance” outline the requirements that must be followed by entities receiving federal funding. These regulations are available publicly at 2 CFR 200, and specific rules relative to cost sharing or match can be found at 2 CFR 200.306. When in doubt, always refer to these regulations as the final authority or ask the funding agency for clarification as needed.
How Much Match Will We Need?
The percentage of match (cost-sharing) required means the percent of the total project cost.
Match requirements vary, from 0% in some cases, up to 50%, which means matching the federal grant dollar for dollar. This may be expressed as a 1:1 match. While most federal grants require between 20% and 50% match, it’s important to read each Notice of Funding Opportunity (NOFO) carefully for specific calculation details.
For example, let's assume the total project cost is $100,000 and the federal grant requires a 30% cost share or "match". This means, of the $100,000, the federal grant will cover $70,000 (70%) of the total project cost. Your organization's contribution to the total project cost is $30,000 (30%). Conversely, match is not the percentage of the government grant amount. In this example, the federal grant is $70,000. If you provide 30% of the federal grant amount ($21,000), your match will be insufficient and your application will be short of the total funds needed to complete the project.
Let’s review real examples from recent funding opportunities
Match Required: 50% of total project cost, aka, 1:1 Match
This means the federal government grant will cover half the cost of the project and the grantee is responsible for covering the other half of the total project cost.
Match Required: 20% of total project cost
This means the grantee is responsible for covering at least 20% of the total project cost using non-federal funds. A project totaling $1,250,000 could apply for $1,000,000 in federal funds (80%) and would need to produce $250,000 (20%) in match.
Match Required: Case by Case
For some grant opportunities, such as the POWER grant from the Appalachian Regional Commission (ARC), the required match varies based on the economic status of each county served by the project, ranging from 20% to 70% of the total project budget. To determine your required match:
- Find your county’s economic distress level and required match percentage here.
- For multiple county projects, this video from the ARC provides a calculation example.
Tip: To quickly search a notice of funding opportunity, try pressing Control + F on your PC keyboard or Command + F on your Mac keyboard. In the pop up search box, try inputting terms such as “match” or “cost share” to quickly locate this information.
What Counts as Match?
Once you know what percentage and dollar amount is required, it’s time to develop a match plan. When you apply for federal grants, the grant application will include match as a budget line item, with space to describe the match your organization will provide.
Tip: Develop your match plan early in the grant application process and give yourself plenty of time to collect any needed commitments in writing. To prove match funds, it may be necessary to ask partners for a match letter or a memorandum of understanding (MOU).
There are generally two ways to meet match requirements: cash and in-kind resources.
Cash is the most common and easiest form of match to document. This is an actual cash contribution to the total project cost. Common sources of cash are:
- Grantee’s own general funds or designated project/program funds
- Non-federal funds from a third party, such as a matching grant from a foundation or partner organization
- Proceeds from a fundraiser to benefit the project
TIP: Learn about the new Kentucky G.R.A.N.T. Program, which assists projects in 41 rural counties with the required match component of federal grant applications. The pilot program was established by the bipartisan passage of KY House Bill 9 and is administered by the Kentucky Department for Local Government. Register for free with the Kentucky Nonprofit Network to watch Grant Ready Kentucky’s program overview recording.
In-kind Resources are goods, services, property, or space provided instead of money. In-kind matches can be more burdensome to track and report. However, you may find that in-kind donations are necessary to meet match requirements. Examples include:
- Training for project staff
- Professional/Expert Services for the project
- Staff Time dedicated to the project
- Volunteer time dedicated to the project
- Equipment rental donation
- Materials donated for the project
- Supplies or other expendables
Property / Space
- Real property such as land or a building
- The value of the lease or rent for the project location
Keep in Mind, in-kind donations of services, goods, and property or space are only match-eligible if they cover the cost of eligible project expenses. Is there a line item for it in the budget template? If so, then it is most likely eligible.
When in doubt, ask the funder!
Will the Federal Funder Accept My Match Plan?
Remember the Uniform Guidance? For federal awards, matching and cost-share such as cash and third party in-kind contributions must meet specific criteria stipulated in 2 CFR 200.306.
Before submitting a match plan, double check that all contributions are:
- Included in the approved budget when required by the federal awarding agency
- Necessary and reasonable to accomplish the project or program objectives
- Make sure all cash and in-kind resources are necessary and directly tied to the funded project or program outcomes.
- Verifiable in your organization’s records
- Document all match components and prioritize good record keeping
- Not double-counted or included as contributions for any other federal award
- Don’t try to use the same contribution against more than one federal grant
- Not from federal sources
- With very few exceptions, matching funds cannot be sourced from another federal award. When in doubt, check with the funding agency directly.
- Are allowable costs under the “Cost Principles” of 2 CFR 200 Subpart E and conform to other provisions of 2 CFR 200.306
- Alcoholic beverages are an example of an unallowable cost
Again, when in doubt, ask the federal funding agency.
How Do We Document Match Commitments?
A federal grant application may require documentation of the match commitments to your project, which could include:
- Award or commitment letter from a foundation, corporation, or individual donor with the funding they will provide and designated use
- Letter of commitment from a donor of land, equipment, supplies, or space
- Letter from your organization describing staff working on, but not paid by, the federal grant-funded project
- Letter from a third-party organization providing professional services, training, or staff on loan specifically for the project
Post-award, your organization must keep records reflecting the value of all cash and in-kind donations, determined in accordance with your organization’s usual accounting policies.
Provide and keep records of receipts for cash and in-kind donations as they are made, including value and designated use.
Valuing In-kind Donations
Generally, the donations of property, space, services, equipment, materials, and goods must be determined by fair market value and in accordance with your organization’s internal procedures. For federal guidance on valuing in-kind match, review 2 CFR 200.306 here.
Property and Space
- The federal government has specific regulations regarding valuing donated property such as land or buildings. Consult the federal regulations before assigning a value.
- The value of donated space must 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.
Services, Staff, and Volunteer Time
- When a third-party organization provides an employee to work on the project, services must be valued at the employee's regular rate of pay plus a percentage of fringe benefits allocated to the person’s donated time.
- Rates for a staff person dedicating time to the project must be at the employee’s current pay rate plus allowable benefits.
- Rates for volunteer services must be consistent with those paid for similar work within your organization. If the required skills are not available, the rates must be consistent with rates paid in your labor market. Fringe benefits that are allowable may be included in the valuation of services.
Equipment, Materials, and Supplies
- The value of donated equipment must not exceed the fair market value of equipment of the same age and condition at the time of donation.
- The value of loaned equipment must not exceed its fair rental value.
- The value of donated equipment, materials, and supplies must not exceed the fair market value at the time of the donation.
Q: Will this grant help cover our rent?
A: It’s possible. The portion of your organization’s space you will use for the project could be covered by the grant, or this portion of rent can be an in-kind donation to directly support the grant-funded project.
Q: Can we use another federal grant to match this one?
A: In most cases, no. There are very few exceptions. Plan to use non-federal sources, and when in doubt, ask the funder.
Q: We have volunteers that support our organization. Can we use their time for match?
A: Are the volunteers assigned directly to the project? Do they contribute directly to the work of this program? If yes, then their time can be used as an in-kind match. Remember that match amounts must be verifiable, so detailed records of volunteer hours will need to be maintained.
Disclaimer: All information provided in this article is general information for charitable purposes only. When in doubt, consult the Uniform Guidance (2 CFR 200) or direct specific questions to the federal funding agency administering the grant program. Grant Ready Kentucky does not provide legal, accounting, or tax advice, and nothing in this article is a substitute for obtaining legal, accounting, or tax advice from a qualified professional. Federal regulations are subject to change. Review our terms and policies for more information.