What is cost-sharing (matching) and why does it matter for federal grants?

• A. It means the recipient must contribute all project costs
• B. The recipient must contribute a portion of costs from non-federal funds; affects eligibility, reporting, and compliance
• C. It is optional and has no impact
• D. It only applies to private donors

Answer: (B)

Cost-sharing means the recipient must provide a portion of the project costs from non-federal funds. This matters because federal grants often require matching or cost-sharing to ensure the recipient has a stake in the project and to stretch federal dollars further. The required contribution can be cash or in-kind, and the amount is defined in the grant terms. Because of this, cost-sharing affects eligibility—some awards are contingent on meeting the matching requirement—and it drives how you plan, report, and audit the project. You’ll need to track and document the non-federal share so it’s clearly auditable, allowable, and accountable. If the cost-sharing obligation isn’t met, it can lead to adjustments in funding or corrective actions. It’s not about funding all costs, nor is it optional in these contexts, and it isn’t limited only to private donors—the non-federal funds can come from the recipient or other non-federal sources.