Securing and Documenting Match and In-kind Support Gregory Winn, Sr. Grants Advisor, OGM Susan Meche, Meche Consulting

Session Objectives Gain knowledge of match requirements at basic and more advanced levels Gather and retain proper match documentation for accountability and audit review Document = Webster’s defines a document as an original or official paper relied on as the basis, proof, or support of something Allowable = permissible by accounting standards, government laws, agency regulations, federal circulars Allocable = to apportion for a specific purpose or to particular project Reasonable = not extreme or excessive; marked by impartiality and honesty; free from self-interest, prejudice, or favoritism Types of match: cash or in-kind (consisting of something other than money, such as goods or commodities Learn about types and examples of match and how to address complex requirements Corporation Grantee Financial Accountability Seminar July 2007

Allowability of Project Costs To be allowable under a grant, costs must: Be reasonable and allocable for the performance of the award Conform to grant award limitations or cost principles Be consistent with policies and procedures that apply to both federally-financed and other activities of the organization Be given consistent treatment Be in accordance with Generally Accepted Accounting Principles (GAAP) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program Be adequately documented Cost sharing = To be allowable under an award, costs must not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. Cost sharing = Salaries and wages of employees used in meeting cost sharing or matching requirements on awards must be supported in the same manner as salaries and wages claimed for reimbursement from awarding agencies Cost share/match = this ratio depends on the grant requirements The value of the donated services may be used to meet cost sharing or matching requirements under conditions described in Sec.__.23 of Circular A-110. You may not include the value of direct community service performed by volunteers, but you may include the value of services contributed by volunteers to your organizations for organizational functions such as accounting, audit, and training of staff and AmeriCorps programs. OMB Circulars – see handout Corporation Grantee Financial Accountability Seminar July 2007

Grantee Share or Match Cash and in-kind contributions are accepted as part of the grantee’s cost sharing or matching when contributions meet all of the following criteria: Are verifiable from the grantee's records Are necessary and reasonable for proper and efficient accomplishment of project or program objectives Are allowable under the applicable OMB 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 grant provisions or OMB Circulars Cost sharing = To be allowable under an award, costs must not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. Cost sharing = Salaries and wages of employees used in meeting cost sharing or matching requirements on awards must be supported in the same manner as salaries and wages claimed for reimbursement from awarding agencies Cost share/match = this ratio depends on the grant requirements The value of the donated services may be used to meet cost sharing or matching requirements under conditions described in Sec.__.23 of Circular A-110. You may not include the value of direct community service performed by volunteers, but you may include the value of services contributed by volunteers to your organizations for organizational functions such as accounting, audit, and training of staff and AmeriCorps programs. Question: How would you estimate and record the value of PSAs? (See FAQ Sheet) Corporation Grantee Financial Accountability Seminar July 2007

Talking Technical: Definitions to Know Project Costs Total allowable expenditures incurred to operate the program and accomplish its objectives Portion of total expenditures paid for with Federal funds (CNCS) Portion of total expenditures not paid for with Federal funds (CNCS) – Key Point – grantee share is recorded and documented the same as CNCS funding Federal Share Cost sharing = To be allowable under an award, costs must not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. Cost sharing = Salaries and wages of employees used in meeting cost sharing or matching requirements on awards must be supported in the same manner as salaries and wages claimed for reimbursement from awarding agencies Cost share/match = this ratio depends on the grant requirements The value of the donated services may be used to meet cost sharing or matching requirements under conditions described in Sec.__.23 of Circular A-110. You may not include the value of direct community service performed by volunteers, but you may include the value of services contributed by volunteers to your organizations for organizational functions such as accounting, audit, and training of staff and AmeriCorps programs. Grantee Share Corporation Grantee Financial Accountability Seminar July 2007

Corporation Grantee Financial Accountability Seminar July 2007 More Technical Talk Gross income earned by the grantee that is directly generated by a supported activity or earned as a result of the award Key Point: There are three ways to address the use of program income – [see FAQ sheet] Value of non-cash contributions provided by non-Federal third parties May be in the form of real property, equipment, supplies, services, and other expendable property Program Income Program Income = deleted from 2005 AmeriCorps provisions, see regulations Program Income = Program income includes, but is not limited to: (1) income from fees for services performed, (2) the use or rental of real or personal property acquired with grant funds, (3) the sale of commodities or items fabricated under a grant agreement, and (4) from payments of principal and interest on loans made with grant funds. § 2541.250 states & local Program income also include (5) license fees and royalties on patents and copyrights § 2543.24 non-profits Interest earned on advances of Federal funds is not program income. Deduction. Ordinarily program income shall be deducted from total allowable costs to determine the net allowable costs. Program income shall be used for current costs unless the Federal agency authorizes otherwise. Program income which the grantee did not anticipate at the time of the award shall be used to reduce the Federal agency and grantee contributions rather than to increase the funds committed to the project Addition. When authorized, program income may be added to the funds committed to the grant agreement by the Federal agency and the grantee. Grantee has no obligation to CNCS regarding program income earned after the end of the project § 2543 (non-profits) = provides definition of in-kind contributions § 2541 ( states & local) Third party in-kind contributions. The term third party in-kind contributions means property or services which benefit a federally assisted project or program and which are contributed by non-Federal third parties without charge to the grantee, or a cost-type contractor under the grant agreement. In-Kind Contributions Corporation Grantee Financial Accountability Seminar July 2007

Where Can You Find Match? Cash: Donations Non-federal income Local governments State appropriations Foundation grants or corporate contributions In-Kind Contributions: Value of donated services and/or donated goods Unfunded Indirect Costs: The portion of indirect costs not allowed by CNCS in Federal Share Where will you find your match? Sources? Mimi = example of unique sources where CA Commission finds match Cash from Donations Non-federal Income State Appropriations In-Kind Contributions Value of donated labor Value of donated space Value of donated vehicles Value of donated training for members/staff Unfunded Indirect Cost Rate If a grantee’s approved indirect cost rate is greater than the 5% allowed by the AmeriCorps program, the unfunded difference can be counted toward the grantee’s matching obligation. Allowable 10% Indirect 10% of the sum of the federally-funded direct costs plus the grantee-funded direct costs may be claimed as grantee administrative cost without any documentation. Government-wide, with few rare exceptions, Grantees cannot use other Federal funds as match Corporation Grantee Financial Accountability Seminar July 2007

Exception: Volunteer Match Do not count as match - The value of direct community services performed by volunteers Do count as match - Services that contribute to organizational functions Count services such as accounting, training of staff or members that are elements of the grantee’s cost allocation plan DO NOT = 2005 Provisions, Section IV, Para. K.1. = Exception for Donated Professional Service. Because the purpose of this grant is to enable and stimulate volunteer community service, the grantee may not include the value of direct community service performed by volunteers. YES, YOU CAN COUNT = the value of volunteer services contributed to the organization for organizational functions such as accounting, audit work, training of staff and AmeriCorps Programs. §2542.240 and 2543.23 = 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 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. Regardless, include paid fringe benefits that are reasonable, allowable, and allocable §2541.240 and 2543.23 = In-kind contributions from third parties = Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees. Corporation Grantee Financial Accountability Seminar July 2007

How to Record In-Kind Contributions Maintain adequate documentation to support amounts claimed as match Maintain same documentation for both CNCS Federal share and for grantee’s share Documentation must meet same standards as other expenditures Record donation and valuation of item in detail Enter into the general ledger as income and expenditure Failure to enter match contributions into general ledger requires a formal explanatory policy and separate spread sheet accountability of receipt and use Recording in-kind: Documentation = obtain and retain the same type of documentation for in-kind as you would for direct costs Record donation = record the value of the donation in you G/L as income (credit) and as an expense (debit) Corporation Grantee Financial Accountability Seminar July 2007

Corporation Grantee Financial Accountability Seminar July 2007 Why Record In-Kind in General Ledger? Statement of Financial Accounting Standards (SFAS #116) sets the standard: Contributed services are recognized in financial statements if services received: Create or enhance non-financial assets Requires specialized skills provided by individuals possessing those skills Would need to be purchased if not provided by donation Statement of Financial Accounting Standards (SFAS) No. 116 = Effective 1/1/1995 (Jan. to Dec.) of 7/1/1995 (July to June); Some of the new requirements: All contributions received are recorded a revenue upon receipt More explicit definitions of the types of contributed services which should be recorded, and prohibition from recording other types: The services create or enhance nonfinancial assets or, The services require specialized skills, are provided by persons possessing those skills, and would typically have to be purchased if volunteers were not available Corporation Grantee Financial Accountability Seminar July 2007

Recording In-Kind Contributions Enter into the general ledger as income and expenditure: Example: Local paint store donates a professional paint sprayer with a fair market value of $550.00 Recording in-kind: Documentation = obtain and retain the same type of documentation for in-kind as you would for direct costs Record donation = record the value of the donation in you G/L as income (credit) and as an expense (debit) $550.00 – 7250 In-Kind Expenses Account (debit) $550.00 – 5250 In-Kind Income Account (credit) Corporation Grantee Financial Accountability Seminar July 2007

Defining Source Documentation: Benefits: Supports a value, cost, or performance criteria relative to the grant Physical information: Hard copy Soft copy: CD, flash drive, server, microfilm Source: Internal source External source NB: Federal Funds and match are maintained and documented the same way with the exception of in-kind match contributions Corporation Grantee Financial Accountability Seminar July 2007

Why Retain Documentation? To track incoming information To review information To provide historical evidence To provide evidence of accomplishments To prepare for an audit How do you maintain documentation? Internal controls and security for your financial system (see handout) Corporation Grantee Financial Accountability Seminar July 2007

Retaining Source Documentation Retain all financial records: 3 years from date of submission of final Financial Status Report Final report submitted by Commission or Parent of National Direct 3 years from final audit resolution when there is an on-going audit Example 1: Grant Ends 7/31/2009 90 days to submit Final FSR = 10/31/2009 3 years = 10/31/2012 Example 2: Grant Ends 7/31/2009 90 days = 10/31/2009 3 years = 10/31/2012 Audit started = 4/1/2012 Final audit resolution = 9/30/2013 3 years = 8/31/2016 Documentation retention Written policy Who is authorized to store or dispose Off-site storage When is it sent to storage or disposed of Mimi = example of why retaining records is important Corporation Grantee Financial Accountability Seminar July 2007

Documentation Examples Salary Benefits Travel Supplies Contract & Consultant Training This is a summary of what is to come. See slide. Evaluation Volunteer or Member Costs Admin Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Salary Signed timesheets with supervisory approval Quarterly payroll returns (941) Payroll register Personnel file with salary/wage information Employment contract Cancelled checks/Direct deposit schedule This is a common audit finding and site visit issue – timesheets documenting salary paid A-21 = educational institutions A-87 = state, local and indian tribal governments A-122 = non-profits Corporation Grantee Financial Accountability Seminar July 2007

Time & Activity Reporting Summary All salaries and wages charged to grants must be supported by signed time & attendance records, i.e., timesheets Exceptions: State, Local and Indian Tribal governments must comply with requirements of OMB A-87 Educational Institutions must comply with requirements of OMB A-21 {See Handout for specifics depending on Grantee Type i.e. State, Local and Indian Tribal Governments, Educational Institutions and Non-Profit Organizations} Non-profits, state, local, and Indian tribal governments must have timesheets Educational institutions must comply with educational requirements Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Benefits Insurance policy Paid invoices and receipts Cost allocation plan Benefits = Fringe Benefits Benefits are allowances and services provided by employers to their employees as compensation, in addition to regular salaries and wages. Fringe Benefits include: Costs of leave – annual leave, sick leave, holidays, court leave, military leave, and other similar leave Employee insurance – employer contributions or expenses for social security; employee life, health Pension plan costs Unemployment benefit plans Worker’s compensation insurance Severance pay Except as provided elsewhere, costs of fringe benefits are allowable to the extent that benefits are reasonable and required by law, governmental unit employee agreement, or an established policy of the government unit. OMB A-122, Para. 8; A-87, Para. 8; A-21, Para. 10 Fringe benefits are allowable, provided such costs are absorbed by all organization activities in proportion to the relative amount of time or effort actually devoted Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Travel Authorization/reimbursement request NB: You must have written policies and procedures on hand on how to authorize and reimburse travel Paid invoices and receipts Per diem rates (applicable for area) Mileage calculation Reconciliation of advances to payments Travel = for transportation, lodging, subsistence, and related items while on official business for organization, government, institution (OMB travel same for all) Methods = costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip, and results in charges consistent with those normally allowed in the organization’s non-federally sponsored activities Costs shall be considered reasonable and allowable only to the extent such costs do not exceed charges normally allowed by the non-profit organization in its regular operations as the result of the organization’s written travel policy Written policy = in the absence of the organization’s written policy, the organization shall use federal government travel allowances as established by GSA: www.gsa.gov First Class airfare = generally unallowable; organization must justify and document these conditions on a case-by-case basis in order for the use of first-class airfare to be allowable OMB A-122, Attachment B, Para. 51; A-87, Para. 43; A-21, Para. 53 Travel costs must not exceed charges normally allowed by the organization in its regular operations based on the organization’s written travel policy Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Supplies Purchase orders Packing slips Paid receipts and invoices Donated Supplies, i.e., in-kind Travel = for transportation, lodging, subsistence, and related items while on official business for organization, government, institution (OMB travel same for all) Methods = costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip, and results in charges consistent with those normally allowed in the organization’s non-federally sponsored activities Costs shall be considered reasonable and allowable only to the extent such costs do not exceed charges normally allowed by the non-profit organization in its regular operations as the result of the organization’s written travel policy Written policy = in the absence of the organization’s written policy, the organization shall use federal government travel allowances as established by GSA: www.gsa.gov First Class airfare = generally unallowable; organization must justify and document these conditions on a case-by-case basis in order for the use of first-class airfare to be allowable OMB A-122, Attachment B, Para. 51; A-87, Para. 43; A-21, Para. 53 Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Contract & Consultant Purchase orders Signed agreements Paid invoices and receipts Maximum Allowed by CNCS for Consultant fee is $540 per day. In charging contract services it is important to differentiate among days of prep time, number of days of activity, travel and per diem where applicable. Travel = for transportation, lodging, subsistence, and related items while on official business for organization, government, institution (OMB travel same for all) Methods = costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip, and results in charges consistent with those normally allowed in the organization’s non-federally sponsored activities Costs shall be considered reasonable and allowable only to the extent such costs do not exceed charges normally allowed by the non-profit organization in its regular operations as the result of the organization’s written travel policy Written policy = in the absence of the organization’s written policy, the organization shall use federal government travel allowances as established by GSA: www.gsa.gov First Class airfare = generally unallowable; organization must justify and document these conditions on a case-by-case basis in order for the use of first-class airfare to be allowable OMB A-122, Attachment B, Para. 51; A-87, Para. 43; A-21, Para. 53 Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Training Agenda Course description, cost Sign-in sheet Consultant/Trainer agreement Paid invoices and receipts While the cost of the training, itself, is usually allowable, one cannot include the value of the time given by the attendees to participate. Participant support costs. Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with meetings, conferences, symposia, or training projects. These costs are allowable with the prior approval of the awarding agency. OMB A-122, para. 33 Meetings and conferences. Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, speakers' fees, and other items incidental to such meetings or conferences OMB A-122, para. 29 Staff development (accounting) = Costs of preparation and maintenance of a program of instruction including but not limited to on-the-job, classroom, and apprenticeship training, designed to increase the vocational effectiveness of employees, including training materials, textbooks, salaries or wages of trainees are allowable. OMB A-122, para. 49 OMB A-122, Attachment B, Para. 49; A-87, Para. 42; A-21, Para. 51 Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Evaluation Purchase orders Signed agreement/contract Paid invoices and receipts Final copy of the evaluation report Participant support costs. Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with meetings, conferences, symposia, or training projects. These costs are allowable with the prior approval of the awarding agency. OMB A-122, para. 33 Meetings and conferences. Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, speakers' fees, and other items incidental to such meetings or conferences OMB A-122, para. 29 Staff development (accounting) = Costs of preparation and maintenance of a program of instruction including but not limited to on-the-job, classroom, and apprenticeship training, designed to increase the vocational effectiveness of employees, including training materials, textbooks, salaries or wages of trainees are allowable. OMB A-122, para. 49 OMB A-122, Attachment B, Para. 49; A-87, Para. 42; A-21, Para. 51 Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Volunteer Costs* Meal receipts Uniforms invoices and receipts Insurance invoices and receipts Recognition invoices and receipts Travel invoices and receipts Physical Examinations invoices and receipts * Senior Corps only Participant support costs. Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with meetings, conferences, symposia, or training projects. These costs are allowable with the prior approval of the awarding agency. OMB A-122, para. 33 Meetings and conferences. Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, speakers' fees, and other items incidental to such meetings or conferences OMB A-122, para. 29 Staff development (accounting) = Costs of preparation and maintenance of a program of instruction including but not limited to on-the-job, classroom, and apprenticeship training, designed to increase the vocational effectiveness of employees, including training materials, textbooks, salaries or wages of trainees are allowable. OMB A-122, para. 49 OMB A-122, Attachment B, Para. 49; A-87, Para. 42; A-21, Para. 51 Corporation Grantee Financial Accountability Seminar July 2007

Identifying Documentation Member Match Member eligibility Signed member contract Member timesheets signed by both member and supervisor Documented pay system Signed mid-year and final member evaluations Were donations received with restrictions on their use, or on the time of their allowable use? Can grantee use cash contribution for a prior period retroactively of member cost or not? Were contributions received timely and used during the course of the award, or only at the end of it? Participant support costs. Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with meetings, conferences, symposia, or training projects. These costs are allowable with the prior approval of the awarding agency. OMB A-122, para. 33 Meetings and conferences. Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, speakers' fees, and other items incidental to such meetings or conferences OMB A-122, para. 29 Staff development (accounting) = Costs of preparation and maintenance of a program of instruction including but not limited to on-the-job, classroom, and apprenticeship training, designed to increase the vocational effectiveness of employees, including training materials, textbooks, salaries or wages of trainees are allowable. OMB A-122, para. 49 OMB A-122, Attachment B, Para. 49; A-87, Para. 42; A-21, Para. 51 Corporation Grantee Financial Accountability Seminar July 2007

More Technical Talk: Match Requirements Minimum matching amount the law requires a grantee to provide Minimum matching amount established by CNCS regulations that may be higher than the statutory requirement Amount of match grantee provides based on budget, budget narrative, and program narrative contained in grant application; may be greater than statutory or regulatory required match Statutory Regulatory Budgeted Corporation Grantee Financial Accountability Seminar July 2007

Sustainability for AmeriCorps and Service Learning: The Ultimate Goal New Program/Project Mature Program/Project Grantee Share CNCS Share Grantee Share CNCS Share Corporation Grantee Financial Accountability Seminar July 2007

Valuing In-Kind Donations Use Fair Market Price Consider what it would cost to obtain similar good or service Value of donation should be placed by the donor Review donation letter or form to ensure the value is reasonable and compare with other estimates or bases for value IRS Definition of Fair market value = Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. If you put a restriction on the use of property you donate, the FMV must reflect that restriction. Pub. 561 - Determining the Value of donate property Pub. 526 – Charitable Contribution Mimi = example of how CA Commission has obtained values of in-kind Corporation Grantee Financial Accountability Seminar July 2007

Documenting In-Kind Contributions Document in-kind contributions to show: What service or goods were obtained Why transaction is allowable for grant purposes The value of the contribution How it is traced back to source documentation In-kind contributions – non cash contributions for goods or services, e.g., staff costs, rent, supplies, Value = the donor must provide the value of the contribution, not your organization IRS publication 561 = Determining the value of donated property Fair market value Real estate Inventory Stocks and bonds If audited, a grantee may be required to obtain full supporting documentation from all donors if not available during the audit. Corporation Grantee Financial Accountability Seminar July 2007

Documenting In-Kind Contributions Document the basis for determining value of personal services, material equipment, building, and land Obtain written acknowledgement of the contribution including: Name and signature of donor Date and Location of donation Detailed description of item/service Estimated value of contribution, how value was determined, who made the determination Was the contribution obtained with Federal funds See slide – self explanatory. *** Keep a copy of the receipt in your files *** Corporation Grantee Financial Accountability Seminar July 2007

Sample 1: In-Kind Contribution Form See slide – self explanatory. Corporation Grantee Financial Accountability Seminar July 2007

Sample 2: In-Kind Contribution Form See slide – self explanatory. Corporation Grantee Financial Accountability Seminar July 2007

Common Audit Findings Related to Cash & In-Kind Match Establish a written policy Training all staff: program and financial staff on match and in-kind documentation Retain records as required See Handout Corporation Grantee Financial Accountability Seminar July 2007

Summing it up: In a Nutshell Source Documentation: Familiarize all staff with cash and in-kind match documentation requirements Ensure supporting documentation relates directly to approved program funded by the CNCS grant Establish documentation for expenditure requirements to ensure costs are: reasonable, necessary, allocable, allowable, and adhere to grant guidelines Maintain proper records and establish a written record retention policy Establish a written policy Training all staff: program and financial staff on match and in-kind documentation Retain records as required Corporation Grantee Financial Accountability Seminar July 2007

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