1. Presented by: Belinda Rinker, JD Senior Advisor, Office of Head Start
Non-Federal Share
Presented by:
Belinda Rinker, JD
Senior Advisor, Office of Head Start
Note: Play presentation as a PowerPoint slide show to activate hyperlinks.

2. 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.

3. Criteria for Acceptable Non-Federal Share
To be accepted, all cost sharing or matching contributions, including cash and third party in-kind, shall meet all of the following criteria:
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; and
Conform to other provisions of this part, as applicable.
45 CFR §74.23 and 45 CFR §92.24

4. Sources of Non-Federal Share
In-Kind: Property or services that benefit a grant supported 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.

5. Fiscal and Non-Federal Share Citations
45 CFR Part 74.23
Institutions of Higher Education, Hospitals, Other Non-Profit Organizations, and Commercial Organizations
45 CFR Part 92.24
States, Local Governments and Indian Tribal Governments
Performance Standards
All Grantees
Mostly 45 CFR 1301
Improving Head Start for School Readiness Act of 2007
Much in Sec. 642

6. 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.

7. 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 (Commercial) Organizations
48 CFR Subpart 31.2
Cost Principles for For-Profit Organizations

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

9. Calculating Non-Federal Share
Method 1: (80/20)
Method 2: General
Federal Funds x .25 = Non-Federal Share
$2,000,000 (Federal Funds) x .25 =
$500,000 (Non-Federal Share)
Total Grant =
$2,500,000
Federal Funds ÷ Federal Share = Total Grant – Federal Funds = Non-Federal Share
$2,000,000 ÷ .80 =
$2,500,000 - $2,000,000 = $500,000
$2,000,000 ÷ .85 =
$2,352,941 - $2,000,000 =
$352,941
Use with a waiver or Non-Federal share over 20%

10. Allowable Non-Federal Share Costs
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.
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.

11. 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:
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).
Consistent with policies and procedures that apply to both 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)

12. 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)

13. 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)

14. Prudent
–adjective 1. wise or judicious in practical affairs; sagacious; discreet or circumspect; sober.
2. careful in providing for the future; provident: a prudent decision.
Dictionary.com
A prudent person is attentive, vigilant, cautious, perceptive, and generally governed by common sense. ND State Government Website.

15. Primary Benefit Analysis
OHS – PC – A – 077
Is the value of parent involvement in a Head Start program an allowable cost for in-kind match?
To determine if a parent involvement activity is allowable as an in-kind match a Head Start program should ask these questions:
Does the parent involvement activity primarily benefit the parent or child? If the answer is yes, then the activity is not allowable as an in-kind match.
Does the parent involvement activity provide a good or service to benefit the program? If the answer is yes, then the activity is allowable as an in-kind match.

16. Other Policy Clarifications
Allowability of parent activities
PC – A – 022 (valuation and record keeping)
PC – A – 033 (walking to and from Center)
PC – A – 040 (home-based curriculum activities)
PC – A – 049 & 058 (parent transportation of home based children to socialization activities)
PC – A – 060 (having lunch with child)
PC – A – 076 (babysitting for a parent volunteer)
PC – A – 078 (volunteering for governing body or policy council)

17. Managing Non-Federal Share
Document
Carefully and Completely
Budget Effectively
Monitor Monthly

18. Disallowance of Non-Federal Share
Funded
Federal Share: $ 800,000
Non-Federal Share: ,000
Total Grant Award: $1,000,000
Actual
Federal Share Spent: $ 800,000
Allowed Non-Federal Share: ,000
Actual Grant Amount: $ 980,000
Maximum Federal Share
$980,000 x .80 = $784,000
If waiver in place, multiplier changes to reflect actual federal share.
Disallowance
$800,000 - $784,000 = $16,000
See PI-HS-12-02: Non-Federal Share Issues

19. 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 Non-Federal 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.

20. 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.
The impact of the cost the Head Start agency may incur in initial years it carries out such program.
The impact of an unanticipated increase in the cost the Head Start agency may incur to carry out such program.
Whether the Head Start agency is located in a community adversely affected by a major disaster.
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)

21. Questions and Comments