Cost share and matching funds
What does a matching funds or cost share requirement actually mean?
It means the funder will pay part of the project cost and you must supply the rest, from somewhere that is not them. A 20% match on a $1,000,000 federal award means you have to put in $250,000 of your own, because the match is usually calculated against total project cost, not against the award. Some matches can be met with in-kind contributions such as staff time or donated space; others must be cash. Other federal money almost never counts. If you cannot document the match, you cannot accept the award.
Last reviewed 6 August 2026.
The arithmetic that catches people
“A 20% match” sounds like 20% of the award. It usually is not. If the requirement is expressed as a share of total project cost, then on a $1,000,000 federal share you are looking at a $1,250,000 project of which you supply $250,000. That is a 25% uplift on the number you were thinking about, and it is discovered late often enough to be a category of disaster, not an anecdote.
Read the announcement for whether the percentage applies to the federal share or the total, and do the arithmetic before anyone briefs a board or a council.
What usually counts
Always subject to the specific announcement, which overrides every general rule below.
- Cash from non-federal sources
- Your own reserves, a private foundation grant, a corporate contribution, a local government appropriation. Always acceptable where any match is acceptable.
- In-kind contributions, when the announcement allows them
- Volunteer time valued at a defensible rate, donated space, donated equipment, a partner's staff time committed in writing. Powerful for organizations with more people than money, and it has to be documented at the time, not reconstructed afterwards.
- Third-party commitments in writing
- A partner's letter of commitment stating a specific dollar value carries far more weight than a letter of support saying the partner thinks the project is a good idea. Funders can tell the difference instantly.
- Unrecovered indirect costs, sometimes
- If your negotiated indirect rate is higher than what the program will pay, the difference can sometimes be counted as match. Worth asking the program officer about, because it can close a gap on paper that you cannot close in cash.
What does not count
Other federal money, almost always. You cannot match a federal grant with a different federal grant unless a statute specifically permits it, and a handful do. Assuming otherwise is the most expensive misunderstanding in this area.
Costs incurred before the award period, unless pre-award costs are explicitly authorized. Work you already did is generally not your match.
Anything you cannot evidence. Match is auditable. If you claim volunteer hours you need timesheets, and if you claim donated space you need a valuation basis. The requirement does not end when the award letter arrives.
When a match requirement should stop you
When you would have to divert restricted funds, when the in-kind you are counting on is one person's goodwill, or when meeting it means committing money you have already promised somewhere else. A match you cannot document turns into a repayment demand at audit, and that is a worse outcome than not applying.
For small municipalities this is frequently the deciding fact about an infrastructure opportunity, which is why it belongs in the first conversation, not the budget conversation. Quillify extracts match and cost share requirements from the announcement into the requirements checklist at the start, for exactly this reason.
Who asks this most
The answer above is the same whoever you are. What Quillify does about it is not.
Related
- Is your organization ready to apply for grants?What does my organization need before it can apply for grants?
- How to read a funding announcementHow do I read a NOFO or funding announcement properly?
- Grants and government contracts are not the same thingWhat is the difference between a grant and a government contract?
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