If you're applying for a federal grant, you may come across a requirement to share in the cost of your project. This is called matching or cost sharing. In short, it means that part of the total cost needs to be covered by non-federal sources.

Matching amounts are usually shown as a percentage of the total project cost. These percentages, along with rules about which funds can be used, vary depending on the program. Always review the Notice of Funding Opportunity (NOFO) or other official guidance for your specific grant.

What Is a Match?

A match is the portion of a project’s funding that doesn’t come from federal dollars. This share is typically required in programs that aim to build strong partnerships or show local investment in the project’s success.

Some programs may require a 20 percent local match, while others might require more or less. The total cost of the project includes both the federal share and your match. Matching requirements can apply to competitive, discretionary, or formula-funded programs, and the federal share may be adjusted depending on certain conditions or community types.

Can Federal Funds Be Used as Match?

In limited situations, yes. This is called federal fund braiding. Braiding allows funds from one federal source to meet the match requirement of another, but it only works when specifically allowed by law. The funding streams must remain separate, and grantees must report to each agency on how funds are used.

For example, some programs explicitly allow their funds to be used as a match for other federal projects. Make sure to confirm in your grant’s rules or federal regulations whether braiding is allowed.

Types of Matching Contributions

Matching funds come in two forms: cash and third-party in-kind contributions.

Cash Match

A cash match is direct spending by the recipient or a project partner. These funds must be:

• Reasonable and necessary for the project
  
  
• Allowable under the federal program’s rules
  
  
• Properly documented and tracked
  
  

Cash matches can come from many sources. Common examples include state or local government funds, toll or fee revenues, or contributions from nonprofit or private sector partners. Universities, philanthropic groups, and even other federal programs (where allowed) may also contribute.

Helpful Tips for Meeting Cash Match Requirements:

• Partner with agencies or organizations that have similar goals and may be willing to invest.
  
  
• Explore whether toll revenue, local fees, or special district funding might be eligible.
  
  
• Review all program documents to confirm whether other federal funds may be used.
  
  

Third-Party In-Kind Match

An in-kind match refers to goods or services donated by third parties that have value but aren’t cash. These can include:

• Donated equipment or office space
  
  
• Volunteer labor
  
  
• Services provided at no cost by another organization
  
  
• Materials or real property used for the project
  
  

The value of in-kind contributions must be fair and supported by documentation. The contributions also need to meet the same standards as other project costs: they must be necessary, reasonable, and allowed by the program.

Valuing In-Kind Contributions:

• Use the fair market value for donated items or space.
  
  
• Volunteer services should be valued at a rate consistent with similar work in your area.
  
  
• If staff from another organization provide free services, use their actual rate of pay plus fringe benefits and any approved indirect costs.
  
  

Helpful Tips for In-Kind Match:

• Track volunteer hours and use appropriate wage rates for calculations.
  
  
• Include donated meeting rooms or workspace at fair rental value.
  
  
• Keep detailed records of all in-kind contributions, including who provided them and when.

Matching Funds Follow the Same Rules

Matching contributions must follow the same federal rules as the grant funds themselves. If a cost is not allowed under your grant, it can’t be covered with match funds either.

Let’s say your grant doesn’t allow conference travel. You can’t cover it using match contributions just because the federal portion won’t pay for it. The restriction applies to the entire project budget, not just the federal share.

Calculating Your Required Match

To figure out how much of a match you need, follow these steps:

1. Determine your total project cost.
   Example: $125,000
   
   
2. Apply the federal share percentage.
   $125,000 × 80% = $100,000 (Federal contribution)
   
   
3. Apply the local share percentage.
   $125,000 × 20% = $25,000 (Your required match)

Keep in mind that these percentages vary by program. Double-check your NOFO or grant agreement to confirm what’s required.

You don’t usually have to submit match documentation with your application, but you must keep it on file. If your project is audited or reviewed, you'll need to show:

• The source of your match
  
  
• The timing of the contributions
  
  
• That the contributions were allowable and properly valued
  
  

You must also report match amounts as part of your regular financial reporting, such as on your Federal Financial Reports (FFRs).

If you go over your required match, those extra funds still need to be documented just like the required amount. And if you’re working with subrecipients, you’re responsible for ensuring they meet the match requirements too.

Understanding cost sharing and in-kind matching is a big part of managing a federal grant successfully. These requirements show commitment from the project team and community, but they come with rules that must be followed closely.

Be sure to read your funding notice, track every contribution carefully, and talk with your grant program contact if anything is unclear.

If you need help navigating your match requirements, preparing your documentation, or building partnerships to meet local cost-share needs, USFCR is here to support your efforts.

Need Assistance?

USFCR’s Consulting Division offers assistance on grant applications through both grant writing and review & submission services. To learn more about grant services or the sourcing of other grants, please contact us at  (877) 252-2700 or complete the grant assessment below.

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