Third-party In-kind Contributions

A third-party in-kind contribution is a type of cost share on a Federal grant or cooperative agreement.

This information applies to:

All grants and cooperative agreements

Contents

Authorities

2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

§200.1 Third-party in-kind contributions.

Third-party in-kind contributions means the value of non-cash contributions (meaning, property or services) that:

(a) Benefit a project or program funded by a Federal award; and

(b) Are contributed by non-Federal third parties, without charge, to a recipient or subrecipient under a Federal award.

§200.306 Cost sharing.

(b) For all Federal awards, the Federal agency or pass-through entity must accept any cost sharing funds (including cash and third-party in-kind contributions, and also including funds committed by the recipient, subrecipient, or third parties) as part of the recipient's or subrecipient's contributions to a program when the funds:

(1) Are verifiable in the recipient's or subrecipient's records;

(2) Are not included as contributions for any other Federal award;

(3) Are necessary and reasonable for achieving the objectives of the Federal award;

(4) Are allowable under subpart E;

(5) Are not paid by the Federal Government under another Federal award, except where the program's Federal authorizing statute specifically provides that Federal funds made available for the program can be applied to cost sharing requirements of other Federal programs;

(6) Are provided for in the approved budget when required by the Federal agency; and

(7) Conform to other applicable provisions of this part.

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(e) Volunteer services furnished by third-party professional and technical personnel, consultants, and other labor may be counted as cost sharing if the service is necessary for the program. Rates for third-party volunteer services must be consistent with those paid for similar work by the recipient or subrecipient. When the required skills are not found in the recipient's or subrecipient's workforce, rates must be consistent with those paid for similar work in the labor market where the recipient or subrecipient competes for the services involved. In either case, fringe benefits that are allowable, allocable, and reasonable may be included in the valuation.

(f) When a third-party organization furnishes the services of an employee, these services must be valued at the employee's regular rate of pay plus an amount of fringe benefits that is reasonable, necessary, allocable, and otherwise allowable, and indirect costs at either the third-party organization's approved federally-negotiated indirect cost rate or, a rate in accordance with § 200.414(d) provided these services employ the same skill(s) for which the employee is normally paid. Where donated services are treated as indirect costs, indirect cost rates will separate the value of the donated services so that reimbursement for the donated services will not be made.

(g) Donated property from third parties may include items such as equipment, office supplies, laboratory supplies, or workshop and classroom supplies. The assessed value of donated property included as cost sharing must not exceed the property's fair market value at the time of the donation.

(h) The method used for determining the value of donated equipment, buildings, and land for which title passes to the recipient or subrecipient may differ according to the following:

(1) If the purpose of the Federal award is to assist the recipient or subrecipient in acquiring equipment, buildings, or land, the aggregate value of the donated property may be claimed as cost sharing.

(2) If the purpose of the Federal award is to support activities that require the use of equipment, buildings, or land, only depreciation charges for equipment and buildings may be made. However, the fair market value of equipment or other capital assets and fair rental charges for land may be allowed if provided in the terms and conditions of the Federal award. See § 200.420.

(i) The value of donated property must be determined in accordance with the accounting policies of the recipient or subrecipient with the following qualifications:

(1) The value of donated land and buildings must not exceed its fair market value at the time of donation to the recipient or subrecipient as established by an independent appraiser (for example, certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient or subrecipient as required by the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601-4655) except as provided in the implementing regulations at 49 CFR part 24, “Uniform Relocation Assistance And Real Property Acquisition For Federal And Federally-Assisted Programs.”

(2) The value of donated equipment must not exceed the fair market value at the time of donation.

(3) The value of donated space must not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.

(4) The value of loaned equipment must not exceed its fair rental value.

(j) The fair market value of third-party in-kind contributions must be documented and, to the extent feasible, supported by the same methods used internally by the recipient or subrecipient.

§200.434 Contributions and donations.

(a) Costs of contributions and donations, including cash, property, and services, from the recipient or subrecipient to other entities are unallowable.

(b) The value of services and property donated (that is, in-kind donations) to the recipient or subrecipient may not be charged to the Federal award either as a direct or indirect cost. The value of donated services and property may be used to meet cost sharing requirements (see § 200.306). Depreciation on donated assets is permitted so long as the donated property is not counted towards meeting cost sharing requirements (see § 200.436).

(c) Services donated or volunteered to the recipient or subrecipient may be provided by professional and technical personnel, consultants, and other skilled and unskilled labor. The value of these services may not be charged to the Federal award as a direct or indirect cost. However, the value of donated services may be used to meet cost sharing requirements in accordance with the provisions of § 200.306.

(d) To the extent feasible, services donated to the recipient or subrecipient will be supported by the same methods used to support the allocability of regular personnel services.

(e) The following provisions apply to nonprofit organizations. The value of services donated to a nonprofit organization and used in the performance of a direct cost activity must be considered in the determination of the recipient's or subrecipient's indirect cost rate(s) and, accordingly, must be allocated a proportionate share of applicable indirect costs when the following circumstances exist:

(1) The aggregate value of the services is material;

(2) The services are supported by a significant amount of the indirect costs incurred by the recipient or subrecipient;

(i) In those instances where there is no basis for determining the fair market value of the services rendered, the recipient or subrecipient and the cognizant agency for indirect costs must negotiate an appropriate allocation of indirect cost to the services.

(ii) Where donated services directly benefit a project supported by the Federal award, the indirect costs allocated to the services will be considered as a part of the project's total costs. Such indirect costs may be reimbursed under the Federal award or used to meet cost sharing requirements.

(f) Fair market value of donated services must be computed as described in § 200.306.

(g) Personal property and use of space.

(1) Donated personal property and use of space may be furnished to a recipient or subrecipient. The value of the personal property and space may not be charged to the Federal award either as a direct or indirect cost.

(2) The value of the donations of personal property and use of space may be used to meet cost sharing requirements described in § 200.300. The recipient or subrecipient must value the donations in accordance with § 200.300. Where the recipient or subrecipient treats donations as indirect costs, indirect cost rates must separate the value of the donations so that reimbursement is not made.

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Frequently Asked Questions

How is the value determined for donated services?

Volunteer services or unpaid services provided to a recipient or subrecipient by individuals will be valued at rates consistent with those ordinarily paid for similar work in the grantee’s or subgrantee’s organization. If the recipient or subrecipient does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in the same labor market. In either case, a reasonable amount for fringe benefits may be included in the valuation.

When an employer other than a recipient, subrecipient, or cost-type contractor furnishes free of charge the services of an employee in the employee’s normal line of work, the services will be valued at the employee’s regular rate of pay exclusive of the employee’s fringe benefits and overhead costs.

How are volunteer donated services properly documented?

To the extent feasible, volunteer services will be supported by the same methods that the recipient's or subrecipient's organization uses to support the allocability of regular personnel costs. In general this means time and activity reporting sheets should be completed and should include:

Each volunteer by name
The date volunteer hours were donated
The number of hours volunteered
The activity that was performed by the volunteer
A signature of each volunteer
A signature or initials of an authorized agency official who reviewed and approved the time and activity report

How is the value determined for donated supplies and loaned equipment or space?

If a third party donates supplies, the contribution will be valued at the market value of the supplies at the time of donation.

If a third party donates the use of equipment or space in a building but retains title, the contribution will be valued at the fair rental rate of the equipment or space.

If a third party donates equipment, buildings, or land, and title passes to a recipient or subrecipient, the treatment of the donated property will depend upon the purpose of the grant or subgrant, as follows:

(1) Awards for capital expenditures. If the purpose of the Federal award is to assist the recipient or subrecipient in the acquisition of property, the market value of that property at the time of donation may be counted as cost sharing,

(2) If the purpose of the Federal award is to support activities that require the use of equipment, buildings, or land, only depreciation charges for equipment and buildings may be made. However, the fair market value of equipment or other capital assets and fair rental charges for land may be allowed if provided in the terms and conditions of the Federal award.

How is the value determined for real property donated by a recipient or subrecipient for the purpose of construction or acquisition?

When a Federal agency or pass-through entity authorizes a recipient or subrecipient to donate buildings or land for construction/facilities acquisition projects or long-term use, the value of the donated property for cost sharing must be the lesser of paragraph (d)(1) or (2) below:

(1) The value of the remaining life of the property recorded in the recipient's or subrecipient's accounting records at the time of donation.

(2) The current fair market value. However, when there is sufficient justification, the Federal agency or pass-through may approve using the current fair market value of the donated property, even if it exceeds the value described in paragraph (d)(1) at the time of donation.

May I use prison labor as in-kind match on my grant?

Prison labor from state and local correctional institutions is allowable third-party in-kind match, as long as the costs meet the allowable cost criteria from the applicable cost principles. Recipients and subrecipients may not use labor from Federal institutions, because match must come from a non-federal source. Whether the prisoners receive minimal compensation from the correctional institution for their services is immaterial for the purposes of determining allowable costs for third party in-kind in this situation.

How would I value prison labor used as third-party in-kind match?

Prison labor should be valued at the cost the recipient or subrecipient would have paid for the service. Typically, prisoners perform manual labor services on grants. In this case, the most appropriate rate would be the Federal minimum wage.

Is the value of youth labor allowable as in-kind match on my grant?

Yes, volunteer third-party in-kind services provided by youth organizations or individuals are allowable, as long as the costs meet the allowable cost criteria from the applicable cost principles.

Is there a minimum age requirement necessary in order to document and use youth in-kind on my grant and comply with the Fair Labor Standard Act?

No. The Fair Labor Standards Act (FLSA) defines employment very broadly, i.e., "to suffer or permit to work." However, the Supreme Court has made it clear that the FLSA was not intended "to stamp all persons as employees who without any express or implied compensation agreement might work for their own advantage on the premises of another." In administering the FLSA, the Department of Labor follows this judicial guidance in the case of individuals serving as unpaid volunteers in various community services. Individuals who volunteer or donate their services, usually on a part-time basis, for public service, religious or humanitarian objectives, not as employees and without contemplation of pay, are not considered employees of the religious, charitable or similar non-profit organizations that receive their service. This information was obtained from the U.S. Department of Labor website at the following address: http://www.dol.gov/elaws/esa/flsa/docs/volunteers.asp

How would I value third-party in-kind labor donations from a youth?

Youth labor should be valued at the cost the recipient or subrecipient would have paid for the service. You should consider whether the work performed by the youth is equal to the work performed by a State employee and make valuation adjustments accordingly.

Can I use a third-party in-kind donation from the National Guard?

Yes, the donation of personnel time is an allowable in-kind match, as long as the costs meet the allowable cost criteria from the applicable cost principles. The donation of equipment time is not allowable, as the Federal government typically funds equipment for the National Guard.

Can I use time contributed by AmeriCorps interns as third-party in-kind match?

No, Although these volunteers may work on federally-funded projects, their services may not be used by a recipient or subrecipient to fulfill the cost sharing requirement to federal grant program funds. AmeriCorps funding ultimately comes from the Federal Government, and therefore a federally funded volunteer organization such as AmeriCorps, and any of their assets cannot be used to contribute to the cost-sharing requirement on a Federal grant.

The Assistant Inspector General for the Corporation for National and Community Service, their Director of Grants Management, as well as grants managers for other federally-funded volunteer organizations were consulted on this issue.

What is a third party for the purposes of in-kind?

An entity that does not have a financial interest in the transaction. If the entity is receiving funding from the financial assistance transaction either as a subrecipient or vendor/contractor, they are not considered a third party. A common third party entity is a volunteer who works on a grant or cooperative agreement funded education program.

A subrecipient is offering to discount part of the cost of the work they are contributing to a grant/cooperative agreement. If they are not third party, is there a way I can count the value of the services as match?

Yes, these costs are called discounted services. If the costs are eligible and allowable costs, they can be documented and claimed as match on the award. Please note, that all non-cash transactions present a higher audit risk for the recipient. The recipient should ensure that a proper value of the discount has been determined and documented in the recipient award file. If you are unsure of how to value the contribution, please consult your FWS representative.

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