GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE PROGRAMS (GEAR
UP),

OFFICE OF POSTSECONDARY EDUCATION,

UNITED STATES DEPARTMENT OF EDUCATION

Matching Requirements

What are the matching requirements for the GEAR UP program?

-   Dollar-for-dollar match: Section 404C(b) of the Higher Education Act
    requires that at least 50 percent of the *total cost* of a GEAR UP
    project to be paid with State, local, institutional, or private
    funds (*i.e.,* for each dollar of Federal funds received, at least
    one dollar of State or private funds must be contributed). Matching
    contributions can be in the form of cash or documented in-kind
    contributions.

-   Contributions that exceed the statutory minimum: Some GEAR UP
    grantees proposed in their applications matching contributions
    exceeding the statutory minimum. Under the GEAR UP regulations at 34
    CFR 694.7(a)(2), a grantee is obligated to contribute the entire
    amount of match stated in its application, even if the amount
    exceeds the statutory requirement.

-   Timing of contributions: Grantees are required by the GEAR UP
    regulations at 34 CFR 694.7(a)(2) to comply with the matching
    percentage stated in their applications *for each individual year*
    of the grant. In other words, grantees must make their matching
    contributions in the year designated in their applications. Federal
    grants are subject to audit at any time during the grant period, and
    auditors may look at matching contributions before the end of the
    grant period. Accordingly, grantees cannot fail to make matching
    contributions in the early years of a grant and then "catch up" in
    the final year or two of the grant.

What are the consequences for failure to provide matching dollars as
proposed in the application?

-   Potential consequences: Failure to provide the level of cost sharing
    reflected in the approved award budget may result in the reduction
    of the Federal award amount, a refund of Federal funds to the
    Department of Education, or possible termination of the award.

-   Audits: Cost sharing commitments are subject to audit, including
    audit by the Inspector General's office.

What types of matching contributions count toward the GEAR UP matching
requirement?

-   Types of matching: The following three types of matching are
    authorized specifically by Section 404C(c) of the Higher Education
    Act:

1.  Financial assistance: The amount of financial assistance paid to
    students from State, local, institutional, or private funds;

2.  Waivers: The amount of tuition, fees, room, or board waived or
    reduced for GEAR UP students; and

3.  Early intervention activities: The amount expended on *documented*,
    targeted, long-term mentoring and counseling provided by volunteers
    or paid staff of nonschool organizations, including businesses,
    religious organizations, community groups, postsecondary educational
    organizations, nonprofit and philanthropic organizations, and other
    organizations.

-   Applicable cost principles: Any items that would be allowable under
    the applicable cost principles if charged directly to the grant may
    be included as match for the grantee's cost sharing requirement.
    Please review OMB circulars that apply to your type of
    organization.[^1] Requirements from these circulars, such as
    requirements that costs be reasonable, allocable, and consistent,
    apply to matching as well as direct costs.

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-   Indirect costs: A GEAR UP grantee may charge indirect costs of eight
    percent or the grantee's negotiated indirect cost rate (whichever is
    less) of allowable Federal direct costs and of allowable matching
    contributions. Indirect costs cannot be charged for scholarship
    components of grants. The grantee must have an approved indirect
    cost rate agreement in order to charge indirect cost to its project.
    However, unrecovered indirect costs cannot be counted as matching
    funds. For example, if a grantee has a negotiated indirect cost rate
    of 40 percent, the grantee may charge up to eight percent of the
    Federal direct costs and matching costs (excluding scholarship
    funds) to the grant as indirect costs.

What are appropriate sources of matching contributions?

-   Sources of matching contributions: Matching contributions may be
    made from any non-Federal source, including non-Federal grants.
    (Under the Education Department General Administrative Regulations
    "EDGAR" 34 CFR 80.24, matching or cost sharing requirements may be
    satisfied by (1) allowable costs incurred by the grantee and/or (2)
    the value of third party in-kind contributions.)

-   Changes in the source of matching contributions: If a grantee finds
    that one or more of the partners in its original grant application
    is not meeting commitments to the GEAR UP project, the grantee may
    find a new partner to provide additional resources. In such cases,
    the grantee's project officer should be notified.

Are there any limitations with respect to matching contributions?

-   Matching contributions can be counted only one time: A matching
    contribution may be counted as cost sharing towards only one Federal
    project. If a grantee has multiple Federal grants, the same
    contributions cannot be counted as cost sharing for two or more
    Federal grants (including multiple GEAR UP grants).

-   Matching contributions must be incurred solely to advance the GEAR
    UP project: If matching contributions benefit both a GEAR UP project
    and another project or entity, the matching contribution must be
    credited in the proportion that it benefits the GEAR UP project. For
    example, if a GEAR UP partner hires a tutor to work with GEAR UP
    students and students that are not in the GEAR UP cohort, only the
    time that the tutor spends with GEAR UP students may be counted as
    match. Also, please note that if a GEAR UP project staff member
    divides his or her time between a GEAR UP project and another
    activity (including another GEAR UP project), time and effort
    reports must reflect the percentage of time devoted to the GEAR UP
    project.

-   Matching contributions cannot be shifted from one project to
    another: Grantees that have more than one Federal grant, including
    more than one GEAR UP grant, must document match separately for each
    grant. Matching contributions cannot be shifted from one project to
    another.

-   Matching contributions must be obligated during the grant period:
    Matching contributions must be obligated during the grant period. In
    the case of scholarship money that will not be awarded until after
    the grant period, matching contributions should be placed in a trust
    fund or otherwise set aside for the benefit of the GEAR UP cohort
    during the grant period.

How should grantees document matching contributions?

-   Documentation of a match: To avoid potential audit findings,
    documentation of match should:

1.  Capture the cost sharing identified with a particular project;

2.  Contain adequate source documentation for claimed cost sharing;

3.  Provide clear valuation of in-kind documentation; and

4.  Provide support of cost sharing by grant partners.

-   Fiscal agent: The fiscal agent of a GEAR UP project is responsible
    for documentation of all matching contributions for the entire grant
    -- even matching provided by its partners. In the event that a
    grantee is audited, documentation of the match should be housed with
    the fiscal agent. (See EDGAR, 34 CFR 75.730).

-   Valuation of in-kind contributions: Costs and third party in-kind
    contributions counting toward a matching requirement must be
    verifiable from the records of the grantee and must show how the
    value of third-party contributions was derived. (See EDGAR 34 CFR
    80.24(a)(6).) Note: *Please review applicable OMB circulars and
    EDGAR for details regarding how to value in-kind contributions.
    Requirements vary by type of organization, and by whether the
    donation came from the grantee or a third party. In most cases,
    grantees are required to value in-kind contributions of facilities
    and equipment using depreciation or use allowance rather than fair
    market value.*

Are there any exceptions to the minimum statutory match?

-   Reduced matching: In a limited number of cases, some grantees may be
    eligible for an exemption from part of the statutory matching
    requirement. Partnerships that meet the eligibility requirements
    under the GEAR UP regulations at 34 CFR 694.7(b)(2) may request
    waivers in their applications for funding, and their budgets must
    reflect the reduced cost share levels. As with all grantees, GEAR UP
    grantees that are eligible for this waiver are held to the amount of
    match indicated in their applications.

[^1]: For States, local governments, and Indian tribes, the applicable
    OMB circulars are A-87, A-102, and A-133; for educational
    institutions (even if part of a State or local government) the
    applicable OMB circulars are A-21, A-110, and A-133; and for
    non-profit organizations, the applicable OMB circulars are A-122,
    A-110, and A-133.