Federal grant in-kind contributions are non-cash resources — volunteer labor, donated equipment, free use of space, loaned staff — that a third party provides to your federally funded project and that you can count toward a cost-sharing or matching requirement. The rules live in 2 CFR Part 200, the Uniform Guidance, and they cover what qualifies, how you value it, and what you have to document. Miss a step and the contribution can be disallowed, which usually means you fall short of your required match.
Cash your organization spends on the project is also cost sharing, but it is not in-kind. The in-kind piece is specifically the non-cash property or services that outside parties give you without sending a bill.1eCFR. 2 CFR 200.1 – Definitions For grantees that cannot write a check to cover their full match, in-kind is often the only realistic way to meet the requirement.
The Seven Criteria Every Contribution Must Meet
A federal agency or pass-through entity can accept an in-kind contribution as cost sharing only if it satisfies all seven conditions in the Uniform Guidance:2eCFR. 2 CFR 200.306 – Cost Sharing
- Verifiable in your organization’s records so an auditor can confirm it.
- Not counted toward more than one federal award.
- Necessary and reasonable for accomplishing the project’s objectives.
- Allowable under the Uniform Guidance cost principles, meaning the cost would have been permitted if you had paid cash for it.
- Not paid for by another federal award, unless a specific statute allows cross-program matching.
- Included in the approved budget when the federal agency requires it.
- Otherwise compliant with 2 CFR Part 200.
The double-counting rule catches organizations that run several federal awards at once, especially when the same volunteer helps on multiple projects. One hour of donated time can be applied to one award, not two.
What Kinds of Resources Qualify
Volunteer Services
Professional, technical, or unskilled labor performed by a third-party volunteer counts, as long as the service is necessary to the grant program.2eCFR. 2 CFR 200.306 – Cost Sharing An attorney reviewing contracts, a data analyst pulling reports, a community member helping at an event — all fair game, provided the work ties directly to funded activities.
Loaned Employees
When another organization assigns one of its employees to work on your project, that is a distinct category from volunteer labor. The difference shows up in valuation: you use the employee’s actual pay rate from the lending organization, not a market rate.
Donated Property, Equipment, and Supplies
Physical goods qualify. The regulations name equipment, office supplies, laboratory supplies, and workshop or classroom materials as examples.2eCFR. 2 CFR 200.306 – Cost Sharing The item has to be dedicated to grant activities; general supplies that benefit your whole organization will not survive a review.
Donated Space and Facilities
Office space, laboratory space, meeting rooms, or other facilities provided at no cost can count at their fair rental value, provided the space is actually used for the project.
Valuing Each Type
This is where in-kind claims fall apart most often. You do not get to assign a number that feels reasonable; each category has a prescribed method.
Volunteer Services
The rate must be consistent with what your organization pays its own employees for similar work. If no one on staff does comparable work, use rates paid for similar services in the local labor market. Allowable fringe benefits can be added on top.2eCFR. 2 CFR 200.306 – Cost Sharing Match the rate to the work: a donated attorney’s hour is valued at local attorney rates, not at your administrative pay scale.
Loaned Employees
Value a loaned employee at their regular rate of pay plus reasonable fringe benefits and indirect costs at the lending organization’s federally negotiated rate. Important limit: this only applies if the employee is using the same skills on your project that they use in their regular job. A software developer loaned to do data entry cannot be valued at a developer’s salary.2eCFR. 2 CFR 200.306 – Cost Sharing
Donated Equipment and Supplies
The value cannot exceed fair market value at the time of donation.2eCFR. 2 CFR 200.306 – Cost Sharing Equipment that is loaned rather than donated outright is capped at fair rental value.
A distinction that many recipients miss until an audit surfaces it: if the grant’s purpose is to help you acquire equipment or property, you can claim the full donated value as cost sharing. If the grant supports activities that merely use equipment, you can generally only claim depreciation charges, unless the award terms specifically allow fair market value.2eCFR. 2 CFR 200.306 – Cost Sharing
Donated Land, Buildings, and Space
Donated land and buildings must be valued at no more than fair market value at the time of donation, established by an independent appraiser (such as a certified real property appraiser or a General Services Administration representative) and certified by a responsible official of your organization.2eCFR. 2 CFR 200.306 – Cost Sharing Donated office or lab space is valued at the fair rental rate for comparable privately owned space in the same area, also set by independent appraisal. Commercial appraisals typically cost several thousand dollars; build that into your planning.
Unrecovered Indirect Costs
Your organization’s overhead — utilities, IT, administration — can also count toward cost sharing, but only the unrecovered portion. If your federally negotiated indirect cost rate is 45 percent and you only charge 30 percent to the grant, the 15 percent difference is unrecovered indirect cost and can be applied to your match. It requires prior approval from the federal agency or pass-through entity.2eCFR. 2 CFR 200.306 – Cost Sharing
Voluntary Cost Sharing on Research Grants
A caution worth knowing before you write your proposal. Federal agencies are told not to expect voluntary cost sharing on research grants, and they may not use voluntary committed cost sharing as a factor in merit review of research grant applications unless a specific statute or regulation authorizes it and the funding announcement says so.2eCFR. 2 CFR 200.306 – Cost Sharing For non-research programs, agencies are discouraged from weighing voluntary cost sharing but not barred; if they do, the funding announcement has to explain how it will be considered.
The practical point: do not offer cost sharing on a research grant unless the notice of funding opportunity asks for it. Once you commit it in your proposal, it becomes a binding term of the award, and falling short carries the same consequences as missing a mandatory match.
Documentation and Record Retention
In-kind contributions require the same documentation discipline as cash. Fair market value must be documented and, where feasible, supported by the same internal methods your organization uses to track paid costs.3eCFR. 2 CFR 200.306 – Cost Sharing What that looks like in practice varies by contribution type.
For volunteer labor, keep a time log per individual that captures dates worked, hours served, tasks performed, the hourly rate used, and the total calculated value. Both the volunteer and a project official should sign it. For loaned employees, add documentation from the lending organization confirming the regular pay rate and fringe benefits.
For donated property and supplies, record a description of the item, the donation date, the donor’s identity, and the basis for the assigned fair market value — a vendor quote, receipt, or price comparison. For donated space, keep the independent appraisal along with records of the dates and extent of use.
All records related to a federal award must be kept for at least three years from the date you submit your final financial report. For awards reported quarterly or annually, the three-year clock starts from submission of each report.4eCFR. 2 CFR 200.334 – Record Retention Requirements If an audit, claim, or dispute is open when that period ends, hold the records until it is resolved.
What Happens If a Contribution Is Disallowed
If an auditor or the federal agency finds that a contribution does not meet the Uniform Guidance standards — the valuation was unsupported, the item was double-counted, the documentation was thin — the contribution can be disallowed. You lose the matching credit, which may drop you below your required cost-sharing threshold.
From there, the agency has a range of remedies for noncompliance:5eCFR. 2 CFR 200.339 – Remedies for Noncompliance
- Temporarily withholding cash payments until the problem is corrected.
- Disallowing the use of federal funds and any matching credit tied to the noncompliant activity.
- Partially or fully suspending or terminating the award.
- Initiating debarment proceedings that would bar the organization from receiving federal awards.
- Withholding additional federal awards for the project or program.
Agencies usually impose additional conditions and give you a chance to fix the issue before pulling the harder levers. Even so, the most common audit finding on in-kind contributions is inadequate documentation, which is fixable only before the fact. Build volunteer tracking, donor records, and appraisal files into your project management from the first day of the award rather than reconstructing them under audit pressure.