Handling Cost Sharing

Some sponsors require that grantee organizations contribute to some of the costs of a project that is being sponsored. This cost sharing is supported in Grantee Management by classifying the account assignment fund as external or internal. Monies received from the sponsor are recorded on an external fund, while contributions from the grantee organizations are recorded on internal funds.

The fund is available in budgeting, as well as on all commitment- and expense-generating transactions such as purchasing documents and invoices. This allows you to separate the sponsor and grantee contributions for all the relevant business processes, and also in reporting.

Detailed cost sharing requirements can be entered in Grant Master Data and this can be used for automatic account assignment splitting and cost share reporting.

This lesson describes these functionalities in detail.

Before a fund can be used in Grantee Management, it needs to be classified as external or internal. This is done by setting the Fund Type attribute to GM Fund Type.

The following cost share related information can be entered on the Grant Master data:

• Cost Sharing Rule (pre-delivered)
• Cost Share percentage for all relevant Sponsored Program, Sponsored Class, and Fund combinations; view the following for more information on how Sponsored Classes and Funds are marked as relevant for Cost Share
• Template Cost Share Rate, which is the field that enables you to fill the template rate in all marked lines of the table when the Apply Template Cost Share Rate button is pressed - simplifying the way you enter the rates

The two pre-delivered Cost Share rules are as follows:

• Sponsored Contribution: A grant amount of 100% for the sponsor is used as the basis for calculating the percentage cost share involvement of the organization. For this rule, a sponsor gives a specific amount and expects the grantee to contribute an amount equal to a percentage of what was funded.

  Example: If the organization and the sponsor have the same shares of the total budget for the grant, a cost share rate of 100% is to be entered in the grant master data. If the sponsor funds the grant at $10,000 and requires a 50% cost share, the grantee will need to fund $5,000.

• Project Cost: A total budget for the grant of 100% is used as the basis for calculating the percentage cost share involvement of the sponsor and the organization. For this rule, a sponsor requires that costs posted to the grant be shared based on a specific percentage.

  Example: The organization and the sponsor have the same shares of the total budget for the grant. A cost share rate of 50% is to be entered in the grant master record. For this example the sponsor requires a 50% participation from the grantee. Costs posted to the grant will be split 50/50 to the internal and external funds.

The Cost Share information is used for automatic account assignment split and in reporting (see the following material).

A cost share percentage can only be entered for Sponsored Classes and internal Funds combinations which are flagged as relevant for Cost Sharing.

While only one external fund is allowed on a grant the cost share contribution can be split between multiple internal funds.

By default all Sponsored Programs are relevant for Cost Sharing. See the following figure, TITLE, as an example.

For Grants with cost share requirements, budget consumption costs can be split automatically between external and internal funds according to the percentages given in the Grant master data. Grantee Management uses the Account Assignment Distribution functionality that is described in detail in the following course: IPSC1 - Implementation of Budget Management Process in SAP S/4HANA Cloud, Public Edition for Public Sector

Distribution rules for grants cost sharing need to be set up with the rule type, GM Cost Sharing Rule. In rules with this type, only the binding rule and action profile can be set and they have the same functionality as described in the Account Assignment Distribution functionality. Field Profile and distribution items are not needed since the distribution is always between funds only and the distribution is calculated from the cost share percentages in the Grant master data.

A derivation of the distribution rule is needed for rules of the following type: GM Cost Sharing Rule. The example in the following figure shows you a derivation of the splitting rule, GRANT, for all grants with a non-empty cost share rule.

In all queries, the sponsor and grantee spending can be evaluated using the fund. The following example shows you the values for the grant, Demo Grant:

On the internal fund, General Fund:

• Cost share budget $1,200.00
• Cost share spending $214.72

On the external fund, Grant funds ext.:

• Sponsored budget $12,000.00
• Spending of sponsored money $2,359.28

This figure shows you the budget and commitment/actual items query.

In addition to standard queries, two dedicated cost share reports are available: one is for spending, and one is for budget figures. These reports show, beside the posted values, the calculated cost share contribution.

The calculation of cost share contribution is done with the posted sponsor values and the cost share rule and cost share percentages given in the Grant master data.

In the following example, the excess Cost Share contribution is zero. This means that the budget figures match the cost share percentages entered in the Grant master data.

In the following example, the excess Cost Share contribution is $-21.21. This means that $21.21 cost share spending needs to be posted on internal fund General Fund to match the cost share percentages entered in the Grant master data.

Watch the simulation Create Automatic Account Assignment Distribution Rule to learn more about the system-related activities.