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Policy on Cost-Sharing for Grant and Non-Repayable Contribution Agreements

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July 2019

1 Objective

1.1 The objective of the Policy on Cost-Sharing for Grant and Non-Repayable Contribution Agreements (“the Policy on Cost-Sharing”) is to provide clarity, transparency and predictability to the application of cost-share requirements for ¶¶ÒùÊÓƵ (the Department), its applicants and its recipients.

1.2 The Policy on Cost-Sharing outlines the percentage, types and sources of contributions that the Department will accept as cost-share. It also outlines accountability, assessment, compliance, monitoring and reporting requirements.

2 Application

2.1 The Policy on Cost-Sharing applies to all grant^{Footnote 1} and non-repayable contribution agreements approved by the Department that are associated with international assistance.

2.2 The policy will not supersede any terms and conditions associated with development, foreign affairs or trade programming.

3 Effective date

3.1 The Policy on Cost-Sharing is effective as of October 1, 2018, and applies to all new applications for funding received on or after April 1, 2019.

3.2 The policy may be reviewed, as required.

4 Parameters

4.1 Types of cost-share

4.1.1 The Policy on Cost-Sharing only allows cost-share contributions, either cash and/or in-kind^{Footnote 2}, that are deemed eligible project costs^{Footnote 3}. Any combination of cash and/or in-kind contributions is acceptable.

4.1.2 The source of the recipient’s cost-share contribution can be from Canadian and/or international sources. In all cases, contributions must come from auditable sources to ensure they can be verified by the Department, as may be required.

4.2 Sources of cost-share

4.2.1 The cost-share contribution can be provided by the recipient^{Footnote 4} and/or other sources, including other civil society organizations, other donor(s) or international organizations, other country governments^{Footnote 5} , regional institutions or the private sector.

4.2.2 The recipient may receive funds from other sources, including monies raised for child sponsorship, but they must maintain records to substantiate that they have been transparent with their funders that donations could be used as cost-share to support broader international assistance programming. These records must be made available to the Department, upon request.

4.2.3 Funding received from Canadian federal government sources cannot be used toward cost-share contributions.

4.2.4 The contributions of a project’s intended recipients cannot be used to account for the recipient’s cost-share. In the context of this policy, “intended recipients” means the individuals or organizations that directly benefit from the project.

5 Accountability

5.1 The cost-share contribution must be accounted for by the recipient with whom the Department has signed the agreement.

5.2 Eligible cash contributions coming from other sources must flow through the accounts of a signatory to the agreement, unless an adequate rationale has been provided to and accepted by the Department.

6 Percentage

6.1 A minimum rate of 5% cost-share will be required for all international assistance projects, unless stipulated in the terms and conditions of a specific program. Exemptions are outlined in Appendix 2.

6.2 Any exemption that is not already referenced in Appendix 2 must be justified within approval documents on an exceptional basis.

7 Assessment

7.1 The cost-share percentage stipulated in this policy is a minimum threshold. Recipients are encouraged to exceed the minimum, however, as much as possible.

7.2 The applicant will not be awarded funding if it does not include the required minimum cost-share in its application or if it is deemed unable to contribute the minimum cost-share required by the Policy on Cost-Sharing.

7.3 The cost-share contribution must be of fair value^{Footnote 6} for either in-kind or cash contributions as opposed to fair market value.

8 Monitoring and reporting

8.1 The recipient must report all cost-share contributions^{Footnote 7} from eligible sources.

8.2 The cost-share contributions will be monitored by the Department throughout the project duration.

8.3 The cost-share contributions must be identifiable, verifiable, transparent and auditable during and after the project period.

9 Compliance

9.1 The Department reserves the right to verify, prior to signing the agreement, whether the recipient is in a financial position to contribute the proposed cost-share.

9.2 The Department reserves the right to proceed with one or a combination of actions if the recipient is not contributing the required cost-share and has not provided an adequate justification. These actions include:

• requiring the recipient to pay the cost-share amount owing;
• withholding amounts from any payment;
• terminating the agreement or modifying its terms.

10 Definitions^{Footnote 8}

• Beneficiary (ies): People and organization(s) in the country (ies) that directly benefit from the project.
• Cost-share: Cash or in-kind contribution, where project costs are shared by the involved parties, according to an agreed-upon formula.
• Eligible costs: Direct project implementation costs, such as salary and travel costs, which are outlined in the approved budget. Eligible costs depend on the exact nature of the project and can vary from one project to another. Some costs could be deemed non-essential to obtain expected results and would therefore be ineligible for reimbursement.
• Fair market value: Methodology that includes the notion of profit and is defined as a value determined and agreed upon by two willing parties in a market where competition can be freely exercised.
• Fair value: Methodology based on a value that can be attributed to a service or asset, excluding profit margin and/or overhead.
• In-kind contribution: A non-cash contribution provided to the project in the form of goods or services to which a value can be attributed, and that would have been otherwise purchased and paid for during the project life cycle to achieve the results.
• Recipient: Signatory (ies) to the financial instrument.

Appendix 1: In-Kind Contributions for Grant and Non-Repayable Contribution Agreements

1 Purpose

To provide information and set principles regarding the types and valuation of eligible in-kind contributions.

2 Eligibility

To be accepted and recognized, an in-kind contribution must:

• be directly related to the implementation of the project (in other words, the good or service would otherwise have been purchased to achieve the desired project results);
• be offered at no cost^{Footnote 9};
• be based on the fair value^{Footnote 10} as opposed to the fair market value;
• be identifiable, verifiable and auditable throughout the project life cycle; and
• not have been paid for by the Department or from other federal government sources.

2.1 Volunteer services

The value attributed to a volunteer’s service must be determined based on the rate of compensation associated with equivalent services under similar working conditions. Where the services are offered as in-kind by the recipient’s employees, the recipient will be required to demonstrate that such employees are on unpaid leave.

2.2 Facilities and assets

Where the recipient’s in-kind contribution is in the form of consumable goods, facilities or assets of a combined value greater than $200,000, the Department must confirm the valuation of the in-kind contribution prior to the signature of the agreement. Below the threshold of $200,000, the in-kind contribution will not be accepted by the Department.

2.3 Loyalty points or equivalent

The use of loyalty points or equivalent for travelling is acceptable provided that the lowest fare rate was used as well as the most direct routing at the time of reservation.

3 Assessment

The organization is responsible to identify, assess and validate its in-kind contributions using the above eligibility criteria. This assessment will be reviewed by the Department on an individual project basis.

Appendix 2: Cost-sharing parameters