TLDR
Matching funds are a required contribution that your organization — or its partners — must provide alongside the federal or foundation award. Cash match is straightforward; in-kind match is where documentation problems concentrate. Both must be incurred during the grant period, valued at fair market rate, verifiable through contemporaneous records, and not simultaneously claimed as match on any other federal award.
Matching requirements are built into many federal grant programs as a mechanism to ensure the recipient organization has genuine investment in the project. Understanding the difference between cash and in-kind match, valuing both correctly, and maintaining documentation that will survive audit review is a continuous operational requirement — not a closeout task.
Cash Match vs In-Kind Match
Cash match is money your organization (or a third-party partner) spends on the grant-funded project from non-federal sources. The most straightforward examples: your organization pays staff whose salaries are partly charged to the grant as match, or a local foundation grant is specifically designated to cover match requirements for a federal award.
Cash match is documented through standard financial records: payroll registers, invoices, bank statements, receipts. The documentation challenge is ensuring the costs are coded consistently in your accounting system so you can extract match totals by grant at any point.
In-kind match is non-cash contributions. It is harder to document, harder to value, and the source of most match-related audit findings. The categories:
- Volunteer time: The contribution of skilled or unskilled volunteer labor to program activities. This is often the largest in-kind match source for community-based organizations. Skilled volunteer time (attorneys doing legal clinics, accountants doing financial counseling, clinicians doing health screenings) can be valued at the professional’s normal billing rate. Unskilled volunteer time is valued at the federal minimum wage or the applicable local prevailing wage, whichever is higher.
- Donated professional services: A consultant, firm, or organization that provides services for free that would otherwise be purchased. The value is the normal market rate for those services.
- Donated supplies and materials: Goods donated to the program and used in program activities. Valued at the fair market value of the goods at the time of donation — not the donor’s book value.
- Donated space: Office, program, or storage space made available at no charge. Valued at the comparable commercial rental rate for similar space in the same geographic market.
- Donated equipment: Equipment provided for use on the project. If donated for permanent use, valued at fair market value. If on loan, valued at a fair rental rate for the period.
Timing Rules
Match must be incurred during the approved grant period. Pre-period contributions — even if directly related to the project — do not count as match unless the grant agreement explicitly allows pre-period cost sharing. Post-period contributions do not count regardless of circumstances.
For volunteer time, the time must be logged during the grant period. A batch of backdated time logs submitted at closeout is inadequate even if the volunteer actually worked those hours — auditors look for evidence that logs were maintained contemporaneously, not reconstructed.
Valuing In-Kind Match
The valuation approach must be documented and defensible. The general standard: value in-kind contributions at fair market value at the time the contribution is made, using rates that would apply if you were purchasing the same goods or services in a normal market transaction.
Specific valuation approaches by type:
Volunteer time from non-professionals: Use the Independent Sector’s annually published value of volunteer time as a benchmark, or document the applicable minimum wage or prevailing wage rate for the type of work performed.
Volunteer time from professionals: Use the individual’s normal hourly rate for the specific professional services provided. Document this rate — ask the volunteer’s employer for a letter confirming the billing rate, or use publicly available rate information for comparable professionals in the market.
Donated space: Get three comparable commercial rental listings for similar space in the same area and take an average, or obtain a written statement from a local commercial real estate professional. Retain the support documentation.
Donated goods: Obtain and retain a receipt or invoice showing the market price at the time of donation. If no receipt is available, use catalog prices or other market documentation.
Documentation Requirements by Match Type
| Match Type | Minimum Documentation |
|---|---|
| Employee salary match | Payroll registers, time sheets showing hours on project, pay rate |
| Volunteer time | Time logs signed by volunteer, rate basis documentation |
| Donated professional services | Written description of services, hours logged, market rate documentation |
| Donated supplies | Receipt or market price documentation, inventory log |
| Donated space | Lease comparables or market rate documentation, usage log |
| Third-party cash | Documentation of third-party expenditure (invoice, receipt, bank statement) |
All match documentation must be retained for the same period as other grant records — minimum three years from submission of the final expenditure report, longer if required by program rules or pending audit.
Common Disallowed Match
No contemporaneous time records for volunteer time. This is the most frequent in-kind match disallowance. A summary statement that “20 volunteers contributed 400 hours during the grant year” is not adequate. Each volunteer must have individual, signed time records showing specific dates and activities.
Using federal funds as match. Costs paid from another federal award cannot be match on a federal grant, unless the program’s authorizing statute specifically permits it. If you are unsure whether a funding source is federal or non-federal (for example, a federal block grant passed through the state), check the CFDA number or ask the funder.
Double counting match across grants. The same cost cannot satisfy match requirements on more than one federal award. If your organization has multiple federal grants with matching requirements, each dollar of match must be allocated to a single award.
Match not connected to the funded project. In-kind contributions must be necessary and reasonable for accomplishing the objectives of the funded program. Volunteer time spent on unrelated organizational activities — board meetings, fundraising events, other programs — does not qualify as match for a specific grant.
Rate documentation missing for in-kind. Claiming volunteer time or donated services without documenting the basis for the rate used is a routine audit finding. The rate documentation must exist at the time the contribution is made, not be assembled retroactively.
Monitoring Your Match Position
Do not wait until closeout to determine whether you have met the match requirement. Build match tracking into your ongoing grant reporting cycle:
- Maintain a separate match ledger by grant showing cumulative cash and in-kind contributions
- Review the match position at each reporting period alongside budget vs. actual expenditure review
- If you are behind on match halfway through the grant period, you have time to course-correct — identify additional volunteer sources, shift eligible organizational costs to the match ledger, or alert your program officer if a shortfall is likely
- Project the expected closeout match position at least 90 days before the period-of-performance end date
Organizations that discover a match shortfall at closeout have no good options. Organizations that monitor match continuously have time to address gaps before they become findings.
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