To use a simple example, if a grant applicant must provide a 25% grant match, then any approved in-kind matches can be used to satisfy a portion of that match requirement. If a grant applicant can justify 5% of the cost of the project as in-kind contributions, then the cash matching in this example would be reduced to 20%.
The BEAD grant process explicitly allows for in-kind matches. The use of in-kind matches for any federal program is described in federal regulation § 200.306 – Cost Sharing or Matching. I must warn you that the federal rules for in-kind matches are confusing, even for accountants.
In-kind matches can be contributed by the grant applicant or by a third party like the local government. The Frequently Asked Questions for BEAD provides a list of examples of costs that might be considered as an in-kind match:
- Employee or volunteer services
- Indirect costs (this one has me scratching my head)
- Computer hardware and software
- Use of facilities
- Access to rights-of-way
- Pole attachments
- Access to other types of infrastructure
How might an in-kind match work? Here are a few examples.
- There might already be empty conduits in the BEAD grant area that can be used by the BEAD grant winner to save money on construction. If the BEAD grant winner or some other owner of the conduit, like a local government, doesn’t charge for the use of the conduit, a value can be calculated for the benefit from the conduit and used as an in-kind match.
- A grant applicant might have already obtained rights-of-ways inside the BEAD grant area. Or perhaps a local government is willing to provide the rights-of-ways for free to encourage the construction of fiber. Some of that past or current value of contributed rights-of-way can be recognized as an in-kind contribution.
- A grant applicant might have made a significant investment in mapping or engineering software in the past. If it can use that software for the BEAD process without a new large charge, then some portion of the value of the software might be considered as an in-kind contribution.
- A local government might provide free permitting, location services, or traffic control as a way to encourage the construction of a fiber network. The imputed value of those services at market rates can be an in-kind contribution.
- An ISP might have multiple reels of fiber already in inventory. The cost of that fiber can be used as an in-kind contribution as long as it is not also billed as material for the construction process.
I must note that these examples are all subject to being approved by the State Broadband Office that will be administering a given BEAD grant. No in-kind contribution is automatic, and the normal process is to negotiate the use and the value of each in-kind contribution with the party awarding the grant. But since it looks like State Broadband Offices are going to be rushing the grant application process, it’s worth claiming as many legitimate in-kind matches as possible to help with the initial grant scoring.
Calculating in-kind contributions is worth pursuing because almost every BEAD grant project will benefit from some existing assets or services that can be classified as in-kind contributions. Every dollar recognized as an in-kind contribution reduces the cash contribution needed for the grant matching.
I’ve also note that there are a number of states that are giving extra grant scoring points for applicants who have local contributions towards a BEAd project. Many local governments will be unable to make cash contributions towards BEAD projects, but it’s well worth talking to them now about contributing in-kind matches.