Meeting Local Match Requirements in Infrastructure Projects
by Jen Tolentino and Lisette Partelow
While many federal grant programs have matching funds requirements, communities have some flexibility in how they meet them. Cities where raising revenue or taxes is not an option have three options to explore: 1) look for grant programs that provide waivers and flexibility for the match requirement, 2) identify in-kind contributions of equal value, or 3) use federal funds from other sources. Each of these strategies is discussed in more detail below.
Most federal competitive grant programs have a matching funds requirement that requires the applicant to provide a certain percentage of the overall project budget. Match requirements vary by program, so it is important to read the Notice of Funding Opportunity (NOFO) carefully for any grant to which you are applying. This post will focus on ways that cities and local governments can meet matching requirements if they aren’t able to provide cash for matching funds, particularly as American Rescue Plan (ARP) State and Local Fiscal Recovery Funds (SLFRF) must be obligated by 2024 and city budgets may be tighter.
1. Seek out match waivers and flexibility
In some circumstances, match requirements can be waived, especially for disadvantaged communities or those that meet Justice40 criteria. To figure out if a grant you are interested in provides waivers, please see this list of programs covered by the Justice40 initiative. The DOT Discretionary Grants Dashboard also allows you to filter your search for programs that include a match waiver. And to find out whether your city or project location would be eligible for the match waiver, you can use this eligibility tool.
Some of the larger programs in the Bipartisan Infrastructure Law (BIL) that have match waivers include:
- Building Resilient Infrastructure and Communities (BRIC)
- Promoting Resilient Operations for Transformative, Efficient, and Cost-saving Transportation Program (PROTECT)
- Rebuilding American Infrastructure with Sustainability and Equity (RAISE)
- INFRA (the Nationally Significant Multimodal Freight & Highway Projects program)
- Reconnecting Communities and Neighborhoods
In addition to match waivers, some grants provide other types of funding flexibility for Justice40 communities, such as a sliding scale or special consideration. This list of DOT grants with match flexibility for Justice40 communities can help you find participating programs.
2. Use in kind contributions to meet match requirements
Matching funds do not have to be provided in the form of cash. They can also include in-kind contributions like services, supplies, real property, and equipment. Some potential sources of in-kind contributions could be:
- Staff time or volunteer staff time;
- Donations from businesses or philanthropy such as supplies, equipment, or office space;
- Services or supplies from other units of government; or
- Volunteer or staff time from local educational institutions.
Because they are more difficult to monitor and audit, it is important to document in-kind contributions carefully and transparently, including by listing them on project budgets and setting up systems and processes for accurate tracking. Other things to be aware of for in-kind contributions is that estimates of value must be based on fair market value and cannot be double counted, for example the same staff time cannot be listed as the local match for 2 different federal grants.
For more information about in-kind contributions in infrastructure projects, please refer to this resource.
3. Use state or other federal funds for the match
Federal programs typically allow local governments to use funds received from state government entities to meet local match requirements. Some states like Colorado and Minnesota have even set up special grant programs to provide matching funds to local governments for green energy and infrastructure projects.
Using federal funds as the match is not as common because most federal programs prohibit it, but there are some exceptions. ARP SLFR funds, which must be obligated by December 2024 and expended by December 2026, can be used to meet federal match requirements if they are identified within the revenue loss category or meet certain other criteria (see question 4.6 for additional detail). While not exhaustive, this list also provides some examples of federal programs that can be used to meet match requirements. Often additional information about federal funds that can be used to meet matching requirements is included in NOFOs or related FAQ documents for each specific program.
