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Federal-aid Matching Strategies

Guidance on Section 322 of the NHS Act Third Party Donations of Funds, Materials, or Services for Federally Assisted Projects (May 1996)

NHS Act Provision

The NHS Act amended 23 U.S.C. 323 to allow donated funds, materials, and services to be used as the State's matching share. Section 323 previously limited eligible donations to real property.

Eligible Donations

These guidelines only apply to third party donations of funds, materials, and services. Third parties may include an individual, company, association, etc., but do not include a Federal, State, or local government agency.

Donations must be made by the third party after the date the project is approved by FHWA and prior to approval of the final voucher. No donations are eligible prior to the date of the NHS Act, November 28, 1995. Donated materials and services must meet the eligibility requirements of the project.

Eligible donations may be applied to the State's matching share of the project on which the donation was made. Donations cannot be used to revise matching shares on unrelated projects. At no time may the Federal share of costs exceed the total project costs actually incurred by the State. If donations exceed the State's share, the excess will be used to reduce the remaining project cost. If cost overruns occur, any excess donations previously used to reduce the remaining project cost, may be used to satisfy the State's matching share of the cost overruns.

Federal Funds Used as Matching

In a few cases, Federal funds with specific legislative authority may be used to match other Federal funds. The following Federal funds may be used to match Federal-aid highway funds:

  • State and Local Assistance Act (P.L. 92-512)
  • HUD Community Development Block Grants (P.L. 93-383)
  • Public Works Employment Act of 1976 (P.L. 94-369)
  • Delaware and Lehigh Navigation Canal National Heritage Corridor Act of 1988

(P.L. 100-692).


Donations applied to the State's matching share must be documented. Records must show how the value placed on in-kind materials and services was derived. To the extent feasible, volunteer services will be supported by the same methods that the organization uses to support the allocability of regular personnel costs, i.e., time sheets, time cards, etc. (This is reiterated in OMB Circular A-87, Attachment B Section 11(i) Donated Services and 49 CFR 18.24.)

Valuation of Donations

Donated materials and services will be valued at their market value at the time of the donation. Donated services may include labor, equipment, and costs related to providing the service. Donated labor will be valued at rates consistent with those ordinarily paid for similar work in the donor's organization. If the donor does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in that location. Equipment will be valued at the fair market rental value or reasonable use rates.

[Questions relating to this guidance should be directed to Max Inman, Office of Fiscal Services, at 202-366-2853.]

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