Identifying a Gift | Identifying a Grant | Identifying a Contract

These guidelines are intended to assist faculty and staff with appropriate classification criteria for the various forms of external support. Correct classification is important to assure the University's ability to comply with any terms specified by the sponsor/donor; meet the State's reporting requirements; properly recover its costs, both direct and indirect; and monitor the nature and extent of sponsored projects (instructional, research, public service, etc.) in various units. Classification of a given award will require the exercise of some judgment if its characteristics are such that the true nature of the award is not immediately clear. To clarify the process of determining classification, coordinate routing proposals between the Development Office and the Office of Sponsored Programs, and assure greater consistency among the various colleges, departments and administrative units of the University, the following guidelines apply.

In general, the following criteria identify a gift: (Back to Top)

• Contractual requirements are not imposed and the funds are not program- specific. However, objectives may be stated and use of the funds may be specified for a particular purpose such as a professorship, scholarship or research in a defined area (e.g., Alzheimer's disease).
  
• Award is irrevocable.
  
• A period of performance is not specified.
  
• Formal financial accounting over a specific project period is not required and there is no requirement to return unexpended funds. However, a report to the donor on the use and/or impact of the gift may be requested, and this report may include expenditures and fund balances.
  
• Generally, funds received from individuals, closely held corporations, and private family foundations will be classified as gifts; and funds received from corporations, corporate foundations and major foundations may be classified as gifts, depending on the circumstances.
  
• Government Support -- Federal, state, local or foreign governmental support is not considered a gift. For example, money from Warren County or the Navy would not be considered gifts.
  

In general, the following criteria identify a grant: (Back to Top)

• The award carries such terms on the use of funds as specified budgetary restrictions; the objectives to be achieved by the use of the funds; the program in which the work will be carried out; the individuals responsible for the completion of the work; the period of performance; indirect costs; and invention rights (intellectual property), a schedule of payments (although sometimes payment is in one lump sum).
  
• The sponsor retains authority to withhold funds pending satisfactory completion of project objectives. Unused funds must be returned to the grantor.
  
• Formal financial accounting, during the life of the project, at its termination, or both, is required.
  
• Reports related to the substance of the work, during the life of the project or at its termination, are required by the sponsor. Copies of published and other materials may also be requested (e.g., syllabi, instructional units, newsletters, participant comments, evaluations, etc.)
  
• Periodic payments are to be made to the University so that the financing of a project is on a continuous basis.
  
• Generally, research-related awards from corporations, corporate foundations, and major private foundations subject to specific restrictions and contingencies will be classified as grants. However, the classification ultimately depends on the terms attached to the award. For this reason, Sponsored Programs should review and classify all gifts and donations from closely held corporations, private family foundations (which usually will be classified as gifts); and funds received from corporations, corporate foundations and major foundations. The classification ultimately depends on the terms attached to the award as defined IA-F and in IIA-F above.
  

In general, the criteria for identifying a contract are the same as those for a grant except that: (Back to Top)

• The award is subject to formal conditions outlined in a contractual instrument signed by both parties.
  
• The sponsor often places more restrictions upon expenditures allowed in the pursuit of the activity (e.g., clauses concerning "Buy American", indirect cost subject to post-review, etc.).
  
• Financing may be on a cost-reimbursable basis, although the University tries to arrange some method of advance funding where possible. Some fixed-price contracts may provide for lump-sum payments as work progresses.
  
• The sponsor requires periodic progress reports and some array of others, often including invention reports, royalty reports, financial status reports, equipment inventory reports, etc.
  
• A closing audit is sometimes required.
  

The criteria listed above are applicable to all awards made available to the University.

In some areas, however, there have been special difficulties in classification. Under the guidelines presented here, awards offered to the University for the performance of services, such as testing or evaluating scientific instruments, methods or other products, would normally be classified as grants and subject to the usual procedures of grant review. Cash, checks, and stock certificates offered to the University with a formal agreement or service requirement, would normally be processed as gifts. Questions related to the contents of this memorandum may be directed to Sponsored Programs, extension 4652.

January 10, 1995