If there are questions about the classification of an award or if administrator (e.g., principal investigator, development officer, sponsored projects officer, research support staff) is unsure of or unable to make a determination of gift or sponsored project, please provide all documentation associated with the funding (e.g., proposal, budget, award letter, draft agreement) to the Director, Office of Corporate and Foundation Relations.
Both sponsored projects and gift-funded activities are externally-supported, with funds provided typically in response to a request or proposal. The classification of funding as "gift" or "sponsored project" will affect, among other things, the way the University of Utah processes the award acceptance, accounts for the funds, calculates and applies indirect (F&A) costs, and reports on the use of the funds to the sponsor/donor. For detailed definitions of the various types of sponsored projects, see the Research Handbook: Types of Sponsored Projects.
2. Definition of Sponsored Projects
Sponsored projects are externally-funded research, instruction, training, testing, service, or other scholarly activities in which a formal written agreement, i.e., a grant, cooperative agreement, or contract is entered into between the University of Utah and the sponsor. A sponsored project may be thought of as a transaction in which there is a specified statement of work for the university to execute with a related, reciprocal transfer of something of either tangible or intangible value for a public purpose or as a direct benefit to the sponsor.
The following conditions are characteristics of a sponsored project agreement, and can help to distinguish such agreements from gifts.
A. Detailed Statement of Work
Sponsored projects are typically awarded in response to a detailed statement of work and commitment to a specified project. Sponsored projects obligate the University and the Principal Investigator to a specific line of scholarly or scientific inquiry that typically follows a plan, or provides for orderly testing or evaluation, or is intended to either develop or improve existing services or products, and/or seeks to meet stated project performance goals. As described below, the statement of work is usually supported by both a project schedule and a line-item budget, both of which are essential to financial accountability. The statement of work and budget are usually described in a written proposal submitted by the University of Utah to the sponsor for competitive review.
B. Detailed Budget & Financial Accountability
A sponsored project agreement usually includes detailed financial accountability, typically including such conditions as:
- A line-item budget related to the project plan. The terms of the agreement may specify allowable or unallowable costs, spending limits within budget categories, or requirements for prior approvals for particular expenditures and/or rebudgeting.
- A requirement to return any unexpended funds at the end of that period, or a sponsor-reserved right to request return of funding should the scope of work change without prior approval.
- Regular financial reporting and audit rights, including, for federal and state awards, accountability under the terms of the OMB Uniform Guidance.
- Incremental distribution of funds based on funder satisfaction with project progress towards established milestones.
- A sponsored project budget will include the University's full negotiated indirect (F&A) cost rate unless a waiver of those costs has been approved.These conditions generally define the level of financial accountability associated with a sponsored project. While not all of the above conditions are necessary to define a sponsored project, they are collectively indicative of the increased level of financial accountability and regulatory compliance associated with such projects.
C. Disposition of Properties ("Deliverables")
Sponsored project agreements usually include terms and conditions for the disposition of tangible properties (e.g., equipment, material, detailed data records, specified technical reports) or intangible properties (e.g., rights in data, intellectual property, copyrights, invention ownership, technology licensing). The presence of such terms and conditions in the agreement indicate that the activity is likely a sponsored project.
D. Imposition of Legal Accountability
Sponsored project agreements may impose terms of legal accountability designed to ensure the work intended by the sponsor is satisfactorily executed by the University. Such terms include but are not limited to indemnification, audit rights, hold harmless clauses, arbitration requirements, confidentiality, and non-disclosure agreements.
3. Definition of Gifts
A gift may be defined as any item of value (usually money) given to the University from a private source, whether solicited directly or not, for which the donor does not retain any future controlling interest or cannot be expected to receive any material, unique, or preferred benefit from the act of donating. In general, the following characteristics describe a gift:
- A proposal/request may be submitted to the potential donor that includes a description of the proposed activities, with the understanding that the description of proposed activities is not intended as a commitment to a specific line of scientific or scholarly inquiry. As a research-intensive institution, University of Utah gift proposal/requests may and often do detail a broad research focus to be pursued.
- Gifts may be accompanied by an agreement that restricts the use of the funds to a particular purpose. Beyond that, no contractual requirements are imposed (beyond the requirements of responsible stewardship), there are no "deliverables" to the donor (e.g., no rights to tangible or intangible property), the donor retains no audit rights, and the award is irrevocable (unless the University determines it can no longer expend the funds for the specified purpose of the gift).
- There are no specific regulatory compliance oversight matters (e.g. IRB, privacy or export control required, etc.), nor formal fiscal accountability to the donor beyond periodic progress reports and summary reports of expenditures. Period and summary reports of expenditures often include a general budget report using consolidated categories (e.g. salaries, fringe, equipment, materials, etc.) These reports may be thought of as requirements of good stewardship, and, as such, may be required by the terms of a gift. They are not characterized as contractual obligations or "deliverables" and the release of incremental funds (for a multi-year gift) is generally not predicated on the donor review of these periodic reports.
4. Interim and Final Progress Reports
Both gifts and sponsored project agreements typically require incremental and final progress reports. Progress reports are generally not considered to be “deliverables” that convey tangible or intangible value to the sponsor or donor. The submission of progress reports is a best practice to ensure strategic donor and sponsor stewardship. The presence of interim and final reports requirement in an agreement does not automatically define an activity as a sponsored project.
5. Implementation and Administrative Issues
A. Guidance for Properly Distinguishing Gifts from Sponsored Projects
1. Distinctions Based on Source of Funds
Any funding provided in support of University of Utah activities by government agencies, at the federal, state, or local level is a sponsored project.
Any funding provided by a foreign government, including funding from intermediary organizations primarily funded by a foreign government is a sponsored project.
2. Distinctions Based on Intent of Donor/Sponsor
In remaining cases, e.g., where funding is being provided by corporations, foundations or others not specified above, the distinction between gifts and sponsored projects will be made based on the proposal, statement of work, and terms of the agreement, taking into consideration the intent of the donor/sponsor.
In some situations, communication, including the proposal and award as well as conversations, makes it clear that the donor’s/ sponsor’s intent is to classify an award to the university as either a gift or a sponsored project. In these cases, the terms of the accompanying agreement may have to be adjusted in consultation with the donor/sponsor in order to clearly document the intent and avoid unintended classification.
B. Administrative Issues
1. Decision-Making in Unclear Situations
In some cases, the distinction between gift and a sponsored project can be difficult to draw. Donors may sometimes use the word "grant" when the donation qualifies as a "gift" or vice versa.
In determining the classification of an award, University of Utah personnel must maintain an appropriate balance between the interests and preferences of the donor/sponsor and the University's administrative policies and objectives. In the process of resolving these issues it may be necessary to contact the donor/sponsor for clarification of intent and requirements, and/or to discuss the planned use of the funds.
If there are questions about the classification of an award or if administrator (e.g., principal investigator, development officer, sponsored projects officer, research support staff) is unsure of or unable to make a determination of gift or sponsored project, please provide all documentation associated with the funding (e.g., proposal, budget, award letter, draft agreement) to the Executive Director, Office of Corporate and Foundation Relations. The Executive Director will consult with the leadership of and subordinate units within the Offices of the Vice President for Research, the Vice President for Institutional Advancement, and the General Counsel on a final determination.
2. Decision-Making Considerations
Awards shall be assessed against the following considerations using the Funding Determination Worksheet:
a) Donor/Sponsor Type
1. Is the donor/sponsor a branch of a federal, state, or local government?
2. Is the donor/sponsor a foreign government or primarily funded by a foreign government?
b) Award Terms
1. Does the donor/sponsor require deliverables (e.g. equipment, material, detailed data records)?
2. Does the donor/sponsor request rights in intellectual property (e.g. licenses, copyrights, ownership, patent rights, royalty or revenue sharing)?
3. Does the donor/sponsor request control of communications, including publications or confidentiality/non-disclosure terms?
4. Does the project require University regulatory oversight (e.g. IRB, IACUC, export control, privacy matters, comparative medicine)?
5. Does the donor/sponsor request terms that pose a legal responsibility on the University for project management (e.g. indemnification, conflict of interest management, audit rights, arbitration, termination rights)?
c) Award Scope and Reporting Requirements
To inform the final determination of gift or sponsored project proposal and award documentation should be assessed to determine the preponderance of “general requirements” vs “detailed requirements” related to research focus, financial reporting, and narrative reporting. A preponderance of general requirements indicates the funding may be administered as a gift, while a preponderance of detailed requirements likely indicates the funding should be administered as a sponsored project.
1. General requirements include but are not limited to: a broad research focus, general budget with consolidated categories, general report on disposition of funds, no required prior approval for budget variance, future payments not contingent on reporting, and narrative reporting that describes general progress made.
2. Detailed requirements include but are not limited to: a detailed scope of work or line of inquiry, a detailed line-item budget, a requirement that funds be spent only in accordance with the proposed budget, future payments being contingent on progress/reporting, narrative reports that require technical and scientific details on results or accomplishments, and/or regulatory compliance oversight.
updated September 2, 2020