Fayetteville Policies and Procedures 227.0
Determining Philanthropic Gifts versus Sponsored Grants
The University of Arkansas frequently and regularly receives funding from a variety of sources including, but not limited to: governmental sources; corporations; family and corporate foundations; individuals; trusts and estates; and professional associations. The following guidelines are designed to help ensure proper acceptance and processing of non-governmental funds received by the university, subject to all other applicable University policies.
Proper determination of whether incoming funds are philanthropic gifts or sponsored grants is necessary to ensure the university’s compliance with applicable federal, state and local laws, and with the specific terms and conditions of any gift or grant. The applicable approval and acceptance procedures, as well as the accounting, financial recording and reporting, oversight, and compliance or stewardship practices vary depending on the classification whether funds are a gift or a grant. To ensure proper administration of funds received, various considerations must be reviewed to determine the type of funding and the appropriate repository.
Philanthropic gifts are voluntary, non-reciprocal transfers of money or property from a donor to an institution. The donor may be an individual, a foundation, a trust or estate, a corporation, or another non-profit organization. The donor does not expect to receive anything of value in return and ceases control of the gift, though the donor may restrict the use of the gift to meet their philanthropic goals. A restricted gift is a contribution designated for a specific purpose or program. If a donor does not specify any restrictions, the institution may allocate the funds at its own discretion for its mission and its tax-exempt purposes.
Whether in aggregate or in detail, reporting is solely intended to assure proper gift stewardship. As allowed by IRS regulations (publication 526), insubstantial benefits or token items are not considered a return benefit to the donor.
Sponsored grants are given to the university in order to meet specific objectives in a program plan. The sponsor transfers money, property, services or anything of value to the university in order to accomplish the grant objectives.
In general, philanthropic gifts are typically initiated by a member of the Division of Advancement team. Sponsored grants are typically initiated by individual principal investigators. Please note the use of the term “grant” is a term that is often used interchangeably among corporations and foundations offering assistance to the university, regardless of whether the funding is a philanthropic gift or a sponsored grant. The word “grant” should not be the sole determining factor in assessing the proper processing of private support through the Office of University Development or the Office of Research and Sponsored Programs (RSSP). The gift versus grant distinction is based on the nature of the proposal, statement of work, and/or other terms of the agreement. The following questions help to determine whether the funding is a sponsored grant or philanthropic gift.
|1||Is the funding provided by a governmental entity?||If YES, this is generally a SPONSORED GRANT.|
|2||Is the funding provided by an individual?||If YES, this is a PHILANTHROPIC GIFT.|
|If neither of the above are true, consider the questions below.||YES||NO|
|3||Is this funding to accomplish a specific Statement of Work?
A commitment to a specific project plan, as opposed to a general field of study or research area; the commitment describes a specific line of scholarly inquiry such as testing of a hypothesis, experiments, a model project or a defined set of deliverables.
|4||Is there a detailed line item budget for work?|
|5||Does the funding agreement require return of any unexpected funds at the end of the designated period?|
|6||Does the funding agreement require detailed financial reporting beyond a summary report of expenditures?|
|7||Does the funding agreement include terms and conditions for the disposition of tangible property (i.e. equipment, records, technical reports, theses, dissertations or other deliverables)?|
|8||Does the funding agreement include terms and conditions for the disposition of intangible property (i.e. intellectual property, rights in data, copyrights)?|
|9||Does the funding agreement include programmatic reports or deliverables beyond gift stewardship?|
Sponsored Grant: If the answer is “YES” to question 1 or if most of the responses from questions 3 through 9 are “YES,” this indicates that the funding is for a sponsored grant/program. Grant proposals are submitted through and require the approval of Research and Sponsored Programs (RSSP).
Philanthropic Gift: If the answer is “YES” to question 2 or if most of the responses from questions 3 through 9 are “NO,” this indicates that the funding is a gift. Gift proposals are developed and submitted in collaboration with, and require the approval of, the Office of University Development. (See Fayetteville Policies and Procedures 203.0.)
The presence of any single factor does not conclusively determine whether funding constitutes a philanthropic gift or a sponsored grant. Determination of the classification of external support as a philanthropic gift or sponsored grant is made by the Office of University Development administrators (associate vice chancellor for University Development, executive director of Planned Giving, and the executive director of Administration and Development Services) in consultation with the vice provost for Research and Economic Development.
Classification of external support is an internal university administrative decision, based on information conveyed to the university by the support source and the university operating unit, after applying above listed factors simultaneously. If, after reviewing these factors, administrators are unable to classify an award, administrators should forward all relevant documentation to the Award Determination Appeal Review Committee consisting of the provost, the vice chancellor for Finance and Administration, and the vice chancellor for University Advancement. The appeal review committee will make a determination on classification, in consultation with legal counsel, if necessary. Documentation supporting the classification should be maintained in the permanent file in the Office of University Development for philanthropic gifts or RSSP for sponsored grants.
External Support and Facilities and Administrative (F&A) Costs
The inclusion, exemption or limitation of F&A costs shall not be a basis for determining whether an award is classified as a sponsored project or gift. Documentation stating the purpose and terms associated with a specific award, the award letter or notification and the proposal are required before any gift or sponsored project may be accepted and expended.
Processing and Reporting
Once the question of gift or grant is determined, the funds should be directed along with all relevant documentation to either Gift Services in the Office of University Development or RSSP. To ensure compliance with established financial procedures, awards assigned as gifts, proposals, gift agreements and checks are to be directed for receipt and acceptance to the University of Arkansas Foundation, Inc. (the foundation), unless the donor has expressed a clear and specific preference that the gift be held by the university instead of the foundation, or the gift is otherwise unable to be processed by the foundation due to a clerical error or omission. For awards that are determined to be grants, request for funding and checks are to be directed to RSSP/University of Arkansas.
All gifts and grants are to be processed in a timely manner and directed to the correct office consistent with the university’s cash handling policy, Fayetteville Policies and Procedures 306.0, as well as ensuring donors and/or grantors are properly acknowledged for their commitment to the university.
In consideration of national standards of fundraising, grants from private entities are included in annual Division of Advancement counting reporting regardless of where the funds are administered.
Transfer of Gifts from University of Arkansas Foundation Account to University of Arkansas Restricted Account
A proposal initially prepared and classified as a gift that subsequently is found to contain disqualifying terms and conditions relating to the use of the support may require reclassification of the support as a sponsored project and the external funding will be transferred to RSSP for review and processing. The inclusion or limitation of F&A costs in the proposals will also be reviewed.
Reporting from RSSP to Division of Advancement
Research and Sponsored Programs will share with the Division of Advancement information about sponsored grants from private, non-governmental entities being administered by RSSP to the extent necessary to allow for appropriate and coordinated stewardship or recognition of the funding party, and if applicable, for purposes of counting the funding in compliance with national standards in fundraising.
Reporting from the Division of Advancement to RSSP
The Division of Advancement will share information about gifts from industries, corporations, and foundations with RSSP to allow for appropriate entry into the research administration system, for purposes of management and reporting of sponsored program funding.
|Source||Type||Office to Deposit Funds||Counting|
|Foundation, industry, other||Non-specific grant/gift||Development||Development|
|Foundation, industry, other||Sponsored award or specific grant||RSSP||Both|
Counting by Both the Office of University Development and RSSP
Specific gifts and grants are those external funding agreements in which a specific university faculty or staff member, or team of university faculty and staff, have been funded to perform a specific task. Specific gifts and grants may be considered for counting by both the Division of Advancement and RSSP. Counting documentation will be maintained by both offices.
Non-specific gifts and grants are those external funding agreements in which specific university employees are not identified. These agreements typically identify the university, a college, a department or a program that should receive the funds to further the unit. The non-specific funder (“donor”) may restrict the funds for a specific purpose or leave it as non-restricted. Non-specific gifts/grants are handled and counted by the Office of University Development.
Effective December 9, 2015