What’s the Difference Between a Corporate Gift and Corporate Sponsored Research?
We’ve previously explored how and why industry might want to sponsor academic research and how industry and academia can work together, and how corporate-sponsored research differs from government- or foundation-sponsored research. In this post we’ll discuss a frequently-asked question: What’s the difference between corporate-sponsored research and a corporate gift?
There is often confusion around this topic since in industry the terms grant, gift, sponsorship, sponsored research, research services – plus many others – are used differently from one company to another. It is therefore important that we at BU know what we mean by these terms, regardless of what term a potential corporate partner might use. Additionally, it is important to properly distinguish sponsored research funds from gifts funds because they follow very different accounting rules. For example, there can be serious consequences from mis-identifying corporate funds and applying a gift agreement and funds to a project that is, in reality, sponsored research.
In general, corporate sponsored research provides corporate funding in exchange for specific research work to be done. This exchange is structured under a legal contract that is mutually agreed upon between the corporate sponsor and the University and which BU typically refers to as a “sponsored research agreement” or a “research services agreement.” The driving purpose of the contract is both to advance an investigator’s research and to meet the strategic, commercial interests of the corporate sponsor. Within the contract, a statement of work and a budget describe and specify, in detail, the work to be done in exchange for the funding. Sponsored research agreements typically require the researcher to provide specific deliverables (results, materials, reports, etc.) to the corporate sponsor, usually on a fixed timeline. These contracts may also provide rights to the sponsor to use results and/or intellectual property created during the project for its own purposes. In summary, corporate sponsored research is very much a quid pro quo arrangement; funds are given by a corporate partner to perform specifically defined research within a set time frame to produce clear deliverables.
A corporate gift, on the other hand, is exactly that: a gift. By definition and by policy, there can be no quid pro quo associated with a gift. Below, we discuss many characteristics that define how a gift is different from a grant, but the two most important and useful concepts are that a gift is unrestricted and irrevocable. Unrestricted means the funds can be used for any purpose the recipient deems fit, without direction from the donor. Irrevocable means that since the funds are a gift, they will not be returned to the donor for any reason.
A gift has a primarily philanthropic intent and is made as an unconditional transfer of assets (cash, equipment, software, etc.) to the University. Generally, for a gift to be used in research the following requirements need to be met:
- There are no contractual requirements imposed on BU for the use of the gift, except that a gift may be designated for a particular purpose (e.g., cancer research or to be used by a particular research lab)
- The donor does not expect and will not receive goods or services in return for the gift other than recognition
- There are no deliverables defined by the donor regarding the work enabled by the gift beyond periodic progress reports, defined solely by the recipient and at their discretion
- The award is irrevocable, with or without an expectation by the donor of the timing of expenditures. Similarly, there can be no provisions for the return of any unexpended funds at the end of any designated period, i.e., start and stop dates. In fact, there can be no designated performance period.
- There is no formal required fiscal accountability (e.g., an audit) beyond periodic progress reports and reports of expenditures as defined by the recipient and at their discretion. These reports, however, might be considered good stewardship of the donor relationship
An obvious question arises: Why would a corporate partner give a research gift if they receive no deliverables and cannot direct how the money will be spent? Many corporate donors will give research gifts for the recognition they receive for giving the gift, which might have some reputational or goodwill benefit in their markets or with their customers. The gift might also align with the broader philanthropic goals of the company. Often, however, gifts have a more strategic intent. A gift given to a specific researcher working in a particular research area may provide visibility for the donor into the researcher and their research, as well as the other way around. The company may also want to learn more about BU’s research capabilities and what it is like to work with the University. In these cases, the gift might be a precursor to larger, more strategic relationships such as corporate sponsored research.
While corporate gifts do not require contracts in the manner of corporate sponsored research agreements or research service agreements, they do require a gift agreement, most often in the form of a corporate gift letter. These agreements need to be carefully worded and reviewed to ensure the gift requirements above are met. Industry Engagement will review, negotiate or draft these agreements on the researcher’s behalf.
Below, we use the simplified Innovation Life Cycle to show that academia and industry tend to focus on different ends of this life cycle and have highlighted the “applied research” sweet spot – the overlapping area of interest where an academic researcher’s work can help an industry partner solve a particular research problem and, at the same time, move a research idea to product development and commercialization. Sponsored Research Agreements are typically found in this “collaboration sweet spot.” But because gifts are unrestricted and irrevocable, a corporate gift can be used however the researcher chooses (with respect given to the donors intended area of support). As a result, gifts are often applied towards basic research.
As you might expect, there can be some blurriness at the boundary between corporate gifts and corporate sponsored research. BU Industry Engagement has the expertise to help sort through these gray areas and make a clear determination of what the funds truly are and how they should be treated by the University. Industry Engagement will also ensure the appropriate gift agreement is put in place to enable the gift to be smoothly and securely received. Contact us at EngageBU@bu.edu to learn more.