Awards from foundation and industry sponsors frequently raise the following questions:
- Is the award a gift or is it a sponsored agreement?
- If the award supports a research activity, should it be included in the organized research base?
- What type of account should be established?
The following general criteria have been developed to assist faculty and administrators in determining whether a contribution is treated as a “Gift” or a “Sponsored Agreement.” In making the final determination it is also important to consider the intent of the donor and/or sponsor. Regardless of the nature of contribution, any research project that is undertaken must comply with all regulatory and Boston University policies and procedures (including those involving human or animal subjects, financial conflicts of interest, or use of hazardous materials).
A gift is made with a primarily philanthropic intent as an unconditional transfer of assets to Boston University (BU). Generally for a gift to be used in research, the following requirements need to be met:
- There are no contractual requirements imposed on BU, except in some cases a gift may designate the funds for a particular purpose (e.g., cancer research).
- The donor does not expect to receive goods or services in return for the gift other than a recognition;
- The award is irrevocable, with or without an expectation by the donor of the timing of expenditures; and
- There is no formal required fiscal accountability (e.g., audit) beyond periodic progress reports and reports of expenditures. These reports may be thought of as a requirement of good stewardship.
In contrast to a gift, an award will be considered a sponsored project agreement if the following criteria are met, and will be administered by the grantee’s department, Sponsored Programs (Sponsored Programs (SP) is the coordinating office for all p...) and Post Award Financial Operations (Sponsored Programs (SP)- Post Award SP- Post Award assist...):
- The project commits the University to a specific line of scholarly or scientific inquiry, typically documented by a research plan or statement of work;
- A specific commitment is made regarding the level of personnel effort, deliverables, or milestones;
- Project activities are budgeted, and the award includes conditions for specific formal fiscal reports/audits, and/or invoicing;
- The project requires that unexpended funds be returned to the sponsor at the end of the project period; and
- The agreement provides for the disposition of either tangible property (e.g., equipment, records, technical reports, theses or dissertations) or intangible property (e.g., inventions, copyrights or rights in data), which may result from the project.
If questions, please contact SP. In some cases, projects that are not processed through the SP at the proposal stage become sponsored projects at the award stage due to conditions set forth in the award agreement. Appendix 1 contains additional detailed terms and conditions that may clarify whether an award is a gift or a sponsored agreement.
In those instances in which these guidelines do not enable a clear indication of the treatment of funds, the case will be reviewed and decided upon by an ad hoc committee comprised of the Director of the Office of Foundation Relations, Associate Vice President, Sponsored Programs and the Associate Vice President for Finance/University Comptroller. Cases needing further clarification will be brought before the Vice President for Development and Alumni Relations and the Vice President for Research for agreement on the appropriate treatment.
If concurrence cannot be reached, the particular case will be referred to the Senior Vice President for Financial Affairs for final determination.
Once final determination has been made, the administration of the gift or sponsored agreement will then proceed in the following manner:
Gift: Administered by the Development Office
Sponsored Agreement: Administered by Sponsored Programs & Administered by Post Award Financial Operations
Appendix 1: Gift vs. Sponsored Program Determination Matrix
The following Table provides a listing of potential terms and conditions that may be used during the review in determining if the award from a foundation or a corporate sponsor should be treated as a gift or a sponsored agreement.
|Terms or Condition||Explanation||Gift or Sponsored Agreement|
|1. The following conditions generally preclude a transfer from being treated as a gift|
|“Must qualify for the basic research tax credit” or “requires annual reporting identifying how much was spent for qualifying basic research”||Under the tax code, the term “qualified research expenses” is defined to cover contract research expenses (or the in-house research expenses of the taxpayer). Basic research means “any original investigation for the advance of scientific knowledge not having a specific commercial object” conducted within the United States except for research in social sciences, arts, or humanities. More than incidental benefit inures to the initiator of contract research. If a corporation has prepared an agreement for a relationship, which will provide such benefit to them, the transfer of funds is not a gift.||Sponsored Agreement|
|Return of unexpended balance required.||In many cases the requirement for return of unexpended funds disqualifies the donation as a charitable contribution. Inclusion of a period of performance or limitation of support to a specific research project creates the possibility that an unexpended balance is not unlikely.||Sponsored Agreement|
|Research award available only for a specific period||Statement of a period of award implies the return of unexpended funds or the need to obtain approval to continue to expend funds.||Sponsored Agreement|
|Intellectual property rights||Intellectual property rights and licensing options are provided in conjunction with contract support. Generally this support is for research activities and is established in research accounts. However, a donor may request a report of inventions made with funding provided, without negating the gift.||Sponsored Agreement|
|Withholding of payment pending receipt of final report on research||The situation supposes BU completion of an activity utilizing its own resources as a condition to payment.||Sponsored Agreement|
|2. The following condition may preclude treatment as a gift or require reduction of the value of the gift|
|Donor receives “title to or use of research equipment purchased”||This is a benefit to the transferor, which indicates a non-gift relationship.||Usually Sponsored Agreement|
|Donation for a research award “requires BU to permit a resident visitor”||The requirement that BU allow a visitor, as a condition of the award, is a quid pro quo reducing or negating the gift.||Usually Sponsored Agreement|
|3. The following conditions generally permit treatment of the transfer as a gift|
|“Support of the department of . . . “||When support is provided for either research or non-research activity at the discretion of BU, a gift account is appropriate.||Gift|
|“Research in the department of . . .” or “Research of Professor Smith in the Department of . . .”||The clearest case of industrial research support appropriate for a gift account is when the award provides support for a department’s general research program. Alternatively, funding may be directed for the general support of a particular scientist’s area of research. These cases will need supervisory review to ensure proper expenditures (and the tax-deductibility of a contribution).||Gift|
|“To support the research project entitled . . .”||When funding is directed for a specific research project use of a non-research account becomes more questionable. However, absent other considerations, the award may still be handled in a non-research account.||Gift|
|“Reasonable accounting” and financial report to an external donor for a research award||While the requirement for reasonable accounting and financial reporting does not negate a gift, the need for separate accounting does force research funding into the organized research base. Many donors need to know how their gift was used. Annual financial reporting in a format similar to a normal BU financial statement is not unusual.||Gift|
|“Return of unexpended balance” of a research award, if occurrence is highly unlikely||If the possibility of reversion is so remote that it is negligible, a request to return unexpended funds does not negate a gift. In order to be assured of gift status, the terms of the award should not contain any possibility of reversion, and in particular where recognition of a charitable contribution is required for tax purposes.||Gift|
|Donation “in recognition of a resident visitor to BU”||This support is similar to support of a department or scientist’s general research program. No performance requirements are placed upon the BU by the donation.||Gift|
|Technical report||While gifts generally represent “disinterested generosity” in terms of benefit to the donor, “disinterested generosity” does not indicate that the donor should not desire or be provided information on activities supported with funding provided. As part of BU’s stewardship responsibilities, it routinely provides such information to donors. Annual progress reports are not unreasonable. Ongoing communication with a corporate liaison is a frequent requirement; however, requirements for presentations and meetings should be minimal. Reporting and “technical communication” become inappropriate for a gift if the content or timing of the communication provides significant benefit to the transferor. Communication and reporting should not provide the company an opportunity in any way to influence the conduct of the research.||Gift|
|Gift to be used as reportable costsharing for Federal research award||In this case the gift follows the award with regard to account choice.||Gift|
|Gift received, and later used for reportable cost-sharing for a Federal research award||If no financial accounting for the gift is required, the gift should also follow the award with regard to account choice.||Gift|
Checklist: Gift or Sponsored Agreement