Gift or Grant?
Q: What is the difference between what is processed through UM's Office of Sponsored Programs (OSP) and the University of Montana Foundation (UMF)?
A: As with almost all sponsored projects, the answer to this questions is, "It depends." Determining whether external funding should be processed through the University or the Foundation involves on many variables, including the kind of sponsor/donor (federal, non-federal, private), type and purpose of the activity, and the sponsor/donor intent. Some determinations are easy: All federal grants are administered through OSP. Others are less obvious and may require involvement by both entities.
Using the following definitions and determining factors, the University and the Foundation work together to assist the University community to correctly identify the administrative avenue most appropriate for processing and oversight, per the terms and conditions of the funding. Don't hesitate to contact a member of your OSP departmentally-assigned pre/post team or the Foundation with questions.
Recognizing that external funding is received by the University of Montana via numerous mechanisms and nomenclature, University Policy 470 institutionally defines terms "grant" and "gift," and these definitions take precedence over any terms used by the funding source:
- Grant: A grant, contract, cooperative agreement, sub grant, subcontract, consortium agreement, purchase order, or memorandum of understanding (hereafter collectively referred to as "grant") is an agreement formalizing the transfer of money or property from a sponsor in exchange for specified services (e.g., outreach, research, training, development, instruction), and will require specific deliverables such as documentation of itemized expenditures or technical reporting.
- Gift: A gift or donation (hereafter referred to as "gift") is a voluntary transfer of money, services, or property (including equipment, intellectual property) from a donor without any expectation of or receipt of direct economic benefit or provision of goods and services from the recipient.
Because some gifts may self-identify as "grants" on the donor paperwork, the University of Montana Office of Sponsored Programs (OSP) and the University of Montana Foundation (Foundation) delineate responsibility for the acceptance and administration of external funding via the following determinations:
OSP administers sponsored activities per federal, state, and University regulations when the terms and conditions of the activity define requirements, such as 1) performance or reporting (fiscal or technical), 2) recorded/reported cost match, 3) audit, 4) research-related compliance, such as human subjects, vertebrate animals, radioactive materials, etc., 5) direct payment of University salaries, 6) publication restrictions, 7) intellectual property or proprietary language, or 8) specific deliverables.
- The University seeks to recover all Facilities & Administrative (F&A) allowed by the sponsor per Montana University System Board of Regent Policy 404 – Indirect Cost Recovery Rate.
- If a sponsored project is to be funded by a private source which requires foundation-to-foundation submission and receipt, the Foundation will subcontract the activity to the University via OSP's standard "Sponsored Research Agreement," and OSP will administer and ensure oversight as appropriate.
- Upon request, OSP will provide to the Foundation a list of all grants received from private foundations for the Foundation to include in reports on total private support to the University.
UMF administers external funding if the intent of the donor and purpose of the specific funding is charitable and philanthropic in nature. Typically, 1) no goods, services, or deliverables of monetary value are offered or exchanged, and 2) detailed financial reporting or accounting is not required, although a donor may request progress and final reports about utilization or impact of the external support, including general expenditures and fund balances.
- All gifts to the Foundation will be assessed a development fee of 6% to advance the University’s mission.
- When managed in accordance and compliance with the intent of the donor, a gift is irrevocable.
- If a donor requires foundation-to-foundation submission and receipt for an activity that meets the definition of a grant, the Foundation will subcontract the activity to the University via OSP's standard "Sponsored Research Agreement," and OSP will administer and ensure oversight as appropriate.
- Upon request, the Foundation will provide to OSP a list of all external funding received from corporations and foundations.
The presence of any one of the following conditions shall designate the award as a grant, and its administration shall be the responsibility of OSP.
- The award is made by a governmental or quasi-governmental agency, or is from a private-sector sponsor that provides a subaward containing federal "flow through" provisions, i.e., federal, state, or other governmental fiscal compliance policy governs the project.
- The award is from a private-sector entity (including individuals) for the work of a specific faculty member(s), and requires the completion of programmatic objectives within a specific budget and time framework.
- The sponsor places restrictions on publication of data resulting from the work. This could include requirements that the sponsor review manuscripts, talks, etc., prior to submission for publication or presentation, and possible delays in publication or presentation until project intellectual property can be protected.
- The sponsor requests proprietary rights in data or inventions resulting from activities conducted under the agreement. This would include any reference to licensing options or arrangements for patents and/or copyrights developed during the work.
- Studies are to be conducted on substances/processes/products, etc. owned by the sponsor.
- The sponsor places restrictions on the use of funds and retains the right to revoke the award or to withhold payment for non-compliance. Examples of restrictions include the requirement for prior sponsor approval of deviation from originally approved budget items and disallowance of certain costs.
- The sponsor requires regular financial reports on the use of the funds, and/or status reports or detailed invoices.
- The sponsor requires that any unused funds be returned.
- The sponsor refuses payment, imposes penalties, and/or revokes the award for failure to meet the terms of the award.
- The sponsor participates in determining the work to be performed or services to be provided on the project.
- The sponsor hopes to gain economic benefit as a result of the work to be performed.
- The award comes from a corporation's research and development budget and is perceived by the company as a "cost of doing business" rather than a charitable gift, and the agreement terms and conditions reflect this intent.
- The sponsor includes a provision for audits by or on behalf of the funding source. Solicitations for grants must be approved by OSP prior to proposal submission.
Types of Awards Accepted and Administered by UMF
The following are characteristics that usually designate funds as gifts or donations, and they are to be managed by UMF:
- The award is made by a private individual, private foundation, corporate foundation, corporation, private agency, or professional association and does not include required programmatic or technical reporting, but may include general financial reporting.
- The award is from a non-government source and the donor specifically intends the award to be a charitable gift as reflected by the absence of any delivery of goods or services or direct economic benefit to the sponsor. Indirect benefits such as tax advantages or goodwill derived from the contribution are not sufficient to affect the gift intent.
- The donor intends the gift to be irrevocable, relinquishing any right to reclaim the gift in its entirety or any unused portion or to invoke any penalties. Solicitations for gifts must be approved by UMF prior to submission.
Determination exceptions will be managed per UM Policy 470 Defining Responsibility for Receipt and Administration of External Funding for Sponsored Projects and Charitable Giving.