Gift or Grant?
Sponsored Agreements and Philanthropic Gifts
Gift or Grant?
The University receives external support from a variety of sources including government agencies, corporations, and private entities. Gifts and sponsored projects are the principal forms of awards made by both governmental and private sources. It’s important to categorize these funds correctly so that they can be recorded, managed and reported in the manner that ensures appropriate stewardship and maximizes the benefits for both donor/sponsor and the university
Determining the Difference Between Gifts and Sponsored Projects
The term "grant" does not determine the classification of an award as a sponsored project or gift. Private sector entities (private agencies, professional associations, private foundations, corporate foundations and corporations) may be either donors or sponsors depending on the nature, intent and expectations of the funding they are providing. Some grants may be classified as philanthropic gifts (for example, a donation from a tax-exempt foundation that is operating a charitable giving program) and grants requiring contractual performance commitments from the University may also come from certain charitable foundations. Even though the donor is philanthropic in nature, the award itself may contain terms and conditions requiring its classification as a sponsored project
The Longwood University Foundation, the Office of Corporate and Foundation Relations, and the Office of Sponsored Programs & Research have jointly developed the following guidelines to assist individuals seeking external support in correctly classifying awards and determining if any funds deriving from their particular proposal should be routed through the University Foundation or the Office of Sponsored Programs & Research.
Definition of a Sponsored Project
A sponsored project (or sponsored program, as the terms are synonymous) is any research, instruction, public service or scholarly activity that is supported (in whole or in part) with funds, materials, or other resources, provided by sources external to the University, and for which a formal written agreement exists, specific outcomes or deliverables are expected, and technical and financial reports are required. Sponsored projects can come in various forms, including, but not limited to, grants, contracts, and cooperative agreements.
The following conditions characterize a sponsored project agreement, and help to distinguish such agreements from gifts:
- The sponsor is a federal, state, or local government or an agency serving as a flow-through of federal, state, or local government funds;
- a for-profit business, industry or association, or non-profit entity with specified terms and conditions for the proposed project.
- The proposal or award document requires a signature from an authorized official binding the University to the terms and conditions of the project;
- The award contains terms on the use of funds, such as budgetary restrictions; states programmatic objectives to be achieved; defines responsible individuals and a period of performance; and details ownership rights;
- The award is typically the result of an outcome-driven proposal;
- Detailed programmatic and/or fiscal reporting with sponsor approval is required during the life of the project and at the end of the project;
- Payment is contingent upon programmatic accomplishments or detailed fiscal reporting;
- Prior sponsor approval is required for significant programmatic and/or fiscal deviations;
- The award contains language regarding the right to revoke funding, and unused funds may need to be returned to the sponsor;
- The award includes a provision for audit;
- The award addresses intellectual property, patent, publication, and/or data rights;
- The award requires protection of confidential information;
- Studies are to be conducted on substances/products/processes that are owned by the sponsor or similar quid pro quo arrangements;
- The project involves the use of human subjects, vertebrate animals, radioactive materials, recombinant DNA, human body substances, etiologic agents, or proprietary materials;
- The sponsor hopes to gain economic benefits as a result of the activity to be conducted.
Proposals meeting any of these criteria must be processed through the Office of Sponsored Programs & Research.
Definition of a Gift
A gift is the voluntary provision of external support by a donor to Longwood University without any expectations or receipt of direct economic or other tangible benefit in return. The contributor of a gift is referred to as the "donor" and the donor’s intent must be philanthropic or charitable. The primary beneficiary of a gift is the general public and not the donor. Examples of such gifts include requests for scholarship and financial aid packages, research and faculty development, capital expansion and renovations, technology upgrades, lab equipment, library acquisitions, and unrestricted support.
Gifts may be either unrestricted or restricted. A restricted gift does not imply that the donor benefits from the gift nor is there an implied quid pro quo. Valid restrictions pertain to the permitted use of gift funds rather than providing a result to the donor.
In general, the following characteristics describe a gift:
- The external support is irrevocable, providing the gift is used in accordance with any valid restrictions accepted by the Longwood University Foundation;
- No goods, services, or deliverables are offered or exchanged in consideration of receipt of the support. Donors may require reports to verify the use of the support is in compliance with the intent;
- The donor provides the support without expectation of direct economic benefit or other tangible benefit. Indirect benefits such as tax advantages, business or personal goodwill derived from close association, and the miscellaneous benefits derived from donor status don’t negate intent;
- It shall be acceptable for the donor to request information from the Foundation about use and/or impact of the external support, including expenditures and fund balances;
- The use of gifts is subject to Foundation spending guidelines and audits by the Foundation.
Proposals meeting any of these criteria may be considered requests for gifts and should be coordinated through the Office of Corporate and Foundation Relations. A Project Director considering submitting a proposal to a foundation should contact the CFR for clearance before contacting the foundation.
In cases where it is difficult to make a determination, the Office of Sponsored Programs & Research and the Office of Corporate and Foundation Relations will work together to review the information to determine if the external support is a gift or a sponsored project in order to ensure that proposals are properly submitted and awards are properly processed.