Policy to Define Gifts vs. Sponsored Awards
REASON FOR POLICY
The University must manage all funds received in accordance with
applicable federal, state, and local laws, and with the specific
terms and conditions of any gift, grant or contract. The
University's approval, negotiation and agreement processes and
mechanisms, accounting, budget practices, oversight, and compliance
practices differ depending on whether funds received are
categorized as a gift or as a sponsored award. It is, therefore,
essential that categorization of external funding received be
undertaken with utmost care and with a sound understanding of the
various considerations (outlined below) that determine the funding
type. This policy is intended to facilitate the appropriate
classification of gifts vs. sponsored awards and to ensure that
external funding directed to the University receives the proper
compliance review, administrative oversight, and monitoring.
Funding derived from sources outside the University is an
essential component of the University's financial health and its
ability to undertake and sustain vital research, scholarship,
creative activities, and public service. The classification of
external funding as a gift or sponsored award (see definitions
below) serves as an important step to ensure appropriate accounting
and compliance. In many cases, the determination of whether funding
received is a gift or constitutes a sponsored award is relatively
straightforward, while in other cases, the determinations may be
more difficult. In some cases, external funding may have many
separate components, some of which qualify as gift funds, and other
components that would qualify as sponsored awards.
Gifts typically carry no reciprocal obligations between donor
and recipient, and are often unrelated (or only indirectly related)
to the business interests or mission of the donor. Therefore, in
general, a gift may be an unrestricted donation to the University,
or a donation whose uses may be restricted to an academic area or
to a defined group of academic, departmental or other University
activities (a "restricted gift"). Within therestrictions set by the
terms of a gift agreement, the specific ways in which funds are
used, and the methods of implementing the intent of the donor, are
left to the discretion of the University.
When restricted or unrestricted gifts are received, the
University typically enjoys broad latitude in how to use the gift
funds, and the University, rather than the donor, chooses what
specific faculty members and students may participate in the
activities supported by the gift. A gift generally has no time
limit for its use and expenditure. A gift may be directed by a
donor to support the work of a specific department or faculty
member, but in these cases, the department or faculty member
typically would have broad discretion as to the design and
implementation of, and specific expenditures to support, specific
academic activities for which funds received would be used.
Although it is not unusual for a donor to expect a report on the
general uses of funds donated (for example, a list of activities or
projects that have been supported by a gift) or even a report on
line-item expenses, a donor may not recoup gift funds. If a gift
made for a restricted purpose has not, however, been spent
according to the donor's restrictions, a donor may have grounds to
rescind and recoup the gifted funds.
In sponsored awards (which include sponsored grants and
contracts), however, the business interests or mission of the
source of external funds is most often related directly to the uses
for which the funds are put by the recipient. Because sponsors are
concerned that their funds be used to support activities that
bolster the sponsor's own mission or interests, sponsors typically
provide funding for sponsored awards on the basis of a specific
project or research plan and budget, for a specified period of
time, with funds unused at the expiration of the time period
reverting to the sponsor.
The plan most often involves an identified University faculty or
group of faculty as the academic project leader(s), and specifies
goals and objectives, as well as the methodologies and approaches
to be used, and it is to pursue the program or research plan that
the funds are typically awarded. Sponsors expect the University to
be fully accountable for assuring that the program or research is
conducted with financial, ethical and scientific integrity and in
compliance with all applicable federal and state laws and
regulations.
Sponsored contracts (which typically are contracts
for sponsored research), unlike grants, are awarded for the pursuit
and completion of specific program or research objectives or tasks,
or the delivery of specific products, within specified timelines.
Sponsors hold the university accountable for successful and timely
completion of contracted deliverables, or work.
In a sponsored award (either grant or contract), both the
University and its faculty are usually responsible for reporting on
progress and results to the sponsor at intervals or milestones
identified in the grant or contract. As part of the terms and
conditions of an award, sponsors require that they have discretion
to examine, even on a line-item basis, the expenditures of the
grant or contract funds, and to disallow and demand repayment of
any funds deemed by the sponsor to have been expended for purposes
other than direct support of the defined activities. If the funded
program or research is not pursued, or the contracted deliverables
not attained, sponsors often reserve the right to recoup all or
some of the sponsored award from the recipient.
In some cases, the distinction between a gift and a sponsored
award (grant or contract) is ambiguous and requires consideration
of many factors, including the funder's mission and potential
benefit from the work; the scope of work; whether there are any
defined activities and, and if so, their nature and the specificity
with which they are defined; the terms of accountability for use of
funds and deliverables; and - in case of failure to complete the
defined activities - the ability of the funder to recoup the funds
provided or to obtain a refund (or receive a reversion) of unused
funds.
Alternately, some external funding can initially resemble a gift
because its terms may lack detail about activities to be funded but
may require a mechanism by which a funder would be asked
periodically to approve specific program or research activities
and/or specific uses of portions of funds; such funding would
therefore likely be considered as a sponsored award, because of the
lingering control of the funder over specific activities for which
the funds would be used and/or the budgets for those
activities.
In some cases, external funds received may be, by the terms on
which they are provided, in part a gift and in part a sponsored
award. In that event, funds received may be allocated between a
gift and a sponsored award, and the corpus of each portion treated
differently and appropriately for management, accounting,
compliance and oversight purposes.
When the appropriate categorization of external funds received
is uncertain, OGSP and/or school officials should consult with the
Office of the Provost and the Finance Office before making a
determination. These offices, in turn, may consult with the
Advancement Office, and the General Counsel (GC). Similarly, when
Advancement and other offices within the University receive
external funds whose appropriate categorization is uncertain, they
should consult with the Office of the Provost, OGSP and/or GC. In
cases of lingering uncertainty or dispute about the appropriate
categorization of external funds received, the Provost and the
Chief Financial Officer will consult and reach a final
determination.
WHO SHOULD COMPLY
Persons who should comply with this policy include all
submitting offices, OGSP for sponsored project awards; school
officials who administer or negotiate gifts or sponsored awards at
their schools; the Advancement Office; and all centers, and
faculty, who apply for, seek, or receive external funding at Lesley
University.
Only OGSP and the Finance Office may formally accept gift or
sponsored program funding on behalf of the University, and the
Finance Office and OGSP therefore must respect this policy in
determining whether to accept a gift or sponsored project
award.
RESPONSIBILITIES
In situations in which the determination of gift vs. sponsored
project award is not obvious, the offices identified below are
expected to coordinate as follows:
The submitting offices (OGSP and the Advancement Office) and the
Office of the Provost are responsible, under the procedures and
considering the factors specified above, for working in conjunction
with one another to reach a determination as to whether the
external funding is a gift or a sponsored award. The submitting
offices are also responsible for following the normal procedures
required to accept and set up a sponsored award.
School-level officials who are involved in discussions relating
to prospective gifts or who administer gift funds, and school-level
officials who assist faculty with applications for and discussions
relating to sponsored project awards, are responsible for applying
this policy, using factors and procedures outlined above.
The Office of the Provost and GC are responsible for providing
input to the submitting offices and in determining whether funding
is a gift or a sponsored award. The Finance Office is responsible
for establishing gift accounts.
DEFINITIONS
Sponsored Awards.
This category includes all funding arrangements in which
the University is providing a return benefit to, or agrees to
provide a defined deliverable or complete a set of activities for,
the sponsor in exchange for the funds, regardless of whether the
funding instrument is designated a contract, cooperative agreement,
grant, consortium agreement, or otherwise. This category includes
all contract or sponsored "grant" funding by foreign entities or
international organizations, whether pursuant to a contract or
sponsored "grant." This category also includes all subcontracts and
subawards, whether from federal or nonfederal sources. Non-federal
Awards are processed only by the submitting office(s). Sponsored
program awards most often support research and education projects,
but in some cases, may be provided for creative activities or
public service projects. Finally, foreign entities or governments
may provide gifts to the University for endowment, financial aid or
other education project, these are reviewed by the General Counsel
and processed by the Finance Office.
Restricted Gift.
This category includes gifts made by a donor who instructs
the University as to the use of the funds in a specific academic
area or for specific academic purposes. Gift terms for restricted
gifts may specify particular activities and budgets for those
activities; but usually do not specify how the funding must be
spent or administered, and allow funding to be utilized at the full
discretion of the recipient, although respecting the overall gift
purposes. Financial reporting requested by donors of restricted
gifts is normally in the aggregate, although detailed reports are
sometimes requested; in both cases this reporting is solely
intended to assure proper gift stewardship. Unexpended funds are
not returned to the donor at the expiration of the restricted gift
period. All restricted Gifts are processed by the Finance Office,
but they may also be recorded by the Advancement Office if there is
a need for detailed financial reporting.
Policy on Gifts and Sponsored Awards: Key
Characteristics of Funding Categories
| Gift | Sponsored Award |
Benefit received by funder from activities
funded | Serves philanthropic or personal interest of funder, but does
not serve the primary business purpose of the funder; no goods or
services are received in exchange for contribution; no tangible
benefit received | Serves the primary business or mission interest of the funder,
whose basic activities are integrally related to the research or
education plan, creative activity, or public service-benefit
received |
Funder's specific intent | Funder seeks advances in a general area of research or
education; or seeks advances in a specific area, but without
prescribing specific strategies or work-plans | Funder seeks implementation of a specific research or education
plan, with well-defined objectives, strategies, work-plans and/or
deliverables |
Value exchanged | Funder essentially receives no personal or institutional value
in return for the funds given, other than intellectual satisfaction
that the activities have been undertaken. No deliverables received
in exchange for contribution | Funder expects and receives implementation of, and a report of, the University's funded activities; funder's
own mission and/or research agenda is advanced through the
University's funded activities. Deliverables provided |
Scope of work | More generally defined; typically no time frame or period of
performance | More specifically defined with a clear period of
performance. |
Persons performing funded activities | Often left to discretion of University, school, department or
one named individual | Key personnel (or the equivalent project leadership team) are
named in proposal, and changes to key personnel must be
pre-approved by funder |
Budget specificity and restrictions | Budgeting is general in nature and terms, and funder
pre-approvals are not required as long as funds are used for the
stated purpose | Budgets are specific, and variances from proposed budgets
(within designated parameters) require funder pre-approval |
Progress reports | May be required but are most often general in nature and
content | Required, and must outline progress toward the specific research
or project plan |
Terms of funding | Less detailed | Often detailed, with standard, detailed terms and conditions for
all funding from that sponsor |
Accountability for use of funds | More moral than legal | More legal than moral |
Ability of funder to recoup funds | Generally very difficult to recoup, except in cases of
deliberate, proven use of restricted funds inconsistent with terms
of a restricted gift | Established ability of funder to terminate the agreement and/or
demand repayment of funds, if specific research or project plans
have not been implemented |
Method of documentation | Letter of intent from funder who makes the award | Binding (often signed) agreement between University and funder,
obligating University to implement specific research or project
plans |