What is a Sponsored Project or Gift?

Processing Private Sector Support for Higher Education: Corporate, Foundation, and Nonprofit Support

The following are key characteristics to consider when determining whether support from a corporation or foundation should be processed through Development’s Gifts and Records Administration (GRA), or through the Office of Research and Sponsored Projects (ORSP).  

Please refer to the table below and the characteristics that follow to determine whether funds provided by a corporate or foundation sponsor should be processed by the Development (GRA) or ORSP.

Note that the existence of one characteristic alone is likely not sufficient to make a determination. Moreover, the characteristics of both sponsored projects and gifts will oftentimes apply to the same award. For these reasons, multiple factors should be considered in making an assessment of how to proceed. A sound judgment based on the preponderance of applicable characteristics should determine which office handles the funds. In general, ORSP will process and engage Sponsored Programs in the management of awards with budget, confidentiality, intellectual property, or compliance factors (e.g., human subjects and animal research), aspects of which require the sophisticated tracking and review tools built into the research enterprise (e.g., effort allocation, royalties, IRB, UCUCA, etc.).

In cases where it is uncertain whether corporate or foundation support should be processed through Development or ORSP, any relevant documentation should be reviewed by ORSP for a determination. U-M gift officers should contact their Foundation Relations personnel for help in getting the documentation to the right place

Corporate, Foundation And Nonprofit Support Processed Through Development (GRA)

The following criteria may indicate a gift, although any single criteria in this list may not be dispositive, and all factors must be considered as a whole when making a determination of whether it is a gift or a sponsored project:

1. Voluntary contribution made to qualifying entities having charitable purposes, including educational institutions such as the University of Michigan.
2. The contribution is not federal or state money.
3. The contribution may be restricted, for example: 
   1. For endowment, i.e., only a proportion of market value may be spent in perpetuity
   2. For a specific school, college, or unit
   3. For a stated purpose, like a construction project, program, professorship, scholarship, etc. 
4. The contribution can support research but the donor must not:
   1. Derive commercial or private benefits from research
   2. Have rights to intellectual property that may result
   3. Have first rights to any research outcomes
5. The agreement documenting the contribution may be binding or non-binding, depending on the purpose.
6. The contribution, once made, must be irrevocable for all donors except private foundations, who are allowed to include a clawback provision in their agreements under IRS regulations.
7. According to the IRS, the agreement with a private foundation that documents a charitable contribution may use the term “grant” instead of “gift”. 
8. Periodic progress reports and reports about expenditures are allowable.

Corporate, Foundation And Nonprofit Support Processed Through The Office Of Research And Sponsored Projects (ORSP)

Transactions that meet the following criteria, individually or collectively, may not be treated as a gift and should be handled as a sponsored project through ORSP:

1. Funds originate from a federal or state sponsor.
2. The corporation or foundation receives some deliverable or commercial benefit, e.g., rights to intellectual property, pre-publication review, hardware, software, data.
3. Funds are restricted for a detailed purpose that requires adherence to: 
   1. a specific statement of work and commitment to a specified project plan, such as a prescribed research activity; 
   2. a detailed project methodology, e.g., a series of experiments to test a particular hypothesis, or support to perform a particular activity; 
   3. a line-item budget, the tracking of which is key to financial accountability and requires sponsored project management systems to fulfill; and
   4. a specified period of performance in which project funds will be expended, usually defined with "start" and "end" dates. 
7. The supported activity requires the approval of a U-M compliance committee (e.g., IRB, UCUCA, IBC, etc.).

The following criteria may indicate a sponsored project, although any single criteria in this list may not be dispositive, and all factors must be considered as a whole when making a determination of whether it is a gift or a sponsored project:

1. Funds are awarded in response to a formal proposal submission, generally led by a member of faculty as primary or lead investigator.
2. The funding is conditional and/or revocable.
3. Use of funds is governed by written sponsor guidelines or policies.
4. Required reporting includes a schedule of periodic progress reports and formal, institutionally signed financial reports.
5. Award requires protection of confidential information.
6. Prior approval is required for changes to the statement of work, budget or period of performance.
    

Processing Corporate, Foundation and Nonprofit Contracts

Support from a corporation or foundation that is not a voluntary donation for religious, charitable, scientific, literary, or educational purposes may actually be a contract. Contracts are defined as “Exchange transactions having potential commercial benefit or profit that does not support a charitable purpose” (e.g., private gain).  This category of support is most applicable to corporate research contracts, not to foundation, corporate foundation, or nonprofit grants or gifts. All contracts are processed through ORSP, and are considered Sponsored Projects.

Development Reporting of Foundation and Nonprofit Support

Gifts and sponsored projects funded by foundations of any type and nonprofit charities can be counted as gifts in DART and campaigns, even when processed and managed as sponsored projects.  Corporate research contracts are not counted.   

Elements that are irrelevant to decision about management of the award, i.e., may be administered as GIFT (GRA) or SPONSORED PROJECT (ORSP): 

• Document is titled “grant agreement” or “grant contract”; 
• Return of unexpended funds (often this is pro forma part of grant letters); 
• Legal language about lobbying; 
• Loose restrictions on purpose of the funding (almost all gifts have a restriction on the purpose or goals of the gift);
• Funder is a family foundation rather than a professional foundation; or 
• Transmittal letter does not refer to the proposal per se. 

When in doubt, work through Corporate Relations, Foundation Relations, or Office of Research and Sponsored Projects staff member to clarify.