NYU Policy on Distinguishing Between Gifts and Sponsored Awards (10/20/2006)

Overview

Gifts and sponsored awards to the University are made in a variety of forms, reflecting the diversity of donors and sponsors as well as the range of their intents, institutional purposes, and the nature of the projects themselves. The language used in the award notification may signify the intent of the donor or sponsor and is one source for making a distinction between an award and a gift. In some cases, however, it is difficult to determine from the wording of the award documents (including any proposal or program guidelines referenced therein) whether a receipt of funds is a sponsored award or a gift.

This document is intended to help individuals across the University understand the distinction between gifts and sponsored awards. When in doubt about whether an award should be considered a gift or a sponsored award, consult the Office of Sponsored Programs (OSP). The determination as to whether a specific award in question should be treated as a sponsored award or a gift is one that will be made in consultation with the Office of University Development and Alumni Relations (UDAR) and the Controller's Division. Any remaining disagreements will be resolved by the Provost, in consultation with OSP, UDAR and the Controller's Division.

Procedures regarding the routing of the paperwork and the depositing of funds for awards are addressed in a companion memo entitled, "Processing of Gifts and Sponsored Awards at NYU."

Sponsored Awards

A sponsored award is funding from an external entity such as a private foundation, corporation or governmental agency for an activity with a defined scope and purpose undertaken by the University with the expectation of an outcome that directly benefits the provider.

• Sponsored awards, which include grants, cooperative agreements and contracts, bind the University to a set of specific terms and conditions and indicate a related reciprocal transfer of something of value to the sponsor (see above examples). In general, contracts contain a precisely stated sponsor-defined scope of work with the expectation of a definable work product or services on some set schedule as a condition of payment. Cooperative agreements have the same features as contracts, but include the active participation of the sponsor in the activities being undertaken. Grants, on the other hand, are generally faculty-initiated with broadly defined objectives and outcomes in an area of interest to the sponsor.
• Sponsored awards are charged facilities and administrative (indirect) costs at the federally negotiated University rate, whether identified in the award or not, unless the sponsor has a written policy that precludes full recovery and the University has accepted the award with this restriction. The Provost or Senior Vice Provost for Research, after consideration of the proposed award, may be petitioned by the Dean to grant an exception to payment of the full rate.

Sponsored awards from private foundations, corporations, corporate foundations and government agencies are administered by the Office of Sponsored Programs and Sponsored Programs Accounting (SPA) to "set up" the appropriate project chart field.

Gifts

External Support for University activities that do not include the above features or characteristics (also see detailed list below) will be treated as gifts.

• A gift is any item of value given to the University by a donor who expects nothing significant of value in return, other than recognition and disposition of the gift in accordance with the donor's wishes.
• Although a donor may place some restrictions on the use or disposition of a gift and may require a report that demonstrates that the donor's wishes have been met, these terms do not make the gift a sponsored award. Such "restricted gifts" essentially create a fiduciary responsibility in which the University, by accepting the gifts, is obligated to carry out the wishes of the donor.

How to Distinguish a Gift from a Sponsored Award

Although proper classification between gifts and sponsored awards may require a detailed examination of the facts pertaining to a specific award, there are a number of features or characteristics which automatically qualify an award as being in the sponsored category, because such terms indicate a related reciprocal transfer of something of value to the sponsor (the converse is not true of gifts, i.e., no single feature in and of itself makes an award into a gift).

Thus if any of the following pertain, then the award is sponsored:

Project Specific	The award commits the University to a specific line of scholarly or scientific inquiry, typically documented by a statement of work. A specific commitment is made regarding the level of personnel effort, deliverables, or milestones.
Fiscal Accountability	Project activities are budgeted, and the award includes conditions for specific formal fiscal reports, and/or invoicing. The sponsor identifies a period of performance as a term and condition and requires that unexpended funds be returned to the sponsor at the end of the project period.
Rights and Access to Results	University is obligated to convey rights to tangible or intangible properties resulting from the project. Tangible properties include equipment, records, technical reports, theses, or dissertations. Intangible properties include rights in data, copyrights or inventions.
Basic Research Tax Credit	Stipulates that expenditures must qualify for the basic research tax credit.
Legal Accountability	Includes indemnification or other legal remedies.

If none of the above features or characteristics are explicitly conveyed by the award letter, then a closer look at the circumstances surrounding the award is necessary. The proper classification depends on the preponderance of evidence favoring one category or the other.

	Gift	Sponsored Award
General	Donor may restrict use or disposition, for example to a School or to a program within the School, such as a scholarship program.	Award instrument requires endorsement by a University official. Investigator is obligated to a line of scholarly or scientific inquiry that follows a plan, provides for orderly testing or evaluation or seeks to meet stated performance goals. Proposal is submitted in sponsor-required format
Publication and Reporting	Donor may request copies of publications that result from activity supported with donated funds and ask to be acknowledged in such publications. Donor may also request annual progress reports or a summary of the types of activities supported. Smaller gifts do not usually require reports.	Terms of the award require publications or technical reports dealing with substantive aspects of the work. Investigator is obligated to report project results.
Accounting and Financial Reports	Donor may require that the funds be established in a separate account and that the donor receive an annual statement of total funds expended. Gifts may, but rarely do, include indirect costs. Smaller gifts do not usually require accounting statements.	Proposal and resulting award often include a line item budget that identifies expenses by activity, function, or project period and includes indirect costs. Award includes budgetary constraints such as limits on budget categories, or the sponsor exercises prior approval or other controls over expenditures. Fiscal accountability is required, as evidenced by submission of financial reports to the sponsor, an audit provision, or return of unexpended funds at the conclusion of the project.
Project Direction or Mentoring	Sponsor may identify an individual in the corporation as a point of contact, particularly if that person works in university relations or philanthropic functions of the corporation.	Sponsor identifies a technical monitor who is responsible for monitoring performance, arranging research visits and providing liaison between the University and corporate research teams.
Period of Performance	A period of performance is not normally included, but one may be stated as a general expectation.	Terms include a period of performance that is specific for defining allowability of expenditures or other purposes.
Renewal	Normally no formal renewal. Additional funding may be provided at the discretion of the donor.	May be continued or renewed contingent on such things as technical review or satisfactory progress. (This implies that the sponsor is monitoring performance to determine if some set of expectations is fulfilled).
Compliance	While activity may involve compliance issues, enforcement is not a sponsor concern.	Sponsor requires University policy and/or certification regarding compliance issues, e.g., animal and human subject treatment, biohazardous materials oversight, etc.