Classification of Gifts and Sponsored Awards (Grants)

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Teachers College Policy Library

Owner: Controller

URL: http://www.tc.columbia.edu/policylibrary/

Policy for the Classification of Gifts and Sponsored Awards(Grants)

Purpose:

To establish guidelines for determining classification of gifts and sponsored awards(grants) that originate from private corporations and foundations and establish a review process for those cases that may seem unclear.

 

Scope:

This policy details the distinctions between gifts and grants applicable to faculty and staff who are involved in the administration of these funds. 

 

Effective Date:

October 26, 2016

 

Responsibility:

The interpretation and administration of this policy shall be the responsibility of the Grants and Contracts Accounting Office in consultation with the Associate Vice President and Controller as well as the Office of Sponsored Programs and the Development Office.

 

Policy:

Teachers College (TC) 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 College’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 consideration (outlined below) that determine the funding type.  This policy is intended to facilitate the appropriate classification of gift vs. sponsored awards and to ensure that external funding directed to the College receives the proper compliance review, administrative oversight, and monitoring.

 

Overview

Teachers College regularly receives funding from a variety of sources including government, corporations and other private entities. Private entities (individuals, private agencies, 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. It is important to accurately classify the funding as either a gift or a grant to ensure that funds are correctly accounted for and properly classified in the College’s financial statements. Furthermore, Teachers College has a fiduciary responsibility to sponsors and to donors to accurately classify these awards.

 

Private funding generally falls into one of two categories:

 

Gifts are the voluntary, non-reciprocal transfer of money or property from a donor to the College.  The donor may be an individual, a foundation, a corporation, or another non- profit organization. The donor does not expect anything of value in return other than recognition and does not have control over expenditures.   A gift may meet the interests of the donor and can be restricted or unrestricted.  A restricted gift is a contribution designated for a specific purpose, program or project. If the donor does not specify any restrictions, the gift is unrestricted and the College may allocate the funds at its own discretion.

 

Sponsored funds (grants) is an agreement formalizing thetransfer of money or property from a sponsor in exchange for specified services (e.g., research and development) and may require specific deliverables including financial and/or technical reporting by the recipient.  The agreement is enforceable by law, and performance is usually to be accomplished within a specified time frame, with payment subject to revocation.  It may include provisions related to intellectual property and publication rights.

 

Gifts are typically initiated by a member of the Development Office. Grants are typically initiated by individual principal investigators who work with the Office of Sponsored Programs. However, some grants from private sources are the result of collaboration with the Development Office.

 

Gift vs. Grant Determination

Funds received from US or international governmental agencies at the federal, state or local levels are never treated as gifts.  In cases where funding is provided by individuals, corporations, foundations or others , the gift vs. grant distinction is based on the nature of the proposal, statement of work, and/or other terms of the agreement, taking into consideration the intent of the donor/sponsor. Note that donors sometimes confuse the classification issue by using the word “grant” when the funding actually qualifies as a gift, or vice versa. Therefore, careful consideration of the supporting documentation is critical in determining donor/sponsor intent.  The chart below are factors to help determine donor/sponsor intent:

 

Category of Indicator

Factors generally indicates a “Gift”

Factors generally indicates a “Grant”

Donor

  • Individual
  • Non-governmental
  • Private foundations or corporations, depending on the nature of the other factors below

 

  • US or international governmental agencies at the federal, state or local
  • Universities and Colleges
  • Private foundations or corporations, depending on the nature of the other factors below

Value Exchange

The donor receives no or nominal value in exchange for the funding provide.  No deliverables (reports or rights) are provided to the donor in exchange for the funding.

The items are of particular value to the sponsor.  The sponsor is entitled to receive value, which may include, reports, intellectual property rights, publication rights, data, etc.

Mission of and benefit

to resource provider (i.e. donor of a gift or sponsor of a grant.)

Donor seeks to advance general area of research, training, education or other specific area but does not prescribe specific strategies or work plans.  Primary intent is charitable without expectation of economic good.

Sponsor seeks implementation of specific research or education with well-defined objectives, strategies, work plans.  Primary intent is public good.

Scope of Work

The donor typically wishes to support

the broad goal of an activity rather than delineating a specific course of action.

A specific commitment is made

regarding the level of personnel effort or specific milestones.

Cost and Budget

Information

There is no requirement for a line item budget or any restriction on the use of the gift other than it must be consistent with the stipulation of the donor.

A request for funding for a specific purpose and the request typically includes a detailed, line-item budget describing how the funds will be used, including the appropriate fringe benefit/indirect costs.

Award terms and

conditions

The donor may request information

related to the use of funds but places little or no restriction on review of results before they are made publicly available.

Sponsor may place restrictions on how the items are reviewed before being made available to the public. 

 

Specific Start and End

Dates

Typically no. However, donors may support annually funded scholarships, fellowships, etc. which generally have specific start and end dates.

There is a specified time period associated with the use of the funds or items, a period of performance, including start and stop dates.

Progress/Financial Reports

Investigators may provide updates on

research progress and/or discoveries; these may or may not be a condition of the award.  Financial reports are limited to details of how, when, and to whom funds were disbursed as well as statement of earnings when applicable.

Programmatic reports are generally required at the award of agency level.  Financial reporting often requires

detailed line item expense reporting, and is often subject to financial audit.

Unspent Funds

Unspent gift funds generally do not have to be returned to the donor.

The sponsor may require that unspent

funds be returned.

Ownership of Results

Recipient retains control and ownership of any results associated with the work of the project.

In some cases, sponsor may assume full or partial ownership of the work accomplished.

The presence of any single factor does not represent the condition of a gift or a grant.  To best determine if a transaction is a gift or a grant, administrators (central and departmental) should consider these factors simultaneously.  If, after reviewing these factors, administrators are unable to classify an award, administrators should forward all relevant documentation to the Office of Grants and Contracts Accounting, attention John L. Hernandez.  A recommendation will be made and then forwarded to the Development Office and Office of Sponsored Programs for review.