The University of Alabama, Research & Economic Development

Distinguishing Sponsored Projects from Charitable Gifts Policy

Unit:  Research and Economic Development
Contact: Kevin Nunnally or Jennifer Camp
Title:  Associate Vice President for Advancement Services and Assistant Vice President for Research Administration
Effective Date: 02/02/2022
Revision Date: 02/02/2022


 
 

Purpose

The University of Alabama must manage all funds received in accordance with applicable federal, state and local laws and with the specific terms and conditions of any charitable gift, grant or contract. The University’s approval, negotiation and agreement processes, including accounting, budgeting, oversight, and compliance practices differ depending on whether funds received are categorized as a sponsored project or charitable gift. The University has obligations to its sponsors and donors to appropriately classify funding to ensure good stewardship of awarded funds and to maximize any benefits to both the sponsor/donor and the University. Therefore, it is essential that categorization of external funding received be undertaken with an understanding of the various considerations that drive the determination of funding type. This policy is intended to facilitate the appropriate classification of charitable gifts verses sponsored projects and to ensure that external funding directed to the University receives the proper compliance review, administrative oversight, and monitoring. 

Policy

Employees seeking external funding must engage with either the Division of Advancement's Office of Development or Division of Research and Economic Development's Office for Sponsored Programs (OSP) to meet federal, state and regulatory requirements for the proper stewardship of donor and sponsor funds and to ensure best practices in the fiscal management of charitable gifts and sponsored projects. Determination of the appropriate classification will be guided by the definitions and criteria outlined below.

Sponsored Projects are externally funded activities in which a formal contract is entered into by the University and the sponsor that establishes an exchange of goods, services and money. Examples include a grant, contract, subaward or cooperative agreement. Generally speaking, the following conditions characterize a sponsored project, and help to distinguish such agreements from charitable gifts:
  • Statement of Work – Sponsored projects are typically awarded in response to a detailed statement of work and commitment to a specified project plan. This statement is often supported by a specific period of performance and budget.
  • Financial Accountability – The sponsored project agreement often includes detailed financial accountability such as budget, financial reporting requirements, audit terms and conditions, and may specify allowable and unallowable costs. The award is revocable, or unexpended funds must be returned to the sponsor.
  • Deliverables – The presence of terms and conditions in the agreement that require technical or programmatic reporting, disposition of equipment or data, records retention, copyrights or inventions.
  • Generally speaking, the sponsoring organization has the right to audit the performance and/or expenditures.
Charitable Gifts/Grants are defined as a voluntary, non-reciprocal transfer of 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 charitable gift in accordance with the donor’s wishes. In general, the following characteristics describe a charitable gift/grant:
  • Charitable Gifts may be accompanied by an agreement that outlines its intended use.
  • There is no formal fiscal accountability to the donor beyond periodic progress reports or summary reports of expenditures as a measure of good stewardship and are not characterized as contractual obligations; funds are irrevocable.

Distinctions Based on Funding Source

Any funding provided by U.S. government agencies at the federal, state or local level, in support of University activities is treated as a sponsored project. Government funds cannot be defined as charitable gifts, including flow-through funding.

Distinctions Based on Intent of Donor/Sponsor

In some situations, communication makes it clear that the donor/sponsor intent is to classify an award as either a charitable gift or a sponsored project. In these cases, the terms of the agreement should be adjusted in consultation with the donor/sponsor in order to clearly document the intent and avoid unintended classification.

If characteristics of the funding fall within both categories, the Office of Development and OSP will confer to make an appropriate decision. A joint decision will be made by the Vice Presidents or their designees.

Scope

This policy applies to all UA personnel who apply for, seek, or receive external funding for charitable gifts or sponsored projects.
 
 

Office for Research and Economic Development

Approved by Russell J. Mumper, Ph.D, Vice President for Research and Economic Development, 02/02/2022