Thanks for the vote of confidence.  I'm replying anyway, because the
question keeps coming up.

At VCU we know there is a "grey area" between gifts and sponsored programs,
but the two items are handled by different offices, so we assign each item
to one or the other.  There is little "us vs them" from that arrangement.
However, some seekers of support think there is some benefit to them that
makes a gift preferable to a sponsored program -- usually this comes down
to questions of indirect costs or some other question of the seeker having
full discretionary control of each dollar that comes in.

If the transmittal says "gift", the choice is obvious -- unless, of course,
the "giver" then attaches so many restrictions that it isn't a gift!  (In
that case there may be some internal discussion before it is assigned.)

Legally, a gift is unilateral unless the intended recipient refuses it,
whereas an agreement ("contract" at law) has an exchange of "consideration"
(something of value, including the promise to do something).  As we look at
it, it becomes a sponsored program when the sponsor gets something for it
as part of the agreement.  This contractual commitment is usually the crux
of the decision how to treat it.

The following is from our Sponsored programs guidelines -- it helps narrow
the "grey area":

A sponsored program is an award from an external source (the "sponsor") for
an agreed purpose with sufficient custodial
responsibility to warrant unique administrative accountability. It is
established by an agreement, usually called a grant or a
contract, between VCU and the sponsor. It generally requires that VCU do
some or all of the following:

 1.provide a fiscal report subject to audit, which implies formal
liability for VCU
 2.return funds/goods not consumed
 3.perform a defined scope of work
 4.maintain confidentiality of information
 5.submit a detailed report of performance
 6.provide something of value to the sponsor; and
 7.comply with terms/conditions set by the sponsor.

This differs from a gift which has the characteristics that it is
irrevocable, and that VCU has full discretionary control over its
use, though the purpose for which it is used may be specified broadly by
the donor.

In administering that guideline, we clearly recognize that some sponsors DO
support research activities for no direct benefit to themselves -- though
there may be indirect benefit, such as a "window" on the University, or
increase of the skilled manpower pool in the professional/specialty.  If
the sponsor can use the word "gift" (second best, "grant"), even when
restricting it somewhat (e.g., to support Professor X's cancer research
program", we want it treated as a gift.  That's much cheaper in terms of
administration.  If it is a gift, clearly there is no indirect cost
attached/claimed.  Please be aware that for-profit sponsors may avoid the
term "gift" but can properly expense (maybe to Public Relations) something
for which they get only indirect benefit, so our treating it as a gift does
not give their auditors heartburn.

We also recognize that there are kinds of support for which the sponsor
gets something of value, but not much, and the award is more "gifty" in
flavor.  These would be sponsored programs, but can often fall under our
policy for reducing or waiving indirect costs.  Reductions in indirect are
easy for us to justify when there is major benefit to students -- remember,
students are our prime constituency, and anything we do to benefit them,
individually or as a group, is in support of our primary mission.

On the other hand, we are an agency of the Commonwealth of Virginia.  As
such, our public resources should not be used for the preferential
betterment of any individual for-profit organization.  Indirect costs are
real, and reducing them is a subsidy of the project.  Therefore, if the
sponsor gets significant value as a result of the award,  it is a sponsored
program and we do not reduce indirect.

Sorry to be long winded -- it is not a simple situation, and some
institutions would respond differently due to differing underlying
institutional considerations.  But this works for us.

By the way, some programs can easily be funded by both gift and sponsored
program funds.  I just helped work out one with about a dozen revenue
inputs, of which two to four will be sponsored programs because the sponsor
cannot get $ to us except on receipt of some value back, while the others
can say, "gift in support of...."
But the program will have several accounts, because at least the sponsored
programs may not be co-mingled, because each refers to a different
agreement ("contract").

Conflict of Interest could come in if there were certain relationships
between individuals who are employees and sponsors/givers (state COI law).
Otherwise, I see little chance.

Intellectual property developed with gift funds belongs to the University.
Intellectual property developed with sponsored programs belongs to the
University unless we contracted away rights which have value!) in the
sponsored program agreement.

The NSF expenditure report depends on expenditure information, not the
source of the funds.  If you hold gifts in a foundation and spend them for
the benefit of the institution rather than flowing them through the
institution's books, you's have to get more expert advice than I can give,
as to how they should be counted.

Chuck

At 08:20 AM 2/1/00 -0600, you wrote:
>Dear Colleagues:
>
>Does anyone have a program (the specifics of which they would share) to
>handle funds from sponsors (particularly, but not necessarily, for-profits)
>that are not gifts because there is no charitable intent but they aren't
>really full blown research projects either.  They may be small amounts for
>pilot studies or partial support of an investigator's general research or
>outreach program.  They are mostly unrestricted but the sponsor may get a
>copy of a widely distributed final report or publication based on the effort.
>
>do you fully cost them?
>
>is there cost share since the funds are simply partial support for
>something the investigator was going to do anyway using internal funds?
>
>do you co-mingle these with other funds of a similar nature?
>
>what happens if by some wild chance IP is developed?
>
>since sponsors get tax breaks for costs other than charitable
>contributions, is there anything wrong with these types of funds going
>through a university foundation as an unrestricted grant?  I will admit
>that some of the tax implications confuse me.  I have usually said if it
>wasn't charitable it couldn't go through development.  Some have suggested
>otherwise.
>
>do you have a way to document the dollar amount of research funds received
>for those things that go through your development folks for internal
>reporting purposes or for the NSF research expenditure report?  Do the
>development folks have a way to account for funds that go through sponsored
>programs but may fit their definition of an unrestricted grant for their
>reporting purposes?
>
>where does potential conflicts of interest fit in?  I am certain it could
>be a problem if not adequately addressed in policies and procedures.
>
>I really didn't intend to open up the "us" versus "them" discussion again
>but rather to borrow heavily from the programs out there that have been
>successful in drafting policies and procedures that have improved not only
>the relationship but have clarified the roles and responsibilities as well
>as to simplify processes and reporting.  We are handling this reasonably
>well at Auburn right now but rather than our "success" being based on a
>firm foundation of policies and procedures, it is based on the
>understandings of the people in positions of authority over the process who
>have met on several occasions to clarify particular situations.  Each time
>something different comes up we have to "meet once again."
>
>One day we might not be here and those who follow will have to beat down
>the same path.  I hope to get some issues in writing before that happens.
>
>I have some really good stuff from Barbara Gray and from Chuck Chermside
>and thank them for allowing me to benefit from their hard work.  I still
>have a long way to go to complete this project.  Any pointers to web sites
>or policies provided by e-mail are appreciated.  Thank you very much.
>
>-----------------------------------------------------------------
>Martha M. Taylor, Director
>Office of Sponsored Programs
>310 Samford Hall
>Auburn University, AL 36849-5131
>
>334-844-4438
>334-844-5953 (fax)
>
>(xxxxxx@auburn.edu)
>
>
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>
Herbert B. Chermside, CRA
Director, Sponsored Programs Administration
Virginia Commonwealth University
PO BOX 980568
Richmond, VA  23298-0568
Express Delivery Only:
 Sanger Hall, Rm. 1-073
 11th & Marshall Streets
 Richmond, VA  23219
Voice:  804-828-6772
Fax     804-828-2521
OFFICE e-mail   xxxxxx@VCU.EDU
Personal e-mail xxxxxx@vcu.edu
http://views.vcu.edu/ospa/

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