This disagreement constantly raises its head.  Recently I searched for an
authoritative published statement by some major entity, and did not find
one.  If anyone out there has found one, please share it.

The argument presented below is completely fallacious.  A 501 C (3) may not
accrue profit to shareholders, etc. AND must conduct activities (presumably
with a benefit to society) in accordance with their charter.  Their charter
may very well include making grants and contracts in order to benefit their
chartered goal, e.g., fund research with the goal of curing XXX disease.

1)  For any institution, one part of the grant-gifts controversy has to do
with what the sponsor/giver's intent, as documented in the "award", is and
how the institution must account for it.

If the intent is to relinquish to the recipient all title and interest, it
is a gift, and may go into a gift account.

If the intent is that the institution must comply with specific
restrictions, e.g., do something specific with the funds (e.g., a project);
provide the sponsor something, e.g. a report, a financial accounting, etc.;
must return unused funds; etc. (some but not necessarily all of these),
then the institution must put the funds in a "restricted" account.  The
accounting principles that apply to this are the standards set out by the
Governmental Accounting Standards Board (GASB)  (for a state institution;
there's something equivalent for private ones) and the National Association
of College and University Business Officers (NACUBO)

2)  Another part of the controversy is who assists university personnel in
the processes of getting the funds.  Work that out any way you can, but be
sure the individual who accepts any sponsored program (I carefully avoid
"grant" because the work can legally mean a gift or a sponsored program
that's not a contract) has the legal authority to bind the institution.

3)  Another part of the controversy is who gets credit for bringing the $
in, and this is what makes it most "sticky", because the value and
productivity of an office may be judged by the $ volume.  This is more
often a critical factor in judging "gift" off ice than sponsored program
offices.  Of course it probably indicates poor management if an office is
judged on one criterion only, but it is certainly easier to point to an
objective factor like $ than to determine the factors, many of which are
not objectively measurable, that go into a good departmental "job review".

Put the $ where you legally should and you won't have trouble with the
auditors.  Work out the rest as best you can to serve your institution now
and in the future.

Good Hunting!!!!

Chuck

At 01:01 PM 2/28/2002 -0600, you wrote:
>We are currently in the midst of a grant-gifts controversy with regard to
>funds provided by private foundations and/or associations for the
>performance of proposed research projects.  One party on our campus, not
>Sponsored Programs, has claimed that regardless of the purpose of the
>funds, regardless of the awarding process, funds provided by private
>foundations and associations are gifts because: they are 501 c.3
>organizations and, according to IRS rules, can only give gifts.
>In other words, they are gifts because that is all that they can be.
>
>I have not been able to find anything in the IRS codes that either
>supports or specifically counters this position.
>
>We have the NACUBO literature and typology of the characteristics of
>grants and gifts.
>
>However, I am wondering if any of you who have previously dealt with this
>on your campuses may have additional information, advice, or
>documentation.  Specifically, anything that shows that the IRS does not
>automatically require that funds provided by private foundations and
>associations be treated as gifts, as distinct from grants.
>
>
>Thank you in advance.
>
>
>John R. Baumann, Ph.D.
>Director
>Office of Sponsored Programs & Research Support
>University of Missouri -- Kansas City
>5100 Rockhill Road
>Kansas City, MO 64110
>
>816.235.1303 (v)
>816.235.6532 (f)
>xxxxxx@umkc.edu
>
>location: 5211 Rockhill Road
>
>
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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. 1-032A
 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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