I question the statement that IRS regs define "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."

However, regardless of what the IRS rules say, the controversy undoubtedly
stems from whether to charge overhead to a source of extramural funding.  Am
I right?

If this is so, then the IRS rules are irrelevant.  It is the intention of
the institutional policy that prevails.  If the policy is to characterize a
source of funding as a gift, and hence no IDC, because it has no conditions,
then such funds should be treated so not because the IRS calls it something,
but rather because the institution calls it a gift.  Same logic applies to
grants that carry IDC.  The IRS cannot tell an institution whether to call
something a gift or a grant if the intent is to differentiate whether you're
going to charge IDC. Hell you can call it a giraffe if you want to.

-----Original Message-----
From: Baumann, John [mailto:xxxxxx@UMKC.EDU]
Sent: Thursday, February 28, 2002 2:02 PM
To: xxxxxx@HRINET.ORG
Subject: [RESADM-L] Grants -- Gifts Issue

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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