I would find it difficult to call this a charitable contribution,
considering that the sponsor gets back unexpended funds and gets some rights
in patents and copyrights.  Does the sponsor also get a report on the
research?
Attaching value to those, in order to calculate some remainder that is
charitable, would be extremely difficult.

Stuart A. Ross
California State University, Fullerton

> -----Original Message-----
> From: Cephas, Lesley [SMTP:xxxxxx@SRNET.UCLA.EDU]
> Sent: Monday, November 02, 1998 11:25 AM
> To:   xxxxxx@hrinet.org
> Subject:      Receipt of Charitable Contribution
>
> Scenario
> We have an internal research funding program whereby a PI submits a
> proposal to the "program" while also getting a commitment of support
> from an extramural sponsor (usually a commercial entity) who will, if
> the proposal is funded, share the costs of the research.  So, for
> example, Prof. Smith submitted a proposal to this program with a budget
> of $300K.  The University awards $200K to Smith for this research and
> the private sponsor kicks in the other $100K.
>
> The University receives the $100K via a research agreement as opposed to
> a gift.  This research agreement, among other things, includes a
> standard termination clause (any advanced funds not expended at the time
> of termination after considering all commitments and uncancelable
> obligations shall be returned to the sponsor) and intellectual property
> clauses that only grant the sponsor limited rights to use copyrightable
> works and which obligate us (to the extent we are legally able to do so)
> to enter into licensing negotiations with the sponsor should any
> patentable  inventions result from the work.
>
> After we executed the research agreement and received the check for
> $100K, the sponsor sent us a "receipt of a charitable contribution" form
> which we're supposed to sign and return.  The form asks us to indicate
> how much we received and what, if any, goods or services were provided
> in return.
>
> Question
>
> Should we sign/is there any harm in signing this form and sending it
> back to the Sponsor?
>
> Since we are a 501(C)3 organization, and since the $100K was for
> scientific research, and since the sponsor wasn't getting anything of
> real value from the "donation", I'm thinking that the IRS may in fact
> consider this a charitable contribution, even though INTERNALLY, we did
> not treat it as a gift.  However, my gut feeling is that we can/should
> sign and return the form, because in any event the burden is on the
> Sponsor to prove that this payment meets the IRS's requirements for a
> "charitable contribution", and all we're doing is providing formal
> information.
>
> Any insight would be greatly appreciated and may be sent to the list or
> privately at xxxxxx@srnet.ucla.edu.
>
> Thanks,
>
> Lesley
> Lesley K. Cephas, Industry Contract Officer
> UCLA Sponsored Research
> Los Angeles, CA  90095-1406
> Voice: (310) 825-1431
> Fax:    (310) 206-3619
> E-Mail: xxxxxx@srnet.ucla.edu
> http://www.research.ucla.edu/sr.htm