Categorization of External Funding

Policy Summary

This policy identifies and categorizes funding received from sources outside the university (external funding) and identifies specific criteria for each category, including authorized signatories. The policy specifically defines Gifts, Sponsored Project Awards and Service Provider Contracts.  

Related Regulations

• 2 CFR §200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
• Accounting Standards Update 2018-08 – Clarifying the Scope and Accounting Guidance for Contributions Received and Made
• Accounting Standards Update 2014-09 – Revenue from Contracts with Customers

Who is Governed by this Policy

• Staff
• Faculty

Policy

The identification and appropriate processing of external funding is critical for the university to be compliant with the applicable regulatory requirements, terms and conditions established by agreements with external parties, the applicable accounting and financial reporting standards, and the timely, appropriate stewardship of donors.

Categorization 

There are three primary categories of external funding, which are defined as:   

1. Gifts 

Any funding provided where there is clear philanthropic intent. Gifts do not include intellectual property or any other compliance-related provisions nor stipulations that suggest a significant contractual relationship beyond areas of general use or naming. Gifts may include stewardship reporting or a purpose/use restriction for the funds. Philanthropic gifts and grants must be coordinated through the division of Development and Alumni Relations according to the type/source of contribution: 

1. Office of Corporate and Foundation Relations – gifts and grants from corporations foundations¹ (other than family foundations) 
2. Office of Planned Giving – deferred gifts 
3. Office of Gift Records – all other contributions 

2. Sponsored Project Awards 

Sponsored project award are funded by external sources with a stated expectation on the part of the sponsor for performance, compliance and/or accountability.  Sponsored project awards usually support research or scholarly activities, but in some cases, funding is provided for services, training or other sponsored activities. Sponsored projects are coordinated by the Office of Sponsored Projects and are managed by the office in collaboration with principal investigators, schools/centers/institutes, and Grants and Contracts Accounting Services (GCAS).

Sponsored project awards may include one or more of the following characteristics but the inclusion of such does not alone consider an agreement to be a sponsored project award: 

1. Required progress, technical, milestone, or final reports or other deliverables, excluding stewardship reports on the funding or routine updates to the awarding entity.  
2. Detailed financial reports to the grantor/sponsor at any time during the life of the project and/or the right to perform a detailed financial audit of the expenditures associated with the funding.  
3. Requirement or stipulation that spending must align with proposed budgets as it creates a level of accountability beyond stewardship reporting. 
4. Federal government or federal pass-through funding, subject to audit and other compliance requirements issued by the Office of Management and Budget (excluding federal student financial aid programs handled through the Office of Student Financial Assistance). 
5. Funds that will be re-granted or subcontracted by the university to other entities.  
6. The use of animals, human subjects, recombinant DNA or hazardous agents requiring the review of the Office of Research Integrity and Compliance in the Office of the Vice President for Research; 
7. Provisions containing restrictions on publication of research results, and/or other research compliance provisions.

3. University as Service Provider Contracts 

Service provider contracts govern transactions in which the funds are received in exchange for a good or service provided by the university and which is available in a competitive market under normal business operations. These service contracts could be inclusive of agreements to provide standard existing educational degrees or certificates to third party entities. A service provider contract is an agreement that clearly states the provisions and conditions of the work to be performed or services provided by the university. A service provider contract may result from a Request for Proposal and will include a statement of work. It may contain provisions for progress reporting related to the schedule or the content of the work.

Conflict Resolution 

In situations where it is unclear whether an agreement constitutes a gift, sponsored project award, or service provider contract, the determination will be made by the Office of the Vice President for Research and the Office of the Vice President for Development and Alumni Relations, in consultation with the Office of the Controller and the Office of the Senior Vice President and General Counsel, as necessary.  When needed, escalations will be made to, and final authority rests with, the Executive Vice President and Chief Financial Officer, the Provost and Executive Vice President for Academic Affairs, and the President.  Such determinations will be made in a timely manner to assure appropriate treatment of the applicable funds.   

Processing Agreements 

1. Gifts 

All Gifts to the university must be processed, recorded and receipted by the Office of Gift Records in Development and Alumni Relations. The Office of Planned Giving must be consulted prior to acceptance of deferred gifts such as testamentary commitments (bequests and legacies), charitable remainder trusts, charitable lead trusts, pooled income funds, gift annuities, and insurance policies, as many of these agreements are financial contracts that may contain conditions to be met by the donor and/or the university.  See the Gift Acceptance Policy for complete details. 

2. Sponsored Project Agreements   

Proposals for sponsored projects are reviewed and submitted by the university’s Authorized Organizational Representative in the Office of Sponsored Projects in the Office of the Vice President for Research. Sponsored Projects awards are made to institutions, rather than individuals. While the university is legally responsible for the stewardship of an award, the principal investigator (PI) is accountable to the sponsor, the university, and the school and department in which all aspects of the program are conducted, whether the award is in the form of a grant, contract, or other award mechanism. In addition to bearing the responsibility for conducting the program in a manner consistent with professional standards, PIs must be aware of and observe all terms and conditions of the award and university policies. 

3. University as Service Provider Contracts 

University as Service provider contracts should be reviewed by department leaders, Office of General Counsel and Other applicable departments within the University.

Authorized Signatories 

Signature authority for all agreements described above is governed by the university’s policy on Signing of Contracts and Agreements.

The university reserves the right to refuse external funds that are conditioned on functions or goals inconsistent with those of the university. Funds containing use restrictions that are inconsistent with the university’s goals and objectives or that violate the law will be refused. The university will not accept external funds when acceptance would restrict the educational process or be inconsistent with other academic policies or priorities.  

¹ Some foundation grants are managed as Sponsored Project Agreements as described in Sponsored Project Agreements and are also included in fundraising totals by Development and Alumni Relations.

Related Information

• International Business & Operations Policies
• Anti-Money Laundering Policy  
• Outside Interests, Relationships, and Professional Activities Policy
• Contract Process Guide 
• Foreign Gifts and Contracts Disclosure Policy 
• Gift Acceptance Policy 
• Foreign Gifts and Contracts Required Information  
• Signing of Contracts and Agreements Policy 
• Third Party Billing Procedure

Contacts