Gift vs. Grant vs. Contract: Research Funding Classification

The accurate classification of funding is important to develop positive relationships with external funders, avoid delays in releasing the funds, and violating policies and regulations.  University Advancement (UA), Beall Applied Innovation (BAI), and Office of Research (OR) collaborate to classify funds based on the funder's intent and requirements and compliance with University policies and Federal and State mandated regulations.

  • Determinative Indicators for Sponsored Awards

    Per the updated Classification of Gifts and Sponsored Awards policy, support must ALWAYS be classified as a Sponsored Award when the following characteristics exist:

    • Support is from the United States federal government;
    • Testing or evaluating of proprietary materials (including software) provided by, or on behalf of the Funder, is involved; or
    • University intellectual property rights are given to the Funder, and/or the Funder directs the dissemination and/or management of University results, including intellectual property.
      • Intellectual property rights include, but are not limited to, options, licenses, any rights in and to patentable or potentially patentable IP, data, or tangible materials, but specifically exclude the use of UC logos, trademarks, or name for gift acknowledgement purposes. Language requiring University to follow UC policies and practices for the management of IP should not be considered the Funder directing “the dissemination and/or management of University results.” However, requiring open source release of UC results constitutes control and/or management of UC intellectual property and therefore is a Determinative Indicator of a Sponsored Award.
  • Preliminary classification of funds

    In the absence of a Determinative Indicator, the preliminary classification is based on the funder's expressed interests and requirements for the use of the funds.  The funder's classification will be considered but we must consider all aspects related to the funds for the final classification to comply with policies and regulations.

    In cases, where the classification is unclear or there is insufficient time to submit for a preliminary classification, please make sure to still submit your application and direct the funds to "UC Regents" not the "UCI Foundation," which can only accept gifts.  This will avoid asking the funder to reissue the funds in the future because the funds were ultimately classified as a grant or contract and not a gift.

    Final official classification of the funds will be based on the requirements presented in the award letter.

    Some key questions to considerGiftGrantContract
    What are the funder's expectations?General pledge of support to the campus, unit, research group, researcher, or research project for which the funder receives no substantial return benefit and over which the funder does not retain controlTransfer of financial assistance with a PI defined scope of work without a legally binding requirement to achieve the proposed resultLegally binding agreement to perform a specific scope of work for the benefit of the funder.
    What are the general characteristics of the planned funding?Minimal requirements from funder without any direct benefit to the funderModerate level of requirements from the funder and may benefit the funderMost requirements from the funder with a direct benefit to the funder
    Are there deliverables?No, there is no commitment of deliverables (data, intellectual property, software, etc.) to funder. Funder may request acknowledgement, summary narrative and basic financial reporting to assure proper gift stewardship.Yes, can include deliverables, technical and financial reportsYes, includes deliverables, reports, and/or milestones. Funds may be tied to progress and performance.
    Will the funds be irrevocable?Yes. The ability of the funder to terminate the Support is limited.No, revocable in whole or in part.
    Funder has the ability to terminate the agreement and/or demand repayment if the specific project plans have not been implemented as agreed upon
    No, revocable in whole or in part.
    Funder has the ability to terminate the agreement and/or demand repayment if the specific project plans have not been implemented as agreed upon
    Will there be a direct benefit to the funder?No and also no perception of a direct benefit to the funderPossiblyYes
    How involved will the funder be?No direction of the work or participation in the work by the funderNo direction of the work or participation in the work by the funderFunder defined scope of work, funder representative to monitor work and provide feedback to company
    Are there any intellectual property provisions?NoPossiblyYes, often extensive intellectual property provisions on data use, software use, patent rights, etc.
    How complex is the award letter?Typically fairly simpleIncludes specific financial and performance termsInclude specific financial and performance terms (research results, deliverables, publication rights, inventions, public dissemination of results, and liability), usually with rights reserved by funder
    Is re-budgeting allowed?Unnecessary because use of funds is unrestrictedFlexibleMore restrictive
    Will the work involve testing or evaluating the funder's products?NoPossiblyPossibly
    What else should we consider?There should not be any other agreements with UCI related to this funding (ex. sponsored research agreement, memorandum of understanding, data use agreements, etc.).Fellowships where the funder selects the fellow are usually classified as grants.

    Assessed UCI indirect cost rate, unless the non-profit sponsor has a written policy that is consistently applied to reduce the rate.
    Contracts allow funders the greatest level of control over the use of the funds.

    Development Officers- please note that contracts are not counted in fundraising totals.
    Who can sign on behalf of the University?University AdvancementContracts and Grants Officer (SPA or ISR)Contracts and Grants Officer (SPA or ISR)
    Who should the funds be made out to?UCI Foundation or UC Regents (if unsure of classification)UC RegentsUC Regents

    Questions or wish to request another option on the classification (as time allows)?  Contact Nadia Wong, Gift Administrator.  

  • Submit the application

    Based on your preliminary classification, work with the appropriate offices to submit your application.  Proposal applications for grants and contracts are submitted through KR Proposal Development.

    • Gift- Development Officer
    • Non-profit sponsor- Sponsored Projects Administration
    • Industry sponsor- Industry Sponsored Research

    If you are not completely sure about the classification, please still submit the application with "UC Regents" as the potential awardee.  Once awarded, we will conduct the official classification of funds.

  • Congratulations on your award! Award classification

    Gift

    • Submit all the documents related to the funding including the application, email communications, etc. to University Advancement.
      • Original gift/donor letter/email, stating:
        • Donor's intended purpose and naming the recipient of the gift
        • Whether donation is irrevocable
        • Donation amount
        • Whether use of donation is unrestricted
        • Any restrictions or terms set by donor
      • All other correspondence or material that accompanied the gift letter
      • Provide a copy or link to any online application/program description (if applicable)
      • Any proposals or written documents provided to the donor for its consideration prior to receipt of the donation
      • Original check (Foundation gifts only)
      • Copy of acknowledgement letter, if available
      • If earmarked for a specific researcher or research project and the donor is a non-governmental entity (exclude individuals and entities on the exempt list), copy of Form 700U from the Principal Investigator and Co-Principal Investigator (if applicable).  Original, signed Form 700U should be forwarded to "Office of Research, 160 Aldrich Hall, Zot: 7600".  For more information on the Form 700U, click here.
        • If the PI and/or Co-PI discloses a financial interest, the COI Team will email the researcher if a COIOC review is required.

     

    Grant/Contract

    • If you received the award letter, forward to Beall Applied Innovation for industry sponsored projects and Office of Research for federal and non-profit sponsored projects.
    • If there are any questions about grant vs. contract classifications, please contact your C&G Officer.

     

    All

    • As the offices process the awards, if there are any questions about the gift vs. grant/contract classification, then it will be forwarded to Nadia Wong, Gift Administrator, for the final determination.  Other offices may be consulted depending on the nature of the question and additional information may be requested.  The key questions in the above table will be considered to determine the appropriate classification based on the all documents related to the funds, including the newly received award documents.

Common reasons for classification changes

  • Award letter from funder includes terms and conditions not appropriate for a gift (too restrictive) such as including language related to intellectual property rights.
  • Original proposed project was a grant or contract with submitted scope of work that included deliverables, budget, and timeline but it was awarded as a gift that referenced the original proposed project.
  • Proposal or application include items/services that are essentially contract deliverables.
  • Proposed project appears to directly benefit the funder (ex. working with funder's proprietary datasets, software, or patented IP).
  • In addition to the award agreement being reviewed, there are parallel or split agreements (no-cost data use agreement, mentorship of students, unfunded collaboration, memorandum of understanding, etc.) related to this project, which together reflect the project should be processed as a grant or contract not gift.
  • Award letter does not include terms and conditions standard to a grant/contract.  For example, no or limited restrictions on the use of the funds, no significant reporting requirements, and no deliverables.
  • Award letter includes support for general research rather than a specific project.
  • Reviewed all of the related materials (RFP, proposal, and award letter) and determined that together they create a contract.
    • Some standard contract characteristics include:  higher level of funder involvement (such as program reviews or annual/semiannual reports, etc.), specific deliverables (such as software or hardware prototypes), use of funder's proprietary materials, fixed price milestones, and/or cost reimbursable invoices.

Tips to obtain a...

  • Submit all documents and email communication related to the proposed funding, including proposals and applications- need documentation of funder's intended use of the funds directly from the funder (award letter, email, etc.).  One key consideration in the gift classification is understanding how the funder decided to award the funds.
  • Even if the sponsor has not asked for a deliverable/prototype/software, etc., if you offer it and they accept your proposal, then that becomes a quid pro quo in the agreement, meaning it can't be processed as a gift.
  • If your standard lab practice is to open source your work, you can include that practice with gift donors, but it must be equal access to everyone.
    • Open-source software  (OSS) under basic non-patent granting license (i.e. BSD or MIT 3-clause license)
      • UCOP does not support the use of Apache License 2.0, GPL V.3 Licenses, and other patent-granting licenses (applies to gifts and sponsored research agreements).  Patent-granting OSS licenses broadly reach into the IP rights of other UC faculty, sponsors, and licensees without their consent and are not authorized for use.
    • Open hosting of data
    • Consider a public portal on your lab page for data/code access- keep it freely open
  • Fellowship grants can come from industry but very narrow in scope.
  • Fellowships where the funder selects the fellow are typically processed as grants.
  • UCOP does not support the use of Apache License 2.0, GPL V.3 Licenses, and other patent-granting licenses (applies to gifts and sponsored research agreements).  Patent-granting OSS licenses broadly reach into the IP rights of other UC faculty, sponsors, and licensees without their consent and are not authorized for use.
  • Consider an "Open science" research contract
    • Agree up-front with industry partner that all results will be published
    • No license required
    • No IP concerns
    • Benefits to funder:
      • Maximum access to student
      • Participation in project
      • Free use of results
      • Funds transferrable should PI move to another university
  • UCOP does not support the use of Apache License 2.0, GPL V.3 Licenses, and other patent-granting licenses (applies to gifts and sponsored research agreements).  Patent-granting OSS licenses broadly reach into the IP rights of other UC faculty, sponsors, and licensees without their consent and are not authorized for use.