What is the difference between a Grant
and a Gift?
In short, there are two distinct factors to
consider in deciding whether a donation is a gift or a grant. The first
factor is the source of the donation while the second factor is the
intent of the donor. A grant is a type of funding awarded to the
university to support approved instruction, research, or public service.
A gift is a type of funding awarded to the university that may be
earmarked for a specific purpose, but the donor does not have specific
control over expenditures or over the work preformed. The line can
become very blurry in determining which category a donation fits. The
following is intended to clarify the distinct difference between the two
types of funding.
What is a grant?
A grant is a
donation of money or property from a sponsor in exchange for specific
services such as, but not limited to, research, development, or service
projects. Grants may come from a governmental, quasi-governmental
entity, or the private-sector (including individuals). A grant may
include funding for indirect costs or overhead including funds for
facilities and administration. Although grants do not typically seek
specific research outcomes, they do come with terms and conditions.
The presence of any of the following conditions
shall necessitate that the funds be treated as a grant.
-
The sponsor requires a
specific time period for conducting the project such as a specific
“period of performance” or “start/stop” dates.
-
The sponsor requires a
specific budget for conducting the project.
-
The sponsor places
restrictions on the publication or dissemination of results of the
project. This would include a requirement that the sponsor
review/approve manuscripts, talks, etc., before submission for
publication or presentation.
-
The sponsor requests
proprietary rights in data or inventions resulting from activities
conducted under the agreement. This would include any proprietary
rights and/or references to licensing arrangements for patents or
copyrights developed as a consequence of the activity.
-
Studies are to be conducted
on substances/products/processes/etc. that are owned by the
sponsor. The sponsor shall retain ownership after the research is
completed.
-
The award comes from a
corporations Research and Development budget and is perceived as a
“cost of doing business” rather than a charitable gift.
-
The sponsor hopes to gain
economic benefit as a result of the activity being conducted.
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The funds are awarded
following a competitive application or bid process.
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Funding is awarded based on
specific budget categories, and permission must be sought from the
sponsor to change the budget. The sponsor retains the right to
revoke the award.
-
Unexpended funds must be
returned to the sponsor at a specific point.
-
There are requirements for
audits by or on behalf of the funding source.
-
The sponsor is entitled to
receive some “deliverables,” such as a product, service, detailed
technical reports, test results, merchandise, financial reports
and/or status reports.
What is a Gift?
A gift is a donation of money or property from a
sponsor with the expectation of nothing significant of value in return.
Gifts may come from non-governmental sources or the private-sector (such
as individuals, groups, and businesses). Government funds are not
treated as gifts. A gift is either restricted or unrestricted. An
unrestricted gift may be spent at the discretion of the university and
is not limited to specific purposes, objective, programs, or
organizational units. A restricted gift is earmarked for a specific
purpose, objective, program, or organizational unit, but the donor does
not have specific control over expenditures or over the work preformed.
A gift is considered unrestricted if the donor does not specify how the
funds are to be used. Gift funds may be used to meet the cost sharing
commitment on a sponsored project if the purpose of the gift so allows.
As long as the general interest of the donor is met, the funds may be
spent at the discretion of the university. Although gifts are not
based on performance, they do come with terms and conditions.
The presence of any of the following conditions
shall necessitate that the funds be treated as a gift.
-
The funds are intended for
capital improvement or for the use of the university’s endowment.
-
The conditions or
stipulations placed on the use of the award serve to direct the
funds to a general area of interest of the donor such as
scholarships, infrastructure, or general research support.
-
Funds are awarded
irrevocably.
-
The sponsor may require the
funds to be used within a specific time period, but there is no
specific “period of performance” or “start/stop” dates as associated
with grants.
-
The sponsor specifically
intends for the award to be a charitable gift as reflected by the
absence of any quid pro quo.
-
The sponsor has no
expectations of direct economic or other tangible compensation (such
as goods or services) associated with the value of the gift.
Indirect benefits such as tax advantages, business or personal
goodwill derived from the close association with the university, and
miscellaneous benefits derived from being a donor are not sufficient
to negate gift intent.
-
There is no formal fiscal
accountability to the donor beyond periodic progress reports and
summary reports of expenditures. These reports may be thought of as
requirements of good stewardship, and, as such, may be required by
the terms of the gift. They are not characterized as contractual
obligations or “deliverables.”
Note: This document was prepared by
Lindsey Hunter, student Chase College of Law, with guidance from web pages at
Chicago State University, Indiana University,
McGill University, Ohio State University, Purdue University, Stanford
University, University of California - Los Angeles, University of Iowa,
University of Kentucky, University of Oregon, University of Minnesota,
University of Washington
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