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A Gift? A Grant? OR An External Sale? Why is this even a question? Gifts, grants, and sales ALL benefit the University No standardized definitions and “transactions” don’t always fit into neat boxes No single characteristic or test Answers are a combination of the intent & expectations of the funder AND the responsibilities and goals of the University Reasons: Historically, there are many reasons why it has been difficult to determine the proper classification of revenue received in academic departments Costs vary depending on the classification of revenue Indirect costs vs. no indirect costs Unrestricted funds vs. restricted funds Effort reporting vs. no effort reporting External funding sources are not clear about the expectations that relate to acceptance of funding Current Matrix Existing grid draws the three way comparison on the following additional delineations: Basic Definition Funders Funding Documentation Document terminology Financial benefit Stipulations on use of funds Scope of project Project timing Reporting requirements Regulatory compliance & monitoring requirements Fiduciary/administrative responsibility Past presentations and policy aids have tried to draw differences amongst gifts, grants, and external sales activities. Charitable Gift Foundations Basic Definition Transfer of money/property (i.e., equipment, land, etc.) to recognized University foundation by individual, group, business, or foundation NOT resulting in direct economic benefit or other tangible compensation (i.e., goods or services) to the donor. Sponsored Project Sponsored Project Administration Externally funded activity usually governed by specific/restrictive terms/conditions. Sponsored activities have separate budgets and accounts for fiscal and technical reporting pursuant to terms of the sponsor External Sales External Sales Administration An exchange by the University of tangible or intangible property or service for monetary consideration with external customers. Excludes SPA sales related to technology transfer, license, and trademark agreements. Charitable Gift Funder Private individual Group Corporation Corporate Foundation Philanthropic public or private foundation Sponsored Project Corporation Public or Private Foundation Government agency Quasi-governmental agency External Sales Private Individual Group Corporation Corporate or Private Foundation Government Agency Quasi-governmental agency Donor specifically intends May retain right to revoke to make charitable gift Payment to University for Funding funding or receive back and may claim a tax sale of goods or services unused amounts deduction if allowed Unit must be preapproved to engage in Grant award notice, sales. Standard Letter, gift agreement, or contract, or cooperative Documentation University contract, or none agreement supplied by customer generated sponsor. contract. Unit may need to invoice customer. Charitable Gift Sponsored Project May involve cost sharing, intellectual property overhead negotiations, Document publication rights. Generally none Terminology Access to results of work may be restricted; funder may own results of work or data. Sponsor hopes to gain Donor does not expect nor direct economic receive direct economic or Financial benefit benefit/public good as a other substantial tangible result of the contracted benefit activity Stipulations on use of funds External Sales Funder owns the resultsUniversity usually has access rights The customer receives goods or services of direct benefit Usually funds specific research/education program or public service program as Generally relatively detailed in written proposal general related to mission None, other than relating to or application of University; but can be the mission of the Funding involving defined quite specifically at University. human/animal subjects, biorequest of donor or radiological hazards, or recombinant DNA MUST be administered by SPA Charitable Gift Sponsored Project External Sales Scope of project Endowed faculty position Scholarship/fellowship Gift to support research or education program of a more general nature Gift to build/renovate building or space Project timing Permanent (e.g. Restricted to a specific time endowment), a specific Contractual period time period, or open-ended Reporting General progress reports Detailed expectation for and updates as part of Product or service delivered deliverables beyond regular stewardship and without detailed reporting. progress reports relationship management Typically characterized by precise programmatic objectives to be accomplished within a specific time and budget Both the unit and their customer should have a clear understanding of the good or service to be provided and how payment is to be made. Charitable Gift Regulatory approvals and monitoring required Typically none Sponsored Project External Sales Scope of work plan includes the following references: No monitoring but each human subjects, biohazards, activity is reviewed for risk, radiological hazards, tax, legal and other impacts. recombinant DNA. Fiduciary/administrative Progress reports, fund responsibility such as balances, information on certification of expenditures, use of gift as part of facility use, personnel Fiduciary/ general stewardship and commitments or cost administrativ relationship management sharing e Possible in certain cases Typically requires detailed responsibility for gifts to be received by accounting, e.g. line-item UMF or MMF and be reporting administered by SPA Prior approval may be required for re-budgeting Each unit decides their work flow, delivery and cost structure based on mutual agreement with their customer. Need to Review: Fund classification work group formed October 5, 2007 at the request of: Richard Pfutzenreuter, Timothy Mulcahy, & Michael Volna Charge to the group: analyze revenue types make recommendations on classification & treatment of revenue determine whether one or more additional classifications are needed determine where different forms of revenue should be administered Work Group: Fund Classification group is comprised of: Pamela Webb Greg Miller Arnie Frishman Denise Seck Mark Bohnhorst Ed Wink Group expanded to include foundations & Office of Technology Commericialization The group has been meeting since October Early Findings: Rarely, is there a distinction between a gift & an external sale Determination of whether an activity is a gift or grant is likely Determination of an activity as a grant or external sale is also likely Classification of revenue from an activity is easier with two matrices rather than one Outcomes: Work Group will develop a series of questions to direct proper classification of revenue Use of decision matrices for classification of revenue Tools may not cover every situation Recommendations will be reviewed by the steering committee Policies will be modified based on steering committee determinations For More Help • Gifts: University of Minnesota Foundation: Jan Gerstenberger (624-8374) [email protected] website: http://www.foundation.umn.edu/facultyandstaff/corp.html Minnesota Medical Foundation: Carmela Kranz (626-8481) website: http://www.mmf.umn.edu [email protected] • Grants/Contracts: Sponsored Projects Administration: Pamela Webb (624-1648) Kevin McKoskey (624-5066) website: http://www.ospa.umn.edu/ [email protected] [email protected] • External Sales: External Sales: Greg Miller (624-4837) [email protected] website: http://process.umn.edu/groups/controller/documents/main/osf_home.cfm