Handbook of Operating Procedures 7-1240

Designating External Support as Gift or Sponsored Award

Effective March 27, 2024
Executive Sponsor: Vice President for Research, Scholarship and Creative Endeavors 
Policy Owner: Director, Office of Sponsored Projects

 

1. Policy Statement

The mission of The University of Texas at Austin (“University”) is to achieve excellence in the interrelated areas of education, research and public service. External support, funding derived from outside the University, is vital to the University’s ability to undertake and sustain important initiatives in these areas. External support may be provided under a variety of labels, including gifts, grants, contracts, cooperative agreements, subawards, sponsorships, and other various mechanisms. The classification of external support as a gift or a sponsored award is a critical step in ensuring external funding is appropriately managed to comply with all requirements of: the sponsor or donor, the Government Accounting Standards Board (GASB), Financial Accounting Standards Board (FASB), Internal Revenue Service (IRS), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200), and all other applicable laws, regulations and University policies.

2. Reason for Policy

This policy outlines responsibilities and procedures for distinguishing between gifts and sponsored awards in accordance with the aforementioned regulatory framework. As a governmental unit, the University must properly determine whether external funding is a gift or a sponsored award in order to appropriately track, expend and report on the funds, as well as ensure all applicable non-financial compliance needs are met.
 

3. Scope & Audience

This policy applies to all faculty and staff who may be involved in the receipt and handling of external funding on behalf of the University.

4. Definitions (specific to this policy)

Gift:

A gift is a voluntary and irrevocable charitable contribution from an individual or an organization. Gifts may either be unrestricted or restricted. An unrestricted gift may be utilized for any purpose, while a restricted gift must be used for a particular purpose or project as specified by the donor and agreed to by the University. 

In general, a gift includes the following elements: 

• Provided without the expectation of significant benefit in return (i.e. no quid pro quo);
• Provides control of the funds to the university (while gift funds may be restricted to a specific program, department, or purpose consistent with the University’s mission, the administrative control rests with the university once the transfer is completed);
• Irrevocable, as long as funds are expended in accordance with any stated purpose (for restricted gifts only); and
• Furthers the University’s mission of education, increasing knowledge, and providing service to the citizens of Texas and the public in general.
   

• Requirements for provision of services, goods or other deliverables;
• Detailed financial reporting beyond providing accountability and good stewardship to the donor, such as through progress reports or project summaries;
• The requirement for seeking prior approval by the donor for specific expenditures or minor modifications in budgets;
• Granting of rights to University-developed intellectual property; 
• Restrictions on the University’s right to publish research results;
• Requirements for insurance, indemnification (other than for in-kind gifts, where appropriate), or warranties of any sort;
• Requirement to return unspent funding; or
• Requirement that funding be returned if performance objectives are not met.

Grant:

A grant is a financial award from an individual, an organization, or a governmental entity that is intended to support a particular charitable purpose. A grant is received by the University for either unrestricted or restricted purposes, with limited terms and conditions. Non-governmental grants may qualify as gifts unless they have quid pro quo elements (such as defined scope of work, deliverables, intellectual property rights) that disqualify the grant as a gift. Governmental grants, and grants with quid pro quo elements, qualify as sponsored awards. The terms and conditions of the grant define its classification.

Sponsored Award:

A sponsored award is a financial arrangement whereby the University receives funding from an external entity in exchange for completion of a defined scope of work that includes one or more deliverables. Sponsored awards encompass a variety of agreement instruments, including contracts, grants, cooperative agreements, subawards, and clinical trial agreements. Sponsored awards are funded by various types of sponsoring parties, including federal, state, and local government agencies, as well as non-profit and for-profit organizations.

Sponsored awards may include the following elements:

• Defined project or program scope of work;
• Budget and payment terms tied to completion of technical reports or deliverables;
• Insurance, indemnity, and other negotiated or qualified terms that establish acceptance of risk; and
• Granting of rights to intellectual property developed under the award.

Contract:

A contract is a legally binding agreement between the University and an outside entity that creates an exchange transaction or tangible benefit relationship between the University and the external entity. Examples of contracts include sponsored research agreements, service agreements, purchase orders, and clinical trial agreements. Because of the quid pro quo nature of the transaction, a benefit received under a contract does not qualify as a gift.
 

5. Website (for policy)

https://secure4.compliancebridge.com/utexas/public/getdoc.php?file=7-1240
 

6. Contacts

7. Responsibilities & Procedures

1. Overall Responsibilities

2. Determination Process

1. The benefiting college, school, or unit receiving the external funding shall use the above definitions (i.e. “gift” or “sponsored award”) in order to determine the classification for acceptance and management of the financial support, taking into consideration the intent of the donor or sponsor. Once the determination is made, the benefiting college, school, or unit should route the documentation associated with the gift or sponsored award to the appropriate responsible office (i.e. UDO or OSP).
2. In cases where the benefiting college, school, or unit is unable to determine the classification, they will request a determination from the Director of Texas Gift Processing and Records Management and the Director of the Office of Sponsored Projects, who will jointly review and determine classification, collaborating with the Office of the Vice President for Legal Affairs as needed.