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.

 

  1. 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.
 

  1. 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.

 

  1. 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: 

Gifts generally do not include the following elements:

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:

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.
 

  1. Website (for policy)

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

  1. Contacts

CONTACT

DETAILS

WEB

Vice President for Development University Development Office (UDO)

Phone: 512-471-4124

Website:

https://www.utexas.edu/about/leadership

Office of Sponsored Projects

 Phone: 512-471-6424

Website:

https://research.utexas.edu/
 

 
  1. Responsibilities & Procedures

 

  1. Overall Responsibilities
Proper management of the receipt and handling of external funding at the University involves shared responsibility of multiple departments and individuals working together to maximize external support while ensuring appropriate stewardship, regulatory, policy, and legal compliance. Only the University Development Office (UDO) is authorized to accept, record, and receive gifts to the University; however, UDO is dedicated to do so in full support of all colleges, schools, and units of the University where charitable gifts support their mission.  Any college, school or unit receiving gifts directed to the University should follow the procedures included in HOP 3-2031:  Gifts: Solicitation, Acceptance and Management. The Office of Sponsored Projects (OSP) is authorized to accept, negotiate, and execute sponsored awards on behalf of the University.  Any college, school or unit receiving sponsored awards directed to the University should follow the procedures included in HOP 7-1040: Sponsored Projects. 
 

 

  1. 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. 

 

  1. Special Considerations
 
  1. Clarifying Intent:  In some situations, communication associated with the external support indicates that the donor or sponsor’s intent does not align with the funding mechanism. In such cases, the terms of the accompanying agreement may need to be adjusted in order to clarify appropriate classification.
  2. Labeling versus Terms and Conditions: In some situations, the title or label of the funding documentation does not align with the funding arrangement terms and conditions. The terms and conditions included in the funding award shall control the University’s classification of the funds, not the title or label attached to them.
  3. Funding Supporting Research:  All regulatory requirements with respect to the conduct of research must be followed even when research projects are funded by a gift. For this reason, gift arrangements exclusively supporting research may be processed or recorded as gifts but may need to be managed administratively as sponsored awards to ensure that the University can track and meet its research compliance and reporting obligations.
    1. To meet these requirements, UDO and OSP will:
      1. regularly share proposals-in-process and notifications of awards related to research projects or programs;
      2. facilitate a process whereby all received gift funding intended for research purposes is appropriately identified as research funding; and
      3. collaborate closely with colleges, schools, and units to ensure that the transaction is managed in a manner that will allow the University to effectively manage risk and stewardship obligations while minimizing administrative review and respecting donor and sponsor relations.

 

  1. Forms & Tools

None
 

  1. Frequently Asked Questions

None

 

  1. Related Information

HOP 3-231 – Gifts: Solicitation, Acceptance, and Management

HOP 7-1040 – Sponsored Projects

Regents' Rules and Regulations, Rule 60101 - Acceptance and Administration of Gifts

UT System Policy UTS117 - Endowment Compliance Plan System-Wide Standards and Guidelines

UT System Policy UTS138 - Gift Acceptance Procedures

UT System Policy UTS142.2 - Policy for Accounting and Financial Reporting for Nonexchange Transactions

Summary of Statement No. 33 - Accounting and Financial Reporting for Nonexchange Transactions

Texas Education Code, Section 65.36 (f) and (g) – Donations for Professorships and Scholarships

 

  1. History

Origination date: March 27, 2024 
     Next scheduled review: March 2027