A Gift? A Gift? A Grant?A Grant?

ORORAn External Sale?An External Sale?

Why is this even a Why is this even a question?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: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 MatrixCurrent 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 Sponsored Project External Sales

Foundations Sponsored Project Administration

External Sales Administration

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.

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

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 Sponsored Project External Sales

Funder

Private individualGroupCorporationCorporate FoundationPhilanthropic public or private foundation

CorporationPublic or Private FoundationGovernment agencyQuasi-governmental agency

Private IndividualGroupCorporationCorporate or Private FoundationGovernment AgencyQuasi-governmental agency

Funding

Donor specifically intends to make charitable gift and may claim a tax deduction if allowed

May retain right to revoke funding or receive back unused amounts

Payment to University for sale of goods or services

Documentation Letter, gift agreement, or none

Grant award notice, contract, or cooperative agreement supplied by sponsor.

Unit must be pre-approved to engage in sales. Standard University contract, or customer generated contract. Unit may need to invoice customer.

Charitable Gift Sponsored Project External Sales

Document Terminology Generally none

May involve cost sharing, intellectual property overhead negotiations, publication rights.Access to results of work may be restricted; funder may own results of work or data.

Funder owns the results-University usually has access rights

Financial benefit

Donor does not expect nor receive direct economic or other substantial tangible benefit

Sponsor hopes to gain direct economic benefit/public good as a result of the contracted activity

The customer receives goods or services of direct benefit

Stipulations on use of funds

Generally relatively general related to mission of University; but can be defined quite specifically at request of donor

Usually funds specific research/education program or public service program as detailed in written proposal or applicationFunding involving human/animal subjects, bio- or radiological hazards, or recombinant DNA MUST be administered by SPA

None, other than relating to the mission of the University.

Charitable Gift Sponsored Project External Sales

Scope of project

Endowed faculty positionScholarship/fellowshipGift to support research or education program of a more general natureGift to build/renovate building or space

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.

Project timing

Permanent (e.g. endowment), a specific time period, or open-ended

Restricted to a specific time period Contractual

ReportingGeneral progress reports and updates as part of stewardship and relationship management

Detailed expectation for deliverables beyond regular progress reports

Product or service delivered without detailed reporting.

Charitable Gift Sponsored Project External SalesRegulatory approvals and monitoring required

Typically none

Scope of work plan includes the following references: human subjects, biohazards, radiological hazards, recombinant DNA.

No monitoring but each activity is reviewed for risk, tax, legal and other impacts.

Fiduciary/administrative responsibility

Progress reports, fund balances, information on use of gift as part of general stewardship and relationship managementPossible in certain cases for gifts to be received by UMF or MMF and be administered by SPA

Fiduciary/administrative responsibility such as certification of expenditures, facility use, personnel commitments or cost sharingTypically requires detailed accounting, e.g. line-item reportingPrior 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: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:Work Group: Fund Classification group is comprised of:

Pamela Webb Denise SeckGreg Miller Mark BohnhorstArnie Frishman Ed Wink

Group expanded to include foundations & Office of Technology Commericialization

The group has been meeting since October

Early Findings: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: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:Gifts:

University of Minnesota Foundation:Jan Gerstenberger (624-8374) jgersten@umn.eduwebsite: http://www.foundation.umn.edu/facultyandstaff/corp.html

Minnesota Medical Foundation:Carmela Kranz (626-8481) kranz001@umn.eduwebsite: http://www.mmf.umn.edu

• Grants/Contracts:Grants/Contracts:Sponsored Projects Administration:Pamela Webb (624-1648) pwebb@umn.eduKevin McKoskey (624-5066) kevin@umn.eduwebsite: http://www.ospa.umn.edu/

• External Sales:External Sales:External Sales:Greg Miller (624-4837) gam@umn.eduwebsite: http://process.umn.edu/groups/controller/documents/main/osf_home.cfm