Gift vs Grant Creating a Win-Win Solution

Lisa Mosley

Executive Director, Research Operations

Arizona State University

Advancing Research, Entrepreneurship and Economic Development

• Background

– History

– Why ???

• Collaboration

• Design

• Implementation

• Challenges

• Lessons learned

• Next steps

Overview

Before….

…..During….

After.

Which Federal entity

defines gift/charitable

funds? • Charitable gift/grants are voluntary donations

to tax-exempt organizations to support activities for religious, charitable, scientific, literary, or educational purposes.

• A charitable contribution is NOT an exchange transaction having potential commercial benefit or profit that does not support charitable purposes

Treas. Regs. §53.4944-3(a)(1)(ii) Scheidelman (T.C. Memo. 2010-151)

Kaufman (136 T.C. No. 13)

Answer

IRC §170(c)(2)(B) and (D); IRS Pub. 526 (2010)

IRS code is

Governs what qualifies as gift….

No mention of how gifts/charitable grants should be administered by recipients

clear

Grant vs. Gift

Grant vs. Gift

Two different questions, not one… • Question 1:

Are the funds charitable under federal tax law?

Answer is the same for every institution (Tax law determines.)

• Question 2:

How should the funds be administered?

Answer varies by institution. (Institutional policy determines.)

Grant vs. Gift

Institutional policies may not be clear on:

• Definition

–gift/charitable grant/grant

• Application/requesting funds

• Receipt of funds

• Administration of funds

Grant vs. Gift

According to IRS criteria – • Return of unexpended funds?

• Financial reporting required?

• Signed agreement?

• Deliverables?

• Scope of work, budget and timeline?

• IRB, IACUC or other regulatory approvals?

Grant vs. Gift

According to Institutional policy? • Return of unexpended funds?

• Financial reporting required?

• Signed agreement?

• Deliverables?

• Scope of work, budget and timeline?

• IRB, IACUC or other regulatory approvals?

Grant vs. Gift

The ASU-ASU Foundation Pilot

• ALL applications for grants to charitable organizations that includes at least one of the following:

– a specific statement of work

– a designated principal investigator (PI) or program director (PD)

– a budget

Would be submitted by ASU listing ASUF as the applicant • Research Advancement staff in the units would provide support to

faculty on ALL applications, regardless of sponsor type

• ALL subsequent awards would be accepted by ASUF and administered by ASU

Grant vs. Gift

The ASU-ASU Foundation Pilot

continued

• Research Advancement staff in the units would provide support to faculty on ALL applications, regardless of sponsor type

• ALL subsequent awards would be accepted by ASUF and administered by ASU

Grant vs. Gift: Benefits • Researchers get credit for ALL proposal

submissions and award expenditures

• Researchers have one point of contact for ALL of their proposal/award support

• ASU and ASUF are able to count these activities toward their goals –

No more tug of war!

Grant vs. Gift: Collaboration

• Senior leadership – ASUF and ASU

• Team leaders –

ASUF and ASU

• Researchers

• Unit Staff

• Central office staff

Grant vs. Gift: Design

• Modeled after existing process used for all grant submissions and awards processed by ASU

• Utilized existing infrastructure and

expertise of ASU and ASUF

Grant vs. Gift: Implementation

• Started as a pilot to capture gaps in knowledge and process

• Pilot allowed for cultural shift at both ASU and ASUF

• Pilot allowed for workload assessment

Grant vs. Gift: Implementation Proposals • Opportunity identified

(multiple sources – researcher, ASUF, ASU)

• Researcher works with Research Advancement staff to prepare proposal application including budget

• Applications < $100K usually don’t have ASUF involvement

• Applications >$100K are eligible to receive enhanced ASUF services based upon availability

• ASUF is applicant – ASU submits on behalf of ASUF

Grant vs. Gift: Implementation

Post Submission • Requests could be received by Researcher, RA,

ASUF or ASU

• Requires communication and coordination

• Award negotiation and acceptance - Whose accepting what?

– ASU was reviewing agreements on behalf of ASUF

– ASUF will now engage with ASU only on certain clauses (export controls, IP, publication restrictions, etc.)

Grant vs. Gift: Implementation

Award Administration • ASUF receives award and deposits $$

• ASUF notifies ASU of award (usually copy of notice from funder/donor/sponsor)

• ASU activates full award amount**

• ASU provides financial reporting directly to funder/sponsor

Grant vs. Gift

The $1,000,000 Question…..

How do you handle F&A,

fees, IDC, administrative

costs, gift fee, processing fee?

Grant vs. Gift

The $1,000,000 Question….. • Budget maximum allowable per funder/sponsor

published policy

• If no published policy and entity is designated as charitable, 11% is budgeted (5% to ASUF; 6% to ASU)

• If funder/donor/sponsor states no F&A, fees, IDC, administrative costs, gift fee, processing fee – both ASUF and ASU honors

• If researcher requests less than maximum allowable or 11%, ASU requires an F&A waiver

Grant vs. Gift

Proceed with caution….. • Gifts from Industry

– All agreements reviewed

• Award documents received – no proposal

ASU’s public statement: The funder’s description of funds as a gift, grant, sponsored project, or other terminology has no bearing on whether or not monies qualify as charitable.

Grant vs. Gift

Challenges • Nomenclature – important to use the same

words in the same way and in context!

– Sponsor vs funder/donor

– F&A, IDC, fee, gift fee, etc.

– What is MTDC/TDC anyway?

• Different culture

– Motivation

– Recognition

Grant vs. Gift

Challenges • Different organizational structure and

culture

– Staffing

– Process oriented

– 80/20 rule

• History

– “We used to do it this way!”

– “It has to be” vs. “Can it be?”

Grant vs. Gift

Lessons learned • Develop and vet the entire process

• Create a Single Point of Truth (SPOT)

• Create a Working Group with decision makers from both sides

• Document the process

and decisions made

• Be flexible

• Over communicate

• Remember why this is a great idea!

Grant vs. Gift

Thank you!

Lisa E. Mosley, CRA Executive Director, Research Operations

Arizona State University t 480-727-9754

lisa.mosley@asu.edu http://researchadmin.asu.edu