13.1 Definition of Sponsored Projects and Distinctions from Other Forms of Funding
Defines sponsored projects, as distinguished from gifts, student aid and other supported activities and provides guidance related to making these distinctions.
Both sponsored projects and gift-funded activities are externally-supported, with funds provided typically in response to a request or proposal. The classification of funding as "gift" or "sponsored" will affect, among other things, the way Stanford University accounts for the funds, calculates and applies F&A (indirect) costs, and reports on the use of the funds to the sponsor or donor. For definitions of the various types of sponsored projects, see RPH: Categories of Sponsored Projects.
Administrative Staff involved in the processing of gifts, including cash, wire transfers or gifts of property, must complete Gift Administration at Stanford training. See below in Related Items.
Administrative Staff involved in sponsored research must complete Cardinal Curriculum Level I.
2. Definition of Sponsored Projects
Sponsored Projects are externally-funded activities in which a formal written agreement, i.e., a grant, contract, or cooperative agreement, is entered into by Stanford University and by the sponsor. A sponsored project may be thought of as a transaction in which there is a specified statement of work with a related, reciprocal transfer of something of value.
The following conditions characterize a sponsored project agreement, and help to distinguish such agreements from gifts.
A. Statement of Work
Sponsored projects are typically awarded to Stanford in response to a detailed statement of work and commitment to a specified project plan. As described below, this statement of work is usually supported by both a project schedule and a line-item budget, both of which are essential to financial accountability. The statement of work and budget are usually described in a written proposal submitted by Stanford University to the sponsor for competitive review.
B. Detailed Financial Accountability
The sponsored project agreement includes detailed financial accountability, typically including such conditions as:
- a line-item budget related to the project plan. The terms of the agreement may specify allowable or unallowable costs, requirements for prior approvals for particular expenditures, etc.
- a specified period of performance, typically defined with "start" and "stop" dates
- a requirement to return any unexpended funds at the end of that period
- regular financial reporting and audit, including, for federal and state awards, accountability under the terms of OMB A-21, OMB-110 or the Uniform Guidance
A sponsored project budget will include the University's full negotiated F&A (indirect) cost rate, unless a waiver of those costs has been approved. These conditions generally define the level of financial accountability associated with a sponsored project. While not all of the above conditions are necessary to define a sponsored project, they are collectively indicative of the increased level of financial accountability associated with such projects.
C. Disposition of Properties ("Deliverables")
Sponsored project agreements also usually include terms and conditions for the disposition of tangible properties (e.g., equipment, records, specified technical reports, theses, or dissertations) or intangible properties (e.g., rights in data, copyrights, inventions). The presence of such terms and conditions in the agreement indicate that the activity is a sponsored project.
3. Definition of Gifts
A gift, on the other hand, is defined as any item of value given to the University by a donor who expects nothing significant of value in return, other than recognition and disposition of the gift in accordance with the donor's wishes. In general, the following characteristics describe a gift:
Gifts may be accompanied by an agreement that restricts the use of the funds to a particular purpose; beyond that, no contractual requirements are imposed (beyond the requirements of responsible stewardship) and there are no "deliverables" to the donor, e.g., no rights to tangible or intellectual property.
A gift is typically irrevocable. While the gift may be intended for use within a certain timeframe, there is usually no specified "period of performance" or "start"/"stop" dates as associated with sponsored projects.
There is no formal fiscal accountability to the donor beyond periodic progress reports and summary reports of expenditures. These reports may be thought of as requirements of good stewardship, and, as such, may be required by the terms of a gift. They are not characterized as contractual obligations or "deliverables."
Stanford agrees to use restricted gifts as the donor specifies, and does not accept gifts that it cannot use as the donor intends. If circumstances change such that a gift cannot be used as the donor specified, the donor must approve a change in the original restriction, or Stanford must receive court approval to waive the restriction (if the donor cannot be contacted). University approval for changes in the purpose of a gift fund can only be granted by the Provost.
Gift solicitations should be coordinated with the appropriate Development Officer in each school, and the Development Office should be contacted for procedures applicable to gift solicitations. See below in Related Items: Conditions of Gift Award.
4. Definitions of Fellowships, Scholarships and Other Student Aid
Fellowships are awards of financial support to individual named students or postdoctoral scholars, or to Stanford University on behalf of individual named students or postdoctoral scholars. At Stanford, fellowships funds are normally categorized as an award of “Student Aid”. However where the award of funding is made to Stanford University, where Stanford names the individuals to receive the support, and where the funds are to support research training, the funds are treated as a research training grant, a type of sponsored research project . See Gift or Fellowship indicators below in Related Items.
In order to facilitate the proper handling of fellowship support, the following procedures apply to proposal and award processes:
A. Undergraduate or Graduate Students (External Funding)
Students may apply for external fellowships in their own name. The process for submitting proposals will vary, depending on whether an institutional endorsement of the application is required by the funding source.
Submissions requiring an institutional endorsement are submitted through the Office of Sponsored Research or, in the School of Medicine, through the Research Management Group Fellowship Office.
Submissions which do not require an institutional endorsement may be submitted directly by the student.
Where funds are given to Stanford University to support named undergraduate or graduate students, those funds are received and processed through the Financial Aid Office, which administers the distribution of funds. Stanford University classifies these funds as “Student Aid.”
B. Postdoctoral Scholars
Postdoctoral Scholars who wish to apply for external fellowship funding must submit their application through either the Office of Sponsored Research or, in the School of Medicine, through the Research Management Group Fellowship Office. Awarded funds are received and processed by the Office of Sponsored Research, which administers the distribution of funds.
Postdoctoral Fellowships are not normally defined as sponsored projects. However, because they typically provide support for the recipient’s research activities, applications are processed through the research administration offices of the University. This helps to assure appropriate internal controls as regards to research policy, as well as the inclusion of the funds in the appropriate base for the calculations of Stanford’s indirect cost rates and the appropriate classification of the research space.
5. Implementation and Administrative Issues
A. Guidance for Properly Distinguishing Gifts from Sponsored Projects
Distinctions based on source of funds
Any funding provided by U.S. Government agencies, at the federal, state, or local level, in support of Stanford activities is treated as sponsored project funding. Government funds are not treated as gifts.
Funding from Voluntary Health Organizations or Associations, such as the American Cancer Society or American Heart Association, is usually treated as a sponsored project and not a gift.
Distinctions based on intent of donor/sponsor
In remaining cases, e.g., where funding is being provided by corporations, foundations or others not specified above, the distinction between gifts and sponsored projects will be made based on the proposal, statement of work, and terms of the agreement, taking into consideration the intent of the donor/sponsor.
Note that, in some situations, communication, including the proposal and award as well as conversations, makes it clear that the donor’s/ sponsor’s intent is to classify an award to Stanford as either a gift or a sponsored project. In these cases, the terms of the accompanying agreement may have to be adjusted in consultation with the donor/sponsor in order to clearly document the intent and avoid unintended classification.
B. Administrative Issues
Decision-making in unclear situations
In some cases, the distinction between gift and grant, i.e., between a gift and a sponsored project, can be difficult to draw. Donors may sometimes use the word "grant" when the donation qualifies as a "gift" or vice versa. When an individual is in doubt about the proper classification and handling of an award to Stanford, the Office of Sponsored Research and the Development Officer for the involved School will confer and resolve the question. This consultation will typically take place within the involved School, involving the School Dean's office as needed. In addition, staff from the Office of Sponsored Research and from Development should consult as needed with the Associate Vice Provost for Research, Foundation Relations and the Controller's Office.
Attachment A to this policy, Checklist for Determining Whether Funding is a Gift or Support for a Sponsored Project, defines this process, offices to be consulted, and materials to be reviewed. As described in this checklist, when this determination is not initially clear, personnel should review appropriate documentation and consult with staff within their school representing both the research administration and development functions to determine the appropriate classification and handling of funds.
In those cases where the determination is not initially clear, and where the final determination is to accept the funds as a gift, the completed Checklist is to be attached to the Gift Transmittal Form.
Similarly, Attachment B to this policy, Checklist for Determining Whether Funding is a Postdoctoral Fellowship or a Sponsored Project, can assist in making the determination as to whether funding should be classified as a Fellowship or Scholarship (i.e., student aid) or not.
In resolving issues related to the classification of an award, Stanford personnel must maintain an appropriate balance between the interests and preferences of the donor/sponsor and the University's administrative policies and objectives. In the process of resolving these issues, in some cases it may be necessary to contact the donor/sponsor for clarification of intent and requirements, and/or to discuss the planned use of the funds. Such contacts are usually best handled by the faculty member and/or development officer who initiated the activity.
Administrative Guide Memo 34.2: Activities/Accounts, specifies the procedure and responsibilities for establishing both sponsored project and gift accounts. Whenever a new account is requested, the responsible organization (Office of Sponsored Research in the case of sponsored projects, or Fund Accounting in the case of gift funding) verifies that the account being set up is proper, in accordance with the definitions in this policy. These offices are responsible for assuring that a proper determination of gift or grant status has been made.
Cost Sharing Implications
Stanford policy and federal regulations define cost sharing as that portion of total project costs of a sponsored agreement borne by the University, rather than by the sponsor. See below in Related Items RPH: Cost Sharing Policy
Committed cost sharing, i.e., that which a sponsor would otherwise pay, which Stanford offers in its proposal and is accepted by the sponsor, must be funded from a non-federal source and charged to a separate cost sharing account. Gift funds may be used to meet a cost sharing commitment on a sponsored project if the purpose of the gift so allows.
Where a donor requires that their gift funds be leveraged with other resources, for example, matching gifts, there is no requirement to account for cost sharing. In these cases, the donor typically expects Stanford to use other gift funds to meet the requirement for matching or additional funding requirements.
Fellowships and scholarships do not require cost sharing, and none is accounted for in conjunction with awards of student aid.
Facilities & Administrative (F&A), i.e., Indirect Cost, Implications
Stanford's policy is to apply the University's full applicable F&A (indirect) cost rate to all sponsored projects. Gift funds will be assessed an infrastructure charge set by Stanford University, in accordance with the Infrastructure Charge Policy, Administrative Guide Memo 37.3. See in Related Items below RPH Indirect Cost Waivers for guidance relating to requesting waivers of F&A costs. Indirect costs are not charged on Fellowships, Scholarships or other student aid.