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Sponsored Project or Gift?

The following information is guidance on defining and distinguishing between sponsored project funding and gifts.

Both sponsored project and research gift funded activities are externally supported, with funds typically provided in response to a request or proposal. The Office of Contracts and Grants is responsible for administering all sponsored projects activity on campus, with the exception of gifts, which are administered by Institutional Advancement. Classification and processing of these awards is sometimes complex and requires the exercise of informed judgment, particularly in the many cases where the nature of an award is not immediately clear.

Sponsored programs are defined as those activities, sponsored in whole or in part, by sources external to the University for which there is an expectation (implied or specifically stated) on the part of the sponsor for performance, deliverable or outcome. Sponsored projects enhance and expand the educational opportunities available to undergraduate and graduate students at the University, permit research, scholarly inquiry, and the development of new knowledge, contribute to the academic achievement and stature of the institution, and assist the University in fulfilling its responsibilities to the state and the nation. Sponsored programs are awarded through various mechanisms: grants, contracts, and cooperative agreements, and/or other legally binding means of transfer. The University may receive sponsored project funding for any of the key areas of its mission, i.e., research, instruction, or public service.

Research gift

A research gift is defined as a flexible, irrevocable award of money, equipment, or other property of value given to the University by a donor who wishes to support the research of a faculty member or group of faculty members, but who expects nothing of significant value in return, other than the recognition and disposition of the gift in accordance with the donor’s wishes. There are few or no conditions specified, there is no commitment of direct project personnel effort to accomplish the research, and no responsibility to provide the donor a product, service, technical or scientific report or intellectual property rights.


Misrepresenting the true nature of sponsored funding can create serious financial and legal liabilities for the University and individual faculty and staff. The classification of funding as a gift does not alter the legal risks and accountability associated with research, nor does it alter the treatment of research for cost accounting purposes. If they apply to a particular project, research compliance issues such as human subjects, animal research, radiation, safety, etc. are not deleted by classifying the award funds as a gift. In addition, University conflict of interest rules apply regardless of whether research is funded by a gift or a grant. The gift classification may not be used to bypass the conflict of interest review process, the need to comply with regulatory issues, or the obligation to pay indirect cost. It is for this reason that awards with these compliance issues are treated as sponsored projects.

Normally a gift transaction gives no opportunity to obtain indemnification from the provider of the funds for liability that UH might incur in performing the research. It also gives no opportunity to clarify key issues regarding the allocation of rights, and there is no opportunity to limit risks arising from alleged “side agreements” and informal understandings. Normally a true gift transaction would not result in the donor’s acquisition of any intellectual property rights. Gift transactions should be closely scrutinized to ensure that the institution’s rights are not limited and that there is no limitation on the institution’s publication rights.

The classification of sponsored projects and gifts has implications for UH’s Facilities and Administrative Cost base aka IDC. In general, a true gift transaction would not impact the organized research base by virtue of the gift arrangement. If, however, the agreement is not a gift but is sponsored activity, then the IDC must be accounted for under the appropriate F&A base. Gift funds used for research and related activities will impact either the instructional or organized research F&A base. Departmental research is considered part of the instruction function. University research is combined with sponsored research under the function of organized research. A pattern of “hiding” true organized research under gift accounts could give rise to an allegation of financial misconduct or a charge of a lack of consistency in allocating costs incurred for the same purpose.

Proper classification and processing of external funds assures the University’s ability to comply with any terms specified by the sponsor or donor, meet reporting requirements, properly recover its costs, both direct and indirect, and facilitate acceptable levels of accountability and stewardship for these funds.

  • Sponsor requires specific deliverables (e.g., final technical or narrative report, evaluation, technical assistance, training). This does not include minimal requirements generally related to required donor pledge payments and the University's commitment to effectuate the donor's intent (i.e., stewardship).
  • Sponsor generally, although not always, requires return of unexpended funds.
  • Award designates a sponsor employee (agent) as project technical monitor, as opposed to designating a contact person to improve communications.
  • Award contains intellectual property rights provisions and/or technology transfer.
  • Award restricts or monitors publications or use of results.
  • Award payments are contingent upon programmatic or fiscal reporting (e.g., specific milestones, invoices).
  • Award includes "boilerplate" terms and conditions imposed by the project sponsor or negotiated with the sponsor by the University.
  • Award requires protection of sponsor and confidential information.
  • Award contains an itemized budget, which requires sponsor approval to modify and/or that is subject to the provisions of federal cost accounting standards.
  • Request for funding will be used to fulfill a matching or cost sharing commitment on another sponsored project or requires a matching, cost sharing or other financial commitment from the University.
  • The project is linked to other sponsored research projects or contracts being conducted by faculty/researchers.
  • Project involves the use of human subjects, vertebrate animals, radioisotopes on humans, radioactive materials, recombinant DNA, human body substances, etiologic agents or proprietary materials.
  • Project involves foreign collaborators or is subject to Export Control

Additional Characteristics of a Research Gifts

  • Gift supports an unrestricted purpose or such activities as endowments (e.g., endowed chairs, professorships), capital projects (e.g., construction or renovation, equipment), or general research support.
  • Gift contains only minimal requirements, generally relating to required donor pledge payments and the University's commitment to effectuate the donor's intent (i.e., stewardship).
  • Gift requires only minimal reporting to the donor in the form of a general statement of how funds were used. Such confirmation may not be a technical or a formal financial report of any detail. However, if publications result, copies may be shared. In addition, confirmation of proper utilization of funds would be allowed such as in a "stewardship report" or “annual endowment report.” For example, if a company provided funds to help students build a solar-powered vehicle for a national student competition, the PI could report back how the students did in the competition, but not be required to provide detailed technical information including raw data.
  • Gifts are generally irrevocable.
  • Unrestricted grants are awards not identified by the sponsors as specifically being a gift or charitable contribution; however, these awards have no strings attached - no statement of work, no deliverables such as technical reports, no intellectual property (IP) terms, etc.
  • Research gifts may specify a purpose, but do not require specific deliverables and do not exhibit other aforementioned characteristics of a sponsored project. For proper stewardship of these awards, a separate restricted cost center should be established to deposit and manage these funds.