• Types of external support: gifts, external sales, and sponsored projects
• Types of sponsored projects:
  • Grants, contracts, and cooperative agreements
  • Cost reimbursable vs. fixed-price and fixed-fee

TYPES OF EXTERNAL SUPPORT: GIFTS vs. EXTERNAL SALES vs. SPONSORED PROJECT

The grid on the external sales policy provides detailed indicators for determining gift or sponsored project.

Gifts
In general, if the funds are subject to reporting restrictions, they are sponsored projects, not gifts.

According to the University's financial policy on Accepting and Managing Gifts, gifts are "all restricted and unrestricted transfers of money or property (i.e., equipment, land, etc.) made to a recognized University Foundation or College by an individual, group, business or non-governmental agency when the use of the funds is NOT intended to result in direct economic benefit or any other tangible compensation (i.e., goods or services) to the donor." For further information, consult the financial policy Accepting and Managing Gifts.
 
External sales
A department or college may receive support by selling supplies or services outside the University community. Income from the external sale may be subject to federal or state taxes.

If the activity generating the sale is supported by sponsored funds, the income from that sale is program income and subject to the policy on Managing Program Income Earned on Sponsored Projects.

Sponsored projects
The term "sponsored project" refers to a financial award (grant, contract, or cooperative agreement) from a sponsor to conduct a specified research, training, or service project. Sponsors can be state or federal agencies, foundations, nonprofit groups, or private enterprises such as business and industry. Sponsored projects may have any one of the following characteristics:

• Any of the following terms are mentioned: contract, cost sharing, line item budget restrictions, overhead negotiations, prior approval required on spending, return of unused funds to sponsor, intellectual property, or period of performance.
• The sponsor is entitled to receive some consideration, such as detailed technical reports, test results, or merchandise.
• Limitations exist on the use of project data, or details relating to patents, or copyrights are involved.
• There is a binding agreement between the University and another entity to provide economic benefit for compensation paid.

Example of Gift vs. Sponsored Project vs. External Sale

A researcher receives a set amount of money from a business to develop a product. These are sponsored funds and treated as a sponsored project. Why?

It is not a gift because the sponsor expects a deliverable.

It is not an external sale because the researcher did not use University funds to develop the product.

 

Important note: program income can be considered as an external sale of an item that was developed with sponsored funds.

For example, the researcher sells a prototype of the deliverable to another business while the project was being conducted. Income from this sale is program income and handled according to the program income policy. However, the policy does indicate if the sponsor is a non-federal sponsor and they do not provide direction on the handling of program income in their policies and/or award document, thus remain silent on the issue, while identified as program income it will be considered non-reportable and handled by the External Sales Office, not SPA and SFR. If the prototype is sold after the project is completed, the income from the sale is treated as an external sale.

Grants, contracts, and cooperative agreements
The University is awarded sponsored projects in the form of grants, contracts, and cooperative agreements. The type of agreement usually reflects the relationship between the sponsor and the recipient. The following descriptions point to distinctions between each type of sponsored project. Note: these definitions are used by federal agencies.  Nonfederal sponsors often use these terms more loosely.

Grant

A grant is a pledge of support where the sponsor has little involvement in conducting the project. Read the agency regulations for specific information about handling the project.

Example: A federal agency might request proposals for projects involving the Americans with Disabilities Act. The PI would then propose a project in this area and it would be conducted with little involvement by the sponsor.

Contract

A contract is an agreement where the sponsor has more involvement and uses the project to achieve a specific outcome or deliverable. Read the agreement for specific information about handling the project.

Example: A business might request proposals to devise an electric wheelchair. Before the project begins, the sponsor and the PI might discuss features that the wheelchair should have and agree on tests that the finished product must pass. The work would then be conducted by the University PI.

Cooperative agreement

An agreement where the sponsor has substantial involvement in the project. The sponsor and grantee work together to achieve a specific objective. Read the agreement for specific information about the project.

Example: The wheelchair project would constitute a cooperative agreement if both the sponsor employees and the University PI worked together to develop the wheelchair.

Cost reimbursable
A "cost reimbursable" agreement indicates that the sponsor funds the project to the extent described in the award notice. The University is reimbursed by the sponsor only for actual costs incurred; any unspent funds revert to the sponsor. Similarly, the University is generally not obligated to complete the work if the estimated award amount was insufficient.

Since it is inherently difficult to estimate the cost of a research project, most sponsored projects are "cost reimbursable."
 
Fixed-price
In a "fixed price" award, the PI agrees to accomplish project objectives within a specific timeframe for a set dollar amount. If the deliverables are not completed within the award period, the contract must be extended. The award amount also remains constant, even if actual costs for the project are above or below it. Any overexpenditures are the responsibility of the department.  Residual balances are retained by the department.
 
Fixed-fee
In a "fixed fee" award, the PI agrees to accomplish project objectives within a specific timeframe for a set dollar amount per patient, per hour, or other unit. These projects are often clinical trials or surveys. The total award amount is based on an estimated number of units and is subject to downward adjustment based on the actual number of units completed. Sponsor approval is required to exceed the estimated number of units. The fee per unit remains constant, even if the actual cost per unit is above or below that amount. Any overexpenditures are the responsibility of the department, and earned unspent revenue does not revert to the sponsor. If the deliverables are not completed within any period of performance, the contract must be extended.