137  Classification of Awards as Gifts or Grants/Contracts

Approved by President
Effective Date: June 5, 2017
Responsible Division: University Advancement
Responsible Office:  Vice President for University Advancement
Responsible Officer: Vice President for University Advancement

I. Purpose

The words “gift” and “grant” are sometimes used interchangeably by donors, grantors, and faculty/staff. However, the nature of the transaction, not the terminology, drives accounting procedures at Middle Tennessee State University (MTSU or University). These accounting procedures reflect IRS regulations, Government Accounting Standards Board (GASB) standards, MTSU policies, and other related internal and external requirements.

MTSU must manage all funds received in accordance with applicable local, state, and federal law, subject to the specific terms and conditions of the gift or award. This policy should provide guidelines for the proper handling of funds received by the various academic, athletic, and programmatic units of the University. The information below covers the vast majority of distinguishing characteristics of gift and grant transactions.

II. Grants and Contracts

Grants and contracts typically represent exchange transactions, or shared obligation, whereby tangible resources and information may be transferred between the sponsor and the university. Grants typically provide funding to support research, public service projects, or programs for the benefit of the public. Contracts are used to procure goods or services for the benefit of the sponsor. 

If one or more of the following conditions are part of the transaction, then it is most likely a grant or contract, and should be processed through the Office of Research Services. 

A.  Funds for the award originated from a unit or agency of federal, state, or local government, whether MTSU receives the funds directly from the government unit or agency, or by way of one (1) or more intermediate public or private pass-through entities.

B.  The proposal or award requires a signature from an authorized official, binding the University to the terms and conditions of the proposed project.

C.  The sponsor requires the formal delivery of specific goods and/or services, or a commitment of University resources, by the University. See Policy 135 Solicitation and Acceptance of Gifts.

D.  The sponsor has the right to limit or prohibit indirect cost recovery.

E.  The sponsor retains the right to terminate the award, at their sole discretion, and require the return any unspent funds to the sponsor.

F.  The award requires testing or evaluation of proprietary product(s).

G.  The award requires a detailed technical report.

H.  Award payments are contingent upon programmatic or fiscal reporting (i.e., milestones and invoices).

I.  The award includes terms and conditions addressing one (1) or more of the following:

1.  Indemnity;

2.  Export Control;

3.  Financial and performance standards;

4.  Intellectual property rights;

5.  Ownership or use of data;

6.  Treatment of proprietary or confidential information or materials;

7.  Prior approval of changes to budget, scope of work, personnel, or personnel effort;

8.  Restrictions on allowable costs;

9.  Right of review or approval of publications and other dissemination; and/or

10.  External audit by Sponsor.

J.  The project requires institutional approval for the use of one (1) or more of the following:

1.  Human subjects;

2.  Vertebrate animals;

3.  Radioisotopes on humans;

4.  Other radioactive materials;

5.  Recombinant DNA;

6.  Human body substances;

7.  Toxic materials;

8.  Select agents;

9.  Other etiologic agents; and/or

10.  Proprietary materials.

III. Gifts

Gifts typically have no reciprocal obligation between the donor and the University, and are generally restricted to the business interests, mission, and activities of the University. Activities supported by a donor that are generally not considered grants, and that should be processed as gifts through the Development Office, may include the following characteristics:

A.  Funds are provided to the University with true philanthropic intent.

B.  The award provides support for broadly defined activities, such as professorships, endowments, building projects, instructional programs, and unrestricted research. The donor may restrict the use of funds to a specific program area or purpose.

C.  The award contains only minimal requirements, generally relating to required donor pledges or payments, and the University’s commitment to effectuate the donor’s intent.

D.  In the case of individual awards and scholarships, a donor may stipulate and restrict funds based on criteria such as major or field of study, academic requirements, and geographic preferences. However, the University retains the right to determine how to fulfill the donor’s stipulations. Donors may not utilize criteria that would be considered discriminatory, as defined by state and federal law.

E.  The award requires reporting to the donor only in the form of a general statement of how funds were used. The unit or faculty member involved may provide the donor with a brief summary of the results of supported activities and/or a statement that expenditures were made in accord with the intent to the gift.

F.  The award is irrevocable. Unspent funds are retained by the University, to be used at its discretion, mindful of the donor’s original intent.

G.  Funds may be returned or reallocated only in the event the University or the MTSU Foundation discontinues, or chooses to abandon, the supported activity, or is unable to perform the supported activity.

H.  Awards that require the use of a 501 (c)(3) organization (MTSU Foundation), or that require a charitable gift receipt, must go through the Development Office.

I.  The award requires no formal or specific deliverable.

IV. Determination

This policy will provide the context by which all external funds will be evaluated, processed, and managed. However, situations may arise that do not clearly meet the above criteria, or that may contain elements of both a charitable gift and a grant award. In those cases, the Office of Research Services, the Development Office, and the Office of Business and Finance will work together to assess the intent and obligation of the award and determine the correct processing actions. In some cases, awards may be considered both a gift and a sponsored award, and will be processed accordingly. In those cases, University records will reflect the dual nature of the award, and this will be reflected in University reports and financial statements.

Forms: none.

Revisions: none.

References: Policy 135 Solicitation and Acceptance of Gifts.