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Research, Grants and Export Control

Determining Funding Classification - 1M13

Funds received to support activities at Southern Illinois University Edwardsville (SIUE, or University) in response to a request or proposal can be classified as a gift, sponsored project, or sponsorship.  Classification affects the way SIUE accounts for and reports the funds.  The proper acceptance and processing of funds ensures the University remains in compliance with relevant internal and external requirements. 

The SIUE Foundation oversees gifts, and various departments may oversee sponsorships pertaining to their department (i.e. Athletics).  The Office of Research and Projects (ORP) oversees sponsored projects per Policy 5B2 Review and Approval of Externally Funded Projects

While funds may be labeled according to the above classifications, the label may not reflect how SIUE will manage the funds.  For example, certain funds labeled as gifts may be managed through ORP to reduce University risk or to ensure compliance with internal or external research requirements, including but not limited to human subjects research and responsible conduct of research training.

Definitions

A gift is an item of value given to the University by a donor who expects nothing of value in return other than recognition and disposition of the gift in accordance with the donor's wishes.  In general, a gift may restrict the use of funds to a particular purpose, but there are no other contractual requirements beyond responsible stewardship, and there are no deliverables to the donor other than a report solely intended to assure proper gift stewardship.

Funding for a sponsored project is given to meet specific objectives, typically through a specific project plan and timeline.  The funds are restricted to this purpose, and the sponsor expects deliverables, such as technical and financial reports.

Funding for a sponsorship is provided to support a University activity with the expectation of sponsor branding and advertising associated with the activity.

Gifts

The following factors normally indicate funds are a gift.

  • The funds or item(s) of value are irrevocably transferred to SIUE.
  • The funds may qualify as a charitable contribution on the funder’s taxes.
  • There is no formal fiscal accountability to the donor beyond typical requirements of stewardship, such as periodic progress reports and summary reports of expenditures.
  • The donor receives no or only nominal value or benefits and no deliverables in return.
  • There is no restriction on the use of funds other than consistency with the donor’s original, accepted stipulations.
  • While the general area of work to be supported may be specified, no detailed scope of work, line-item budget, or period of performance is specified by the donor or promised by SIUE.

Unrestricted funds meet the definition of a gift.  Funds received for the following purposes are generally considered gifts:

  • endowed chairs
  • non-governmental building projects
  • building naming rights
  • professorships
  • programmatic support
  • scholarships and fellowships.

Sponsored Projects

The following factors normally indicate funds are a sponsored project.

  • The funds or item(s) of value are provided to implement a specific scope of work with a line-item budget on a specified timeline or within a limited time period.
  • SIUE commits to deliverables (such as periodic technical, progress, and/or financial reports or other products).
  • Other fiscal accountability, such as audit provisions, sponsor prior approval of or control over expenditures, and/or an obligation to return unexpended funds, is required.
  • Funder retains right to terminate the project.
  • Rights to tangible or intangible property resulting from the project (such as equipment, data, and copyrightable or patentable materials) do not belong to the University.
  • The activity involves testing or evaluating proprietary products.
  • The funder includes terms and conditions including, but not limited to:
    • indemnity
    • compliance with state and federal requirements
    • prior approval requirements (e.g., budget, work performed, or changes in personnel)
    • publication restrictions.
  • Subsequent funding is dependent on funder receiving deliverables.
  • The funding is directly from a government agency or is flow-through from a government agency.
  • Indirect costs are allowed.

In general, the agreement between the funder and SIUE is binding and creates a quid pro quo relationship.

Sponsorship

The following factors normally indicate funds are a sponsorship.

  • The funds support one or more specific University activities.
  • SIUE commits to sponsor branding or advertising associated with the activity(ies).
  • Sponsorship fees are directed to operating versus Foundation accounts to ensure compliance with IRS Laws and regulations.
  • Sponsor requires Proof of Performance Summary following fully executed agreement and activation of deliverables.

Process for Classifying Funds

As sponsors/funders sometimes use the terms grant and gift interchangeably, the terms cannot be used as the sole factor in determining the proper classification of the funds.  Similarly, the inclusion, exemption, or limitation of indirect costs cannot be used as the sole classification factor.  Funds received to support research activities are typically sponsored projects but may be classified as a gift if there is no commitment to a specific line of inquiry.  Classification of funds must be based on multiple factors, except when government funding is involved; government funds are not gifts.

ORP and the Foundation are responsible for working together to classify external funding.  To make the most accurate decision, all information, including but not limited to all terms and conditions, related to the funding should be reviewed by appropriate stakeholders in the decision.  Stakeholders outside ORP and the Foundation may include the faculty or staff primary investigator (PI), department chair or supervisor, and school/college dean or vice chancellor. 

A questionnaire or checklist will be used to assist in classifying funds.  The questionnaire or checklist may be revised as needed to improve clarification and proper classification of funds.

The classification will be made based on factors such as the statement of work, terms of the agreement, and intent of the funder.  In resolving issues related to funding classification, ORP and the Foundation must maintain an appropriate balance between the interests and preferences of the funder and the University’s interests, requirements, and policies.  It may be necessary to contact the funder for clarification of intent and requirements and/or to discuss the planned use of the funds.  When communication from the funder clearly indicates a specific classification, the terms of the agreement may need to be adjusted to document clearly that intent and avoid unintended classification.

If ORP and the Foundation are unable to come to an agreement on the classification, the Provost and Vice Chancellor for Academic Affairs, the Vice Chancellor for University Advancement, the SIU Office of General Counsel, and the SIUE Foundation legal counsel will jointly make a determination.

Documentation of the final classification of funds shall be maintained in ORP for funds classified as sponsored projects, in the applicable University department for funds classified as sponsorships, and in the Foundation for funds classified as gifts.

Funds received and subsequently identified as being misclassified will be transferred to the appropriate unit for management unless otherwise decided by a consensus between the relevant stakeholders or, if no consensus, the Provost and Vice Chancellor for Academic Affairs, the Vice Chancellor for University Advancement, the SIU Office of General Counsel, and the SIUE Foundation legal counsel.  Funds initially classified as a gift that are subsequently found to be a sponsored project will have the exclusion or limitation of indirect costs reviewed by ORP.

Approved by Chancellor effective 12/21/2020
This policy was issued on December 23, 2020.
Document Reference: 1M13
Origin: GR 19/20-19

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