Division of Research and Economic Development:Gift vs. Grant Determination Process and Indicator Checklist

Funding, particularly when received from a non-profit entity (i.e., a foundation, corporate foundation, private organization or corporation), is sometimes difficult to classify as a gift or grant.

The definitions below are intended to clarify the differences between gifts and grants. Additionally, the Table of Indicators below may be helpful in classifying unclear awards.

In order to make the most accurate decision between what is a grant and what is a gift, all components of information related to the gift/sponsored project should be reviewed by the PI and any other participant who may be appropriate to be a part of the decision-making process. Internally, this may include administrative leadership, Office for Institutional Advancement representatives, the Principal Investigator (PI), the department or college administrator and/or staff from the Office of Research and Sponsored Projects (ORSP).

The review should be discussed with ORSP personnel, whom, in collaboration with Advancement Office personnel, will aid in making a final determination on whether the project funds should be treated as a gift or as a grant. In cases where questions remain regarding whether an activity for which external funding is sought constitutes a grant or a gift, a determination will be made in accordance and compliance with Generally Accepted Accounting Principles (GAAP).

When making the determination, ORSP and Advancement personnel may seek clarification, question a decision, ask for justification or solicit additional documentation to ensure that the donor's/sponsor's intent is honored. Back-up documentation should reside in the ORSP or the Advancement Office.

Definitions

Gift

A gift is the voluntary, non-reciprocal transfer of money or property from a donor to an institution. The donor may be an individual, a corporation or a non-profit organization. The donor does not expect anything of value in return other than recognition and does not exert control over how the funds are spent. A gift may meet the interests of the donor and can be restricted or unrestricted.

Restricted Gift

A restricted gift is a contribution designated for a specific purpose, program or project.

Unrestricted Gift

If the donor does not specify any restrictions, this would be considered an unrestricted gift, and the institution allocates the funds according to its own discretion.

Regardless of the gift type, only the Advancement Office may accept gifts on behalf of the University.

Grant

A grant (i.e., “sponsored program” funding, or “award”) is the transfer of money or property from a sponsor to an institution that may require performance of specific duties such as research, budget reports, progress reports and the return of unused funds.

Any funding provided by U.S. Government agencies at the federal, state or local level in support of East Texas A&M activities is treated as a grant. Government funds are not treated as gifts. Additionally, funding from voluntary health organizations or associations, such as the American Cancer Society or American Heart Association, is usually treated as a grant and not a gift.

What if You’re Not Sure?

If the funding’s characteristics may fall within both categories, we must consider the factors in the table below to determine whether the funding is intended as a gift or a grant. The presence of any single factor does not represent the condition of a gift or a grant; rather, to determine if a transaction is a gift or a grant, all factors should be considered simultaneously. In cases where questions remain as to whether a specific line of external funding constitutes a grant or a gift, ORSP personnel will work with Advancement Office personnel to determine what procedures should apply.

Table of Indicators

FACTOR	GIFT INDICATOR	GRANT INDICATOR
Source	Individuals, Non-Profit Organizations, Corporations, Corporate Foundations, Other Organizations (such as Donor-Advised Funds), and Family or Individual Foundations are generally treated as individuals	Government Agencies, Non-Profit Organizations, Corporations or Corporate Foundations
Purpose	The donor may specify an area of interest or a goal to be funded with their gift.	The sponsor specifies how the funds should be used, as outlined in supporting documentation (award letter or grant agreement).
Value Exchange	No implicit or explicit value is exchanged other than recognition.	No implicit or explicit value is exchanged other than recognition and/or reporting.
Reporting	The institution has little or no obligation to report to the donor on how the gift is used or invested. The institution is not prevented from providing such reports, but rather uses the opportunity for donor stewardship. Required reporting is limited to details of how, when and to whom funds were disbursed, as well as statements of earning when applicable.	The sponsor requires performance of specific duties such as research, budget reports, progress reports and the return of unused funds.
Proposal Process	Initiated by donors, advancement staff or faculty members.	Initiated by the sponsor, advancement CFR staff or faculty members (working together with ORSP).
Document	Letter of Donation/Gift Agreement	Award Letter and/or Grant Agreement
Deadline/Terms	Typically no time period is associated with the use of these funds.	Typically requires a specific time period for conducting projects.
Excess Funds	N/A	May be required to return to sponsor.
Penalty for Non-Performance	No penalties for failing to use the funds.	Penalties may exist for failing to use the funds or to deliver the items on a timely basis.
F&A (Facilities and Administrative) Cost Rates*	None	F&A Cost Rates* as defined by DHHS and administered by ORSP.