Gift or Sponsored Award

How do I know if I'm receiving a gift or a sponsored award?

A sponsored project and a gift or donation often have similar attributes, so it is important to recognize the common characteristics of each to ensure that the award is properly managed.

SPA works closely with the NIU Foundation and Northern Illinois Research Foundation (NIRF) to appropriately classify external funding as a gift or sponsored project.

If the sponsor is a federal, state, or local government agency, or flow through from one of these organizations, the activity is always a sponsored project.

Key factors to differentiate between gifts and sponsored projects

Factor Gift Sponsored project
Purpose The donor may provide support for a particular activity, program area or purpose. These can include professorships, endowed chairs, scholarships, non-federal building projects, fellowships, research and instructional programs. Sponsor requires specific deliverables (e.g. final technical report, evaluation).
Reporting The donor may require or request a brief summary of the results from the participant. The sponsor requires performance of specific duties such as research, budget reports and progress reports.
Unused funds Donor does not require return of unspent funds at end of gift period. The sponsor requires return of unexpended funds or written approval to spend beyond the project period or re-budget funds between line items.
Intellectual property The donor makes no claims on the patents, copyrights and other intellectual property rights that may result from activities associated with the gift. The sponsor may impose restrictions on intellectual property rights, such as prior review of publications or on use of results.
University process Managed through NIU Foundation or NIU Research Foundation. Managed through Sponsored Programs Administration.

Questions to help determine gift vs. sponsored project

Who will be the primary beneficiary?

If it is the donor or sponsor, the award should be handled under a contractual agreement and is a sponsored project. The contractual agreement is necessary to ensure that there is a concise scope of work and that sponsor expectations are clearly defined. Grants are a form of a contract.

Is there a quid pro quo?

Is the institution or principal investigator required to provide the donor with any deliverable? Assurance to the donor that the funds were used for the purpose for which they were donated does not constitute quid pro quo. Many gifts require some sort of basic reporting.

Can the sponsor require the institution to return the gift if the donor is unsatisfied with the outcome of a project which it supported?

If the funds were provided with no expectation of outcome or deliverable, then they can be properly considered as a gift. For example, a donor contributing to a scholarship fund rightfully expects that the funds would be used for that purpose. However, if the sponsor was unsatisfied with the outcome of a research project and requested a refund, the funds were not contributed. Gifts are considered irrevocable while restricted grants and contracts (e.g. sponsored projects) can be terminated for poor or nonperformance or unavailability of funds as well as a variety of other reasons.

Can funds be provided partially as a gift and partially as a contractual arrangement?

Funds can be transferred as both a gift and a contract. However, intent and use of the funds should be reviewed, as well as any relationship between the sponsor and recipient. It is difficult to separate a portion of a project supported by a gift and the portion that is contractual. For instance, an institution may agree to a contractual arrangement to develop a new nano-particle. The sponsor also provides funds to support a graduate student. If the student works on the same project it may be construed as circumventing the contractual process. A gift must have charitable intent and the expectation and distinction between the gift and contract must be clear.

Can government funds be counted as gift funds?

It is not likely that either state or federal funds would be transferred as gift funds. Generally, public funds come with restrictions that exceed minimum requirements to be counted as a contribution and as a general rule, governments are not legally authorized to make gifts to non-profit organizations.

Contact Us

Sponsored Programs Administration
203 Lowden Hall
Northern Illinois University
DeKalb, IL 60115-2828

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