Working with Sponsors: Foundations

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UM Research Relations with Sponsors:
Working with Foundations, Public Charities, and Other Nonprofit Organizations

DRDA is responsible for maintaining sponsored research relations with private foundations, public charities, and other nonprofit organizations. While some 50,000 foundations and several hundred public charities operate in the United States, most foundations are not appropriate sponsors of university research. However, the programs and activities of about 450 organizations are closely monitored by DRDA, which provides proposal development and grant administrative services to faculty members wishing to work with these organizations. Efforts are made to keep informed regarding the activities of private foundations and to serve as a point of contact for any nonprofit organization seeking to access the various services available through the University. For further information call or visit Julie Feldkamp at the Wolverine Tower, 3003 South State Street, 763-4522 (feldkamp@umich.edu).

Gifts and Grants
Important distinctions must be recognized between gifts and grants--two principal forms of awards made by foundations and nonprofit organizations:

1. A gift is defined as any money from private sources, whether solicited directly or not, for which the donor does not retain any reversionary interest or cannot be expected to receive any material, unique, or preferential benefit from the act of donating funds. This definition follows guidelines established by the Internal Revenue Service as well as practices of other universities and nonprofit organizations.

2. A grant is an award of funds by a sponsor to achieve some general or specific purpose. The relationship between a sponsor and a grant recipient has not explicitly been defined by law. However, while a grant is not as exacting in its provisions, it should be treated with the same respect as a contract. A grant generally is construed to allow greater discretion than a contract in the conduct of the research and to provide less specificity in the definition of the intended outcome of the research. All grant documents should be reviewed and processed by DRDA.

All gifts to the University in the form of money and securities or in any other forms, whether for the benefit of the entire institution or any of its subdivisions, must be reported to the President and the Board of Regents (Section 3.05 of the Board of Regents Bylaws). The Office of Development (998-6000) is responsible for processing and reporting all such gifts.

Sponsors/donors often use the terms "gift" or "grant" in ways inconsistent with the objectives of the University. Therefore, the terminology used by the sponsor or donor should not deter-mine the classification of the funds. All requests to establish new accounts involving Restricted Expendable Funds will be reviewed by Financial Operations to determine if the award should be treated as a gift or as a grant.

Funds should not be treated as a gift if their transfer to the University results in the payor receiving a unique or preferential benefit. Examples of unique benefits include the receipt of technical reports before such information is made available to the general public, involvement in determining the research protocol, or first rights to specific research findings or inventions.

The requirement that the sponsor/donor receive reports detailing the expenditure of the funds, however, does not preclude these funds from being considered as a gift. This requirement of accountability is a common practice of many large charities. Restrictions of funds to particular areas of research also would not preclude the funds from being treated as gifts, as long as the remaining criteria in the gift definition are met.

Negotiations regarding the technical statement of work should be carried out by the faculty member, subject to general policies and procedures of the University. However, the agreement formats offered by sponsors may contain provisions that are inconsistent with the policies of the University or those of the State of Michigan. Therefore, it is essential that each agreement be reviewed by DRDA prior to acceptance or initiation of work thereunder.

General Operating Policies
Several general policies regarding research agreements with private foundations, public charities, and other nonprofit organizations are outlined below. Any situation that appears to deviate from these policies should be brought to the attention of the Division of Research Development and Administration prior to agreement to or implementation of the deviation.

1. Proposals:: Any oral or written presentation to a potential sponsor that provides cost estimates is considered a "proposal". In accordance with Section 3.06 of the Board of Regents Bylaws, every grant proposal must be submitted for prior approval through the appropriate University channels before being sent to the sponsor. All proposals require review and coordination through DRDA, utilizing a Proposal Approval Form (PAF).
2. Funding:: Sponsors are expected to pay the appropriate direct costs associated with their sponsored efforts. Unless otherwise stipulated in written sponsor policy (which is uniformly and consistently applied), full indirect costs at the approved rates will be recovered on all grants and contracts.
3. Expenditure of Funds:: Funds from a sponsor are under the control of the faculty member identified by the sponsor and must be expended for their intended purpose, as delineated in the award document or proposal. A sponsored project account will be established in the University accounting system for this purpose.
4. Agreements:: Any written agreement committing the University to the performance of a sponsored project forms a contractual relationship. All agreements (grants, contracts, subcontracts, cooperative agreements, letters of commitment) require review by the Division of Research Development and Administration and the Office of Contract Administration and must be signed or acknowledged by a University official who has been delegated such authority by the Board of Regents.
5. Reporting:: The Project Director is responsible for providing progress reports to the sponsor in accordance with terms of the agreement or, if reporting requirements are not explicitly stipulated, on a reasonable basis.
6. University Name:: All agreements will require that the sponsor obtain written permission from the University prior to using the University name or trademarks in any advertising or public statement.
7. Publication:: The University will not accept any sponsored project which denies the University the right to divulge the source of support or to publish the results of the research. However, the University may agree to: exclude sponsor-provided privileged information from such publication; submit the proposed publication to the sponsor for review prior to publication; delay publication for a reasonable period of time to permit patent applications.

Special care must be exercised in the negotiation and acceptance of research agreements with foundations, public charities, and nonprofit organizations. There are relatively few "standard" provisions for such agreements.