Chapter 9-500: Distinguishing Between Private Gifts and Grants for Research

9-510 Presidential Policy: Review of Gifts/Grants for Research

In a Report of the Office of the Auditor General to the Joint Legislative Audit Committee, August 1, 1978, titled "University of California: Review of Privately Supported Research," the State Auditor General concluded that in many cases monies awarded to the University which should have been classified and processed as grants were classified and processed as gifts.

To clarify this situation and to insure greater consistency among campuses, the President issued a policy entitled Review of Gifts/Grants for Research on July 8, 1980. Following are the guidelines specified in this Policy:

In general, classify funds as gifts when the following characteristics exist:

  • donor does not impose contractual requirements;
  • funds are awarded irrevocably.

In general, classify funds as grants when the following characteristics exist:

  • provision for audits by or on behalf of the grantor;
  • the grantor is entitled to receive some consideration such as a detailed technical report of research results or a report of expenditures;
  • testing or evaluating of proprietary products is involved;
  • the research is directed to satisfying specific grantor requirements (e.g., terms and conditions stating a precise scope of work to be done rather than a general area of research);
  • a specified period of performance is prescribed or termination is at the discretion of the grantor;
  • funds unexpended at end of period shall be returned to the grantor;
  • patent rights requested by grantor.

Since, in many situations not all of the above characteristics will be present, campuses must exercise judgment in order to classify the gift/grant in accordance with the intent of this Policy. The decision as to whether a particular award should be considered a gift cannot be made based upon the presence or absence of a single characteristic or criterion. Rather, one must look at the award as a whole in order to make a judgment as to its proper classification.

Regardless of whether an award is designated as a gift or a grant (or a contract), it will be subject to the research review process as well as to the administrative rules and procedures which apply to all University funds. The processing of gifts does not include the application of indirect costs, but may include assessment of a campus gift fee. Indirect costs are discussed in Chapter 8 of this Manual. Processing of grants and contracts will include the application of indirect costs in accordance with University policy set forth in Chapter 8.

9-520 Guidelines on Univerwsity-Industry Relations

On May 17, 1989, the President issued Guidelines on University-Industry Relations. Guideline 12, "Recovering Costs from Research Sponsors: Gift/Grant Distinctions," reconfirms the importance of adhering to the University Policy on Review of Gifts/Grants for Research: "The proper distinction between gifts and grants, with the different obligations in each case, is important to the integrity of the University's sponsored research program."