GENERAL QUESTIONS ABOUT EXTERNAL FUNDING

1.  What is the difference between a grant, a contract and a gift?  A grant is financial assistance from a sponsoring agency (government or private sector philanthropy) in exchange for carrying out an approved project or activity specified in a proposal, without any formal detailed stipulation as to the direction of any research or outcomes of activities. Other factors that would be indicative of a grant include:

• Scope of Work is defined in a general fashion.
• No specific results or transfer of knowledge is generally expected by funding agency; however, a final report stating results of the research is usually submitted.
• Funds may be awarded following a competitive application or bid process.
• There is little or no substantial programmatic involvement between the funding agency and the grantee during the performance of the activities.
• There may be a specific time period and specific budget for conducting the project.
• The award is more for the “public good” than an attempt to gain anything directly from it by the funding agency.
•  Funding is usually made in advance of expenditures.

A contract is a mechanism for procurement of a product or service with specific, legally binding obligations for both sponsor and recipient. It is an agreement to provide financial support in return for conducting and completing research under specific stipulations and conditions. Typically, a research topic and the methods for conducting the research are specified in detail by the sponsor, usually in a Request for Proposals (RFP). In general, a contract has the following characteristics:

• Performance expectations include project milestones and detailed deliverables.
• Allowable line items are approved for indirect costs or overhead.
• The specific Scope of Work cannot be changed without prior approval of sponsoring agency.
• Funding is attached to specific performance outcomes that can be retracted if performance is not optimal.
• Ownership of intellectual property, patent rights and licensing arrangements are established.
• Budgetary approvals and payment schedules are established.
• A primary purpose is to acquire goods or services (including particular areas of research and development, or training exercises) for the direct use or benefit of the Government.
• There is substantial programmatic involvement, monitoring or control between funding agency and grantee to ensure accomplishment of the research goals.

Gifts are any entity with a monetary value (i.e. cash, publically or privately held stock, art, horses and other sundry gifts in-kind, etc.) complete ownership of which is transferred from a donor(s) to the University with the expectation of nothing significant of value in return. Gifts may come from non-government sources or the private sector (such as individuals, groups or businesses). Government funds are not gifts, they are either grants or contracts. Gifts may be unrestricted or restricted as to type of use, but do not generally involve a budget, scope of work, or reporting requirement. The University endorses the Association of Fundraising Professionals' Donor Bill of Right as a venue for communicating to donors the belief in the principals of good fundraising--transparent and honest communication; creation of gift programs that fulfill legacy wishes; and provision of information to the donor within legal and ethical boundaries. Characteristics of a gift include:

• The donor(s) exercise no direct control over expenditures.
• As long as the general intent of the donor is met, funds may be spent at the discretion of the agency awarded the gift.
• Funds are intended for capital improvement, endowment, enhancement and general or restricted operating expenses.
• Stipulations placed on the use of the award direct the funds to an area of interest of the donor (scholarships, infrastructure, general research, etc.).
• Funds are given irrevocably by the donor(s).
• The donor may require that funds be used within a specific time period but typically there are no “project timelines” to be met (donor may match gifts made within a specific timeframe).
• The donor has no expectation of any direct or indirect economic benefit from a gift or its value.

2.  What are direct costs? 
All expenses that directly support a program. These expenses may include salaries and benefits of key personnel, travel, supplies, equipment, etc. 


3. What are indirect costs? 
Limited expenses that indirectly (overhead) support a program. These expenses may include rent, lighting, heating, maintenance, administrative assistants salaries, etc. The University has a negotiated indirect cost rate with the federal government. Whenever possible, this indirect cost rate should be included in project budgets. Call the Director of Pre-Award Sponsored Programs at ext. 4429 for the cost rate and more information on how to incorporate this into a budget. 


4.  What is a not-for-profit or nonprofit organization? Is the University of Findlay a nonprofit organization?A non-profit organization is one that is incorporated under the laws of the state in which it operates and which has been granted tax exempt status by the IRS usually under section 501(c)(3). The University is a nonprofit organzation. If you are preparing a proposal and need information about the University's tax-exempt status, please call the Office of Pre-Award Sponsored Programs at ext. 4429.