Research Policy Handbook

Definitions and Categories of Sponsored Projects (RPH 3.2)

Current version: June 10, 2009

Summary:

Defines sponsored projects, as distinguished from gifts and other supported activities, and illustrates the major categories of sponsored projects, i.e., organized research (including both sponsored research and University research), sponsored instruction, and other sponsored activities. Definition of Industry-Funded Clinical Trials clarified in October 2009.

This document defines sponsored projects, as distinguished from gifts and other supported activities, and illustrates the major categories of sponsored projects, i.e., Organized Research (including both sponsored research and university research), Sponsored Instruction, and Other Sponsored Activities. Also included here are descriptions of several specialized subcategories of sponsored projects.

Individuals who are involved in the processing of gifts, including cash, wire transfers or gifts of property, must complete appropriate training (see Gift Administration at Stanford, http://ora.stanford.edu/gifts ).

1. DEFINITIONS

Both sponsored projects and gift-funded activities are externally-supported, with funds provided typically in response to a request or proposal. The classification of funding as "gift" or "sponsored" will affect, among other things, the way Stanford University accounts for the funds, calculates and applies F&A (indirect) costs, and reports on the use of the funds to the sponsor or donor.

1. DEFINITION OF SPONSORED PROJECTS
   

   Sponsored Projects are externally-funded activities in which a formal written agreement, i.e., a grant, contract, or cooperative agreement, is entered into by Stanford University and by the sponsor. A sponsored project may be thought of as a transaction in which there is a specified statement of work with a related, reciprocal transfer of something of value.

   The following conditions characterize a sponsored project agreement, and help to distinguish such agreements from gifts:

   1. STATEMENT OF WORK
      

      Sponsored projects are typically awarded to Stanford in response to a detailed statement of work and commitment to a specified project plan. As described below, this statement of work is usually supported by both a project schedule and a line-item budget, both of which are essential to financial accountability. The statement of work and budget are usually described in a written proposal submitted by Stanford University to the sponsor for competitive review.

   2. DETAILED FINANCIAL ACCOUNTABILITY
      The sponsored project agreement includes detailed financial accountability, typically including such conditions as:
      • a line-item budget related to the project plan. The terms of the agreement may specify allowable or unallowable costs, requirements for prior approvals for particular expenditures, etc.
      • a specified period of performance, typically defined with "start" and "stop" dates
      • a requirement to return any unexpended funds at the end of that period
      • regular financial reporting and audit, including, for federal and state awards, accountability under the terms of OMB A-21, Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements With Educational Institutions and OMB A-110, Grants and Agreements with Institutions of Higher Education, Hospitals , and Other Non-Profit Organizations.

      A sponsored project budget will include the University's full negotiated F&A (indirect) cost rate, unless a waiver of those costs has been approved.

      These conditions generally define the level of financial accountability associated with a sponsored project. While not all of the above conditions are necessary to define a sponsored project, they are collectively indicative of the increased level of financial accountability associated with such projects.

   3. DISPOSITION OF PROPERTIES ("Deliverables")
      

      Sponsored project agreements also usually include terms and conditions for the disposition of tangible properties (e. g., equipment, records, specified technical reports, theses or dissertations) or intangible properties (e.g., rights in data, copyrights, inventions). The presence of such terms and conditions in the agreement indicate that the activity is a sponsored project.

2. DEFINITION OF GIFTS
   

   A gift, on the other hand, is defined as any item of value given to the University by a donor who expects nothing significant of value in return, other than recognition and disposition of the gift in accordance with the donor's wishes. In general, the following characteristics describe a gift:

   1. No contractual requirements are imposed and there are no "deliverables" to the donor. However, the gift may be accompanied by an agreement that restricts the use of the funds to a particular purpose.

   2. A gift is typically irrevocable. While the gift may be intended for use within a certain timeframe, there is no specified "period of performance" or "start"/ "stop" dates as associated with sponsored projects.

   3. There is no formal fiscal accountability to the donor beyond periodic progress reports and summary reports of expenditures. These reports may be thought of as requirements of good stewardship, and, as such, may be required by the terms of a gift. They are not characterized as contractual obligations or "deliverables."

   Stanford agrees to use restricted gifts as the donor specifies, and does not accept gifts that it cannot use as the donor intends. If circumstances change such that a gift cannot be used as the donor specified, the donor must approve a change in the original restriction, or Stanford must receive court approval to waive the restriction (if the donor cannot be contacted). University approval for changes in the purpose of a gift fund can only be granted by the Provost.

   Gift solicitations should be coordinated with the appropriate Development Officer in each school, and the Development Office should be contacted for procedures applicable to gift solicitations. (A template Conditions of Gift letter is available in Word format.)

3. GUIDANCE FOR PROPERLY DISTINGUISHING GIFTS FROM SPONSORED PROJECTS
   

   1. DISTINCTIONS BASED ON SOURCE OF FUNDS
      Any funding provided by U.S. Government agencies, at the federal, state, or local level, in support of Stanford activities is treated as sponsored project funding. Government funds are not treated as gifts.

      Funding from Voluntary Health Organizations or Associations, such as the American Cancer Society or American Heart Association, is usually treated as a sponsored project and not a gift.

   2. DISTINCTIONS BASED ON INTENT OF DONOR/SPONSOR
      

      In remaining cases, e.g., where funding is being provided by corporations, foundations or others not specified above, the distinction between gifts and sponsored projects will be made based on the proposal, statement of work, and terms of the agreement, taking into consideration the intent of the donor/sponsor.
      

      Note that, in some situations, communication, including the proposal and award as well as conversations, makes it clear that the donor's/ sponsor's intent is to classify an award to Stanford as either a gift or a sponsored project. In these cases, the terms of the accompanying agreement may have to be adjusted in consultation with the donor/sponsor in order to clearly document the intent and avoid unintended classification. See section D.1. below.

4. ADMINISTRATIVE ISSUES
   
   1. DECISION-MAKING PROCESS IN UNCLEAR SITUATIONS
      

      In some cases, the distinction between gift and grant, i.e., between a gift and a sponsored project, can be difficult to draw. Donors may sometimes use the word "grant" when the donation qualifies as a "gift" or vice versa. When an individual is in doubt about the proper classification and handling of an award to Stanford, the Office of Sponsored Research and the Development Officer for the involved School will confer and resolve the question. This consultation will typically take place within the involved School, involving the School Dean's office as needed. In addition, staff from the Office of Sponsored Research and from Development should consult as needed with the Associate Vice President for Research Administration, Dean of Research, Foundation Relations and the Controller's Office.

      Attachment A to this policy, Checklist for Determining Whether Funding is a Gift or Support for a Sponsored Project, defines this process, offices to be consulted, and materials to be reviewed. As described in this checklist, when this determination is not initially clear, personnel should review appropriate documentation and consult with staff within their school representing both the research administration and development functions to determine the appropriate classification and handling of funds.

      In those cases where the determination is not initially clear, and where the final determination is to accept the funds as a gift, the completed Checklist is to be attached to the Gift Transmittal Form.

   2. DONOR/SPONSOR RELATIONS
      

      In resolving issues related to the classification of an award, Stanford personnel must maintain an appropriate balance between the interests and preferences of the donor/sponsor and the University's administrative policies and objectives. In the process of resolving these issues, in some cases it may be necessary to contact the donor/sponsor for clarification of intent and requirements, and/or to discuss the planned use of the funds. Such contacts are usually best handled by the faculty member and/or development officer who initiated the activity.

   3. ACCOUNT SET-UP
      

      Administrative Guide Memo 34.2, Activities/Accounts [pdf file], specifies the procedure and responsibilities for establishing both sponsored project and gift accounts. Whenever a new account is requested, the responsible organization (Office of Sponsored Research in the case of sponsored projects, or Fund Accounting in the case of gift funding) verifies that the account being set up is proper, in accordance with the definitions in this policy. These offices are responsible for assuring that a proper determination of gift or grant status has been made.

   4. COST SHARING IMPLICATIONS
      

      Stanford policy and federal regulations define cost sharing as that portion of total project costs of a sponsored agreement borne by the University, rather than by the sponsor. (See Stanford's Cost Sharing Policy, Research Policy Handbook 3.5.)

      Committed cost sharing, i.e., that which a sponsor would otherwise pay, which Stanford offers in its proposal and is accepted by the sponsor, must be funded from a non-federal source and charged to a separate cost sharing account. Gift funds may be used to meet a cost sharing commitment on a sponsored project if the purpose of the gift so allows.

      Where a donor requires that their gift funds be leveraged with other resources, for example, matching gifts, there is no requirement to account for cost sharing. In these cases, the donor typically expects Stanford to use other gift funds to meet the requirement for matching or additional funding requirements.

   5. FACILITIES & ADMINISTRATIVE (F&A), i.e., INDIRECT COST, IMPLICATIONS
      

      Stanford's policy is to apply the University's full applicable F&A (indirect) cost rate to all sponsored projects. Gift funds will be assessed an infrastructure charge set by Stanford University, in accordance with the Infrastructure Charge Policy (Administrative Guide Memo 37.3 [pdf file]). Where a sponsored project is not charged at least the infrastructure charge rate, the difference between the F&A cost rate and the infrastructure charge rate will be calculated on specified expenditures and must be funded by the project or by other departmental funds. (See Indirect Cost Waivers, Research Policy Handbook 3.10, for guidance relating to requesting waivers of F&A costs.)

2. GENERAL CATEGORIES OF SPONSORED PROJECTS

Sponsored projects at Stanford University are categorized under the following general headings:

1. Organized Research, including Sponsored Research and University Research
2. Sponsored Instruction
3. Other Sponsored Activities.

Classification of a sponsored project into one of these categories affects the calculation of Stanford's Facilities & Administrative (F&A), i.e., indirect cost, rates, and determines the appropriate rate to be charged. See Facilities & Administrative (Indirect Cost) and Fringe Benefit Rates: Definitions and Calculations, Research Policy Handbook 3.3. Definitions and examples of these categories follow.

1. ORGANIZED RESEARCH
   

   Research and scholarship activities include the rigorous inquiry, experiment or investigation to increase the scholarly understanding of the involved discipline. Organized research activities are funded by both external sponsors (Sponsored Research) and by Stanford University (University Research), and must be separately budgeted and accounted for. Together, these categories comprise the Organized Research distribution base, used to calculate the Organized Research F&A rate.

   1. SPONSORED RESEARCH
      

      Research activities are properly classified as Sponsored Research if the activity is sponsored (funded) by an external organization, i.e., a federal, state or private organization or agency. Examples of sponsored research include:

      • awards to Stanford faculty to support research activities
      • external Faculty "Career Awards" to support the research efforts of the faculty
      • external funding to maintain facilities or equipment and/or operation of a center or facility which will be used for research
      • external support for the writing of books, when the purpose of the writing is to publish research results.
   2. UNIVERSITY RESEARCH
      

      See also Research Policy Handbook document 3.4, Classification of Sponsored, University and Departmental Research, for discussion of the impact of 1993 changes to OMB Circular A-21 regarding the definition of University Research.

      Research activity is properly classified as University Research if the activity is supported by either of the following:

      1. Funding that is derived from Stanford institutional funds (e.g. gifts, endowment income, interest income, technology licensing income, operating budget) through a competitive application and award process, and where the proposed activity is characterized by the same factors which generally distinguish sponsored projects (see 1.A.), or
      2. Cost sharing expenditures which are committed to be borne by Stanford rather than by the sponsor.

      Research supported by an award from the Office of Technology Licensing Research Incentive Fund is an example of University Research. Further detail on the distinctions between Sponsored Research or University Research can be found in the policy on Classification of Sponsored, University and Departmental Research, Research Policy Handbook 3.4.

   3. ACCOUNTING FOR ORGANIZED RESEARCH
      

      Sponsored activities that qualify as either Sponsored Research or University Research shall be assigned to the Sponsored Research or University Research Task Service Types in the University's accounting system.  All University Research shall be separately budgeted and accounted for.   Space used in the conduct of Sponsored Research or University Research shall be coded to Organized Research (R) in the University's Space Inventory System. 

      All other research activity that is not defined as either Sponsored Research or University Research shall be considered Departmental Research. 

      Expenditures for Departmental Research shall be assigned to Instruction and Department Research Task Service Type in the accounting system.  Space used in the conduct of Departmental Research should be coded to Department Research (L) in the University's Space Inventory system. 

2. SPONSORED INSTRUCTION

   Sponsored Instruction is defined as teaching and training activities at Stanford funded by grants and contracts from federal or non-federal sponsors. Sponsored Instruction includes agreements which support curriculum development as well as all types of teaching/training activities, whether offered for credit toward a degree or certificate, on a non-credit basis, or through regular academic departments or by separate divisions, summer school or external division.

   Sponsored Instruction includes:

   • any project for which the purpose is to instruct any student at any location; recipients of this instruction may be Stanford students or staff, teachers or students in elementary or secondary schools, or the general public
   • curriculum development projects at any level, including projects which involve evaluation of curriculum or teaching methods; such evaluation may be considered "research" only when the preponderance of activity is data collection, evaluation and reporting
   • projects which involve Stanford students in community service activities for which they are receiving academic credit
   • activities funded by awards to departments or schools for the support of students
   • dissertation work funded by grants, including grants for travel in relation to a dissertation
   • Upward Bound Program, bringing local students on campus for classes
   • general support for the writing of textbooks or reference books, video or software to be used as instructional materials.

   ACCOUNTING FOR SPONSORED INSTRUCTION

   Activities that qualify as Sponsored Instruction shall be assigned to the Sponsored Instruction Task Service Type in the University accounting system. Space used in the conduct of Sponsored Instruction should be coded to Instruction (I) in the University's Space Inventory system.

   NOTE:  Research training grants are accounted for as Sponsored Research, not as Sponsored Instruction. 

3. OTHER SPONSORED ACTIVITIES (OSA)
   

   Other Sponsored Activities (OSA) are defined as academic projects funded by sponsors in which project activities involve the performance of work other than Sponsored Instruction or Sponsored Research. Since most projects in this category do not directly involve students and gain little, if any benefit from libraries, the F&A (indirect cost) rate applicable to Other Sponsored Activities is less than the rate for Organized Research or Sponsored Instruction.

   OSA may include:

   • Travel grants
   • Support for conferences or seminars
   • Support for University public events such as "Lively Arts"
   • Publications by Stanford University Press
   • Support for Stanford Youth Opportunity Program
   • Support for student participation in community service projects which do not result in academic credit
   • Support for projects pertaining to library collections, acquisitions, bibliographies or cataloging
   • Programs to enhance institutional resources, including Data Center expansion, computer enhancements, etc.

   ACCOUNTING FOR OTHER SPONSORED ACTIVITIES

   Activities that qualify as Other Sponsored Activities shall be assigned to the Other Sponsored Activities Task Service Type in the University's accounting system.   These activities are not to be assigned to the Sponsored Research, University Research, Student Aid, of any other Task Service Type. Space used in the conduct of OSA should be coded to Instruction (I) in the University's Space Inventory system.

3. OTHER TYPES OF SPONSORED PROJECTS

In addition to sponsored projects as defined above, the following specialized categories of agreements are defined and handled as sponsored projects.

1. INDUSTRY-FUNDED CLINICAL TRIALS
   

   Clinical trials are a subset of clinical research and must include all four of the following factors in order to qualify for the clinical trial indirect cost rate:

   1. The objective of the study is either:
      1. testing of a drug, device, diagnostic, treatment, intervention, or preventive measure including testing for an unapproved indication or
      2. data collection, or review of data generated or acquired in a clinical setting, to increase knowledge that would lead to enhanced safety and efficacy of a drug or device.
   2. The study must involve contact with human subjects or the review of patient care clinical data.
   3. The study must be performed primarily in patient care or clinical space to qualify as an off-campus project as outlined in the Research Policy Handbook 3.3.
   4. The study must be industry funded.

   For information regarding rates for Industry-Funded Clinical Trials, the investigator should contact the School of Medicine Research Management Group or the Office of Sponsored Research.

2. RESEARCH PARTICIPATION AGREEMENTS
   

   A Research Participation Agreement (RPA) is a form of sponsored project in which services of Stanford personnel, academic facilities, and/or laboratory equipment are employed on behalf of parties not otherwise affiliated with the University. A Research Participation Agreement is different from other forms of sponsored research projects in that a significant portion of the responsi-bility for the intellectual direction, interpretation, and/or outcome of the work rests with the outside user.

   Criteria for the establishment of Research Participation Agreements and process for their approval is outlined in Research Participation Agreements, Research Policy Handbook 10.6.

3. BETA TEST SITE AGREEMENTS
   

   Beta Test Site Agreements are contracts by which commercial vendors test and evaluate early product development. The proposed agreements come from companies that have agreed to provide various products and/or software to academic departments in exchange for evaluation. Beta Test Site Agreements must be processed as sponsored research projects through the Office of Sponsored Research.

4. EQUIPMENT LOAN AGREEMENTS
   

   Equipment Loans are agreements whereby a sponsor may loan certain equipment to Stanford, such as hardware, software and/or documentation for research use. One such example is an agreement whereby Stanford and a private entity participate in a joint research program using the company's equipment and share the results, including data. This type of agreement usually does not involve money, but enables Stanford and industry researchers the opportunity to use each other's facilities.

5. MATERIAL TRANSFER AGREEMENTS
   

   Material Transfer Agreements (MTAs) are contracts by which tangible research property, such as biological organisms, is provided by external sources to Stanford investigators for research, or by Stanford investigators to external researchers. Material Transfer Agreements are processed as sponsored research projects along with the fully endorsed MTA Routing Form through the Industrial Contracts Office within the Office of Technology Licensing.

6. INDUSTRIAL COLLABORATION AGREEMENTS
   

   Companies and universities are increasingly requiring documentation of inter-institutional research partnerships. Formal agreements in these cases will help to avoid misunderstandings and disputes over ownership of results. Collaboration contracts should be sent with a fully endorsed Proposal Routing Sheet to the Industrial Contracts Office within the Office of Technology Licensing. Stanford has its own standard collaboration agreement that may be used as well.

7. INTERGOVERNMENTAL PERSONNEL ACT (IPA) AGREEMENTS
   

   An IPA is a contract whereby Stanford employees may serve or cross train in federal agencies for limited periods of time. Some or all of their salary and staff benefits are paid by the federal agency under Title IV of the Intergovernmental Personnel Act, while they are still considered Stanford employees, and provision has been made for their return to Stanford.

   IPA proposals should be submitted along with a completed Proposal Routing Sheet to each school dean's office. The dean will review the appropriateness of the arrangement, and the need for certification by Stanford that the participating employee will be returned to the same or similar position upon completion of the assignment. The dean's office will notify the Stanford employee of its decision and forward the proposal to the Office of Sponsored Research for review and submission to the appropriate government agency.