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The factors below are important considerations in determining whether a new fund is a gift or a grant. A new fund may have characteristics that fall within both categories; thus, all factors must be weighed in order to make a final determination.
Notes:
- No single indicator is, by itself, a characterization of an award vs. a grant. All factors must be weighed to make a final decision.
- Grants are reciprocal in nature - each party is giving and receiving something of relatively equal value in the transaction.
- A gift or contribution is an item given 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.
- Often, foundations will require financial reports or narratives from the recipient in order to demonstrate that they, as a sponsor, are meeting the criteria required of a charitable organization. These financial reports by themselves do not constitute conditions of a "grant."
- Stewardship alone in financial reporting does not constitute a condition of a "grant."
- U.S. Government (state or federal) money should always be treated as a grant.
| CATEGORY of INDICATOR | FACTOR INDICATIVE of a "GIFT" | FACTOR INDICATIVE of a "GRANT" |
|---|---|---|
| Mission of and benefit to resource provider (i.e. donor of a gift or sponsor of a grant) | Items are directly related to the recipient's mission, while only indirectly related to the resource provider's business. This is typical of family foundations. Example: Resource provider asserts that it is making a donation to support a program. | Items are directly related to the sponsor's business activities; may or may not be directly related to the recipient's mission. (i.e. organizations with a specific mission such as Intel Corporation) Example: Sponsor asserts that it is transferring resources in exchange for a benefit. |
| Value Exchange | The donor receives no or nominal value in exchange for the funding provided. No deliverables (reports or rights) are provided to the donor in exchange for the funding. | The items are of particular value to the resource provider. The resource provider is entitled to receive value, which may include reports, intellectual property rights, publication rights, data, etc. |
| Scope of Work | The donor expresses the goal of an activity rather than the "how to's". There is typically no time period associated with the use of the gift. | The sponsor determines the "how to's", such as the protocol of testing (in the case of research) or the method of delivery. Example: American Cancer Society evaluating research results; sponsor detailing how funds should be spent according to budget line items There is a specified time period associated with the use of the funds or items, i.e. a period of performance, including start and stop dates. |
| Penalty for Non-Performance | The only penalties for failing to deliver the items on a timely basis are returning unspent funds. No penalties are incurred for failing to use all the funds, or to deliver the items promised. | There may be penalties for failing to deliver the items on a timely basis that may contain punitive damages. Sponsor may include audit & compliance terms. |
| Award terms and conditions, such as Publication and Data Review | The donor may request information related to the use of funds but places little or no restriction on review of items before they are made available.
Example: No preliminary review by the donor is requested before publications are issued. | The sponsor may place restrictions on how the items are reviewed before being made available to a wider audience.
Example: The sponsor asks to review publications and/or data in order to ensure that its confidential information is not disclosed. |
| Cost and Budget Information | There is no requirement for a line item budget or any restriction on the use of the gift other than it must be consistent with the stipulation of the donor. Gift funds do not have to be returned to the donor. | A grant is preceded by a request for funding for a specific purpose and the request typically includes a detailed, line-item budget describing how the funds will be used, including the appropriate overhead/ indirect cost. Unspent funds must be returned to the sponsor. |
