Gifts vs. grant guidelines

NAU Foundation (NAUF)

The Northern Arizona University Foundation is a 501(c)(3) non-profit organization working to advance the teaching, research, and public service endeavors of Northern Arizona University by generating private contributions from individuals, corporations, and foundations to supplement the University’s state and federal revenues for capital, operating, projects, programs, and student assistance funds. The NAU Foundation is the catalyst and conduit through which charitable support and endowment income flow to provide immediate and long-term support for the University and all of its endeavors.

In support of this mission, Corporate and Foundation Relations (CFR) offers range of services that build and support positive and mutually beneficial relationships with companies, private foundations, and other private organizations.

Applying organizations

Unless explicitly prohibited by the sponsor, the NAUF serves as the applicant organization for all charitable support applications. The Office of Sponsored Projects (OSP) serves as the applicant organization for all exchange transactions.

The following guidelines describe the difference between two types of sponsored project support from private, non-government sources – exchange transactions and charitable support – and how this support is secured and administered at Northern Arizona University.

The primary difference between an exchange transaction and charitable support is intent.

Charitable support 

A charitable support application is any proposal or request to an individual, corporation, foundation, or non-profit organization that meets the definition of a sponsored project (i.e., proposals including a specific statement of work, detailed budget and PI) but is philanthropic and charitable in intent.

As determined by the Internal Revenue Code, charitable support is financial support in the form of donations to a tax-exempt organization (such as NAU and NAUF) exclusively for religious, charitable, scientific, literary, or educational purposes. From Internal Revenue Code, Publication 526, Charitable Contributions:

“A charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value… Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals.”

In general, the following characteristics describe charitable support:

• No contractual requirements are imposed. However, the contribution may involve a gift agreement that outlines the funds be for a stated and restricted purpose.
• The awards are typically irrevocable.
• There is no formal fiscal accountability beyond periodic progress reports and reports of expenditures. These reports may be thought of as a requirement of good stewardship, rather than as a contractual obligation.
• The funds are considered “charitable” under IRS federal tax law.
• There is no exchange of commercial value.
• If the money is being used for charitable purposes, it is considered a “gift,” although a private funder may refer to the contribution as a “grant.”

Requests for charitable support from foundations or corporations are submitted by Corporate and Foundation Relations, Advancement (CFR) through the NAU Foundation and funding is received by the NAU Foundation. Under certain circumstances, awarded funds may be administered by the OSP after they are received by NAUF.

The funder’s description of funds as a gift, grant, sponsored project, or other terminology has no bearing on NAU’s or NAUF’s categorization of it as a gift, charitable grant, or sponsored project.

Exchange transaction

An exchange transaction is when a resource provider receives a direct benefit related to the dollar amount they provide to the recipient. Exchange transactions create a relationship between a sponsor and the university where funds are awarded for the pursuit and completion of specific program or research objectives or tasks, or the delivery of specific products, with commercial value and within specified timelines where, through an agreement or contract, the sponsor holds the university accountable for successful and timely completion of the work and “hand-over” of the deliverables. In an exchange transaction, both the university and its faculty are usually responsible for reporting on progress and results to the sponsor at intervals or milestones identified in the agreement or contract. Sponsors usually stipulate as part of the terms and conditions of an award that they have discretion to examine, even on a line-item basis, the expenditures of the funds, and to disallow and demand repayment of any funds deemed by the sponsor to have been expended for purposes other than direct support of the defined activities. If the funded program or research is not pursued, or the deliverables not attained, sponsors often reserve the right to recoup all or some of the sponsored award from the recipient.

The OSP submits requests and administers all exchange transactions on behalf of the University.

Office of Sponsored Projects

The OSP facilitates external funding between the university community and sponsors such as federal, state, local, and tribal governments and private-sector sponsors. The OSP also is responsible for accepting awards and has the responsibility to negotiate awards that protect the rights of faculty, staff, and students to use, publish, and otherwise disseminate the results of their creative activities, and that comply with university and sponsor laws, regulations, and policies, including those of the state and federal government.

A sponsored project is any externally funded activity for which there is a:

1. Specific statement of work that is expected to be completed within a defined period of time;
2. Detailed budget; and
3. Designated principal investigator (PI) or program director (PD). A PI is typically a faculty member who is submitting a proposal to an external sponsor.

Once an award is made, the PI has primary responsibility for technical compliance, completion of programmatic work, and fiscal stewardship of funds. A sponsored project may support university activities including but not limited to research, training, instruction, public service, and construction. Sponsored projects are funded by numerous public (local, state and federal government agencies and public organizations), tribal governments, and private, non-government funding sources.

Who can help me?

If you have questions regarding Nongovernmental Funding Guidelines, please contact Petra Schaumburg-Fitch, Director of University Development-Advancement.

Questions regarding sponsored projects or exchange agreements should be directed to NAU-OSP@nau.edu, 928-523-4880.