Gift vs. Grant or Contract Determination

I. Policy Summary

New Jersey Institute of Technology (NJIT) receives external support in the form of money, property, or services to further University purposes. To ensure proper accounting, legal compliance, and administrative oversight, these awards must be classified as either a Gift (non-exchange) or a Grant/Contract (exchange).

II. Policy Purpose

This policy provides a framework for classifying external funds in compliance with GASB/FASB accounting standards and the University’s Chart of Accounts. Proper classification ensures that:

• Revenue is recognized in the correct fiscal period.
• Facilities and Administrative (F&A) costs are appropriately applied.
• Compliance, reporting, and stewardship obligations are met.

III. Policy Scope and Applicability

This policy applies to all NJIT units, specifically the Office of Development and Alumni Relations (Development) and the Office of Research.

IV. Definitions

• Gift: A voluntary, non-reciprocal transfer of resources. There is no expectation of direct economic benefit or "quid pro quo" services.
• Grant or Contract: An award in exchange for specific deliverables (e.g., technical reports, data, or products) provided within a defined period of performance.
• Exchange Transaction: A reciprocal transfer where the sponsor receives a benefit of roughly equal value to the resources provided.
• Non-Exchange Transaction: A transfer where the sponsor does not receive direct compensation or goods in return.
• F&A (Indirect) Costs: Costs incurred for common institutional objectives (e.g., utilities, administration) that cannot be uniquely assigned to a specific project.
• Sponsor: Any federal, state, local, or private entity providing financial or material support.

V. Policy Statement

1. General Principles

Classification requires professional judgment. The terminology used by a sponsor (e.g., calling a contract a "grant") is not solely determinative.

Research Determination: All awards from federal or state government sources (including pass-through) related to research are classified as Grants/Contracts and administered by the Office of Research.

• Regardless of the source, an award is a Grant/Contract if it meets all the following:
  1. Supports activities within the research enterprise.
  2. Requires regulatory monitoring (IRB, IACUC, etc.).
  3. Includes terms for Intellectual Property (IP), confidentiality, or licensing.
  4. Has a specified period of performance and deliverables.
  5. Requires fiduciary reporting (expenditure certification, effort reporting).

2. Accounting and Revenue Recognition

• Gifts: Recognized as revenue in the period received. Pledges are recorded at their present value.
• Grants/Contracts: Recognized as revenue only as qualified expenditures are incurred.

3. Conflict Resolution

If the Office of Research and Development cannot agree on a classification:

1. The offices will review documentation against the Decision Tree (Appendix A).
2. Unresolved cases escalate to the VP for Development and the SVP for Research.
3. Final determination rests with the SVP for Finance and Chief Financial Officer (CFO).

VI. Review Criteria

The following table serves as a guide for classification. The presence of a single factor does not mandate a designation; the award must be viewed in its entirety.

VII. Authority and Responsibility

The Office of Research, Development and Alumni Relations, and Finance share institutional authority for the administration of this policy.

Contact Information

For questions regarding fund classification, compliance with University guidelines, or adherence to 2 CFR 200 (Uniform Guidance), please contact:

• Office of Research: Executive Director, Sponsored Research Programs Administration
• Office of Development: Associate Vice President of Development Operations

Appendix A: Decision Tree for Funding Classification

To determine if external support should be processed as a Gift (through Development) or a Grant/Contract (through the Office of Research), follow the diagnostic flow below.

Frequently Asked Questions (FAQ)

1. The sponsor calls the award a "Grant," but there are no deliverables or IP requirements. Is it still a grant?

Not necessarily. As per Section V(i), the sponsor’s terminology is not determinative. If the funds are a voluntary, non-reciprocal transfer for general support without a specific "quid pro quo" (deliverables, audits, or IP terms), it may be classified as a Gift.

2. What is a "Research Gift" and how is it different from a "Research Grant"?

• Research Gift: Funds restricted to a specific researcher or lab to support their general work. There are no technical milestones, no return of unspent funds, and no IP claims. (Administered by Development).
• Research Grant: Funds provided for a specific project with a defined scope of work, budget, start/end dates, and required technical reports. (Administered by Office of Research).

3. If a corporation provides funding but requires a copy of the final research data, is it a gift?

No. Requiring specific data, technical reports, or a right to review findings constitutes a deliverable (Exchange Transaction). This should be processed as a Grant/Contract.

4. Why does it matter which office handles the funds?

Correct classification ensures NJIT complies with Uniform Guidance (2 CFR 200) for federal funds and GASB/FASB accounting standards. It also ensures that Facility & Administrative (F&A) costs are recovered where applicable and that the Office of Research can provide necessary oversight for compliance (e.g., human subjects or lab safety).

5. What happens if an award includes a "Right to First Refusal" for Intellectual Property?

Any language regarding the ownership, licensing, or control of Intellectual Property (IP) automatically classifies the award as a Grant or Contract to be managed by the Office of Research.