Policy No. C.1.2
Initiated by: Development Office and Financial Services
Approved by: MBL Director/CEO
Date: October 31, 2007
Distribution: MBL Staff
1.0 Policy Statement:
This policy defines the responsibilities when seeking gifts or grants from foundations and corporations, the accounting for the award received including, ways to differentiate between gifts or grants; the indirect cost recovery rate on potential awards; the compliance requirements associated with the awards; and the consequences of violation of the policy or underlying procedures. It should be used in conjunction with other policies including, but not limited to, the Code of Conduct, the Employee Conflict of Interest, and the Allegations of Misconduct.
The Development Office, Grant Accounting, the Office of Sponsored Programs, and the Principal Investigator (PIs) or designated Program Director must work as an award team to assure compliance with this policy. All gifts or grants being sought from foundations or corporations for research or education must be prepared by the Corporation and Foundation Director (C&F) with support from Sponsored Programs as well as a PI or Program Director and then reviewed and submitted through the Development Office. All awards received are made to the institution so effective stewardship of the funds requires broad administrative attention. The C&F Director and the Financial Services unit are responsible for the proper accounting of the funds receipt and use, and the development of any financial reports required. As the MBL receives over half of its funding from Government Agencies for research and education, the Office of Sponsored Programs oversight for awards from corporations or foundations is often necessary to assure compliance.
These administrative units must perform the following roles: provide effective stewardship of the foundation and corporate relationships, account for the awards appropriately, and assure compliance with government regulations and this policy. The goal is to avoid inherent or perceived conflicts and to ensure objectivity and consistency in managing all aspects of foundations and corporations awards.
2.1 The Development Office
The Development Office of the MBL generates private philanthropic support for the academic mission and programs of the Laboratory from individuals, corporations, and foundations. It seeks outright gifts, grants, and multi-year pledges which are either unrestricted or are restricted to endowment or current use support of scholarships, fellowships, faculty support, research, teaching, library, construction and the renovation of campus buildings. It mobilizes support through periodic comprehensive campaigns, through the Annual Fund, through corporate and foundation gifts, and through special purpose fund-raising efforts. The professional staff of the Development Office works closely with members of the Board of Trustees, the Corporation and other volunteers to increase participation in giving to the MBL. The Director of External Affairs and the Corporate and Foundations Director work to coordinate requests and secure support for MBL programs and priorities as identified by the Director/CEO and the Board of Trustees.
2.2 Primary Responsibilities of the Office of Corporate and Foundation Relations
Corporate and Foundation Relations identifies researches, cultivates, solicits and stewards relationships with top national, international, regional and local corporations and foundations in an ongoing effort to initiate and sustain their support. The office also acts as a liaison between Principal Investigators (PIs) or other MBL authorized Administrators and the Development Office at large. The Director of Corporate and Foundation(C&F) Relations and the Director of External Affairs serve as a resource for PIs and Administrators seeking direction and information which will help them raise funds in support of education and research activities at the MBL. These roles are instrumental since PIs and Administrators are not permitted to approach private funding sources without the coordination and approval of the Development Office.
2.2.1 Serve as the MBL point of contact with the corporation or foundation and manage the totality of the relationship between the Laboratory and the corporation or foundation.
2.2.2 Provide guidance within the MBL in selecting and approaching corporations and foundations for funding for programs.
2.2.3 Assist in developing grant proposals and related materials by PIs or other authorized MBL Administrators.
2.2.4 Prepare all proposal budgets and re-budgeting requests for adherence with the corporation or foundation guidelines and review with Sponsored Program Administration before submission.
2.2.5 Assist in the negotiation process with corporate contacts or foundation program officers reviewing drafts and offering suggestions for rewrites and determination of the final terms and conditions of the award.
2.2.5 Track submitted, pending, or funded requests to corporations and foundations.
2.2.6 Receive award letter and check and fill out and submit an asset transmittal form to Financial Services with a request to establish a new cost center for the award.
2.2.7 Collaborate with the MBL Controller to determine the proper accounting treatment of the application and award as a gift or grant per the Guidelines in Section 3.0.
2.2.8 Notify PIs or Administrator of interim and final narrative and financial report requirements and any other due dates as specified by the corporation or foundation.
2.2.9 Determine how any residual equipment and/or funds from an award will be disposed of by consulting with the PI and Financial Services.
2.3 Primary Responsibilities of Grant Accounting (Post Award)
2.3.1 Review agreement budgets with the corporation or foundation and establish new job centers for awards including set up procedures.
2.3.2 Oversees all charges including accounting of costs on active jobs and all necessary billing to the corporation or foundation.
2.3.3 Assist in developing financial reports for submission by the C&F Director to the corporation or foundation as required per the award agreement.
2.3.4 Complete Financial Close-Out of all completed awards assuring proper reporting to the C&F Director.
2.4 Primary Responsibilities of Principal Investigators (PI) or designated Program Director
2.4.1 It is the responsibility of the PI to understand and comply with this MBL policy.
2.4.2 It is also the responsibility of the PI to understand and comply with the sponsor’s policies, as well as other applicable policies.
2.4.3 Inform the Development Office before initiating a contact with a private sponsor (foundation, corporation, etc.) to discuss a potential gift or grant. The purpose of this requirement is not in any way intended to discourage such solicitations. On the contrary, PIs play a central role in the solicitation of private gifts and grants. But this cannot work effectively without coordination because it may be that the MBL is considering other initiatives with the same sponsor that the PI wants to approach.
2.4.4 Submit a Proposal Summary Form (available from the Office of Sponsored Programs) well in advance (preferably one month) of the due date for application to Sponsored Programs Administration to assure institutional resources are available to support the proposal, that an acceptable indirect cost recovery rate is being utilized, and any proposed cost sharing is acceptable.
2.4.5 Submit all gift or grant proposals to the C&F Director for their review prior to submitting to a corporation or foundation sponsor.
2.4.6 Once an award is made, the Office of Financial Services will make the determination classifying the award as a gift or grant.
2.4.7 Monitor and ensure charges to the award are related to the approved budget.
2.4.8 If cost sharing is applicable the source should be clearly identified prior to submission and accounted for properly if an award is received.
2.4.9 Oversee the purchase of equipment and general supplies authorized in any award. Note that the employee Conflict of Interest applies to these purchasing activities and that disclosure of any vendor relationships is important. Equipment and supplies purchased with awards are property of the MBL.
2.4.10 Ensure any budget changes to an award are appropriate and filed in a timely manner with the C&F Director and Sponsored Programs.
2.4.11 Ensure performance/technical/final reports or deliverables are completed and submitted on scheduled basis with the corporation or foundation.
2.5 Primary Responsibilities of Sponsored Programs Administration
2.5.1 Review and approve the Proposal Summary Form as well as all grant proposal budgets and re-budgeting requests for adherence with MBL policies and practices.
2.5.2 If an award involves a contract or agreement, review and approve all terms and conditions. This is particularly important if the proposed activity involves human subjects, laboratory animals, radiological hazards, biohazards, or recombinant DNA.
2.5.3 Prepare and negotiate any required sub-awards and amendments of sub-awards to other institutions per the request and approval from the PI or designated Program Director overseeing the award.
2.5.4 Collaborate with the Grants Accountant and Controller to assure proper award accounting including PIs time and effort and guarantee MBL’s compliance with regulations and laws.
2.5.5 Co-direct the administration of invention disclosures and Intellectual Property (IP) that belongs to the MBL with the Chief Financial Officer and coordinate IP activities with Brown Technology Partnerships.
3.0 Guidelines for Gift or Grant determination
Government funding always implies a Sponsored Program Grant. For awards from a foundation or corporation the following analysis will help make the correct classification for accounting purposes.
The following conditions characterize a sponsored program contract or agreement, and should help to distinguish such arrangements from gifts. Any analysis of these conditions must also take the intent of the donor/sponsor into consideration.
3.1.1 Specific statement of work
Sponsored program grants are typically awarded to the MBL in response to a proposal to accomplish a specific statement of work and commitment to a specified project plan. While gifts may be restricted to a general purpose, (e.g., research, construction of a building, or library support), a sponsored program will usually entail a more detailed project methodology, (e.g., a series of experiments to test a particular hypothesis, or support to perform a particular activity). This statement of work is typically supported by both a project schedule and a line-item budget, both of which are key to financial accountability, described below.
3.1.2 Detailed financial accountability
The written contract or agreement typically includes detailed and complex financial accountability, including such conditions as:
a. A line-item budget related to the program plan, usually including F&A (indirect) cost recovery. The absence or prohibition of indirect cost recovery does not automatically preclude the award from being a sponsored agreement.
b. A specified period of time in which project funds may be expended, usually defined with “start” and “stop” dates.
c. A requirement to return any unexpended funds at the end of that period.
d. Regular financial reporting and audit.
These kinds of conditions generally define the level of financial accountability associated with a sponsored project. They are collectively indicative of the increased level of financial accountability associated with such projects.
3.1.3 Disposition of properties (“deliverables”)
Sponsored program contracts or agreements also usually include terms and conditions for the disposition of tangible or intangible properties, including, for example, hardware, data, or intellectual property. The presence of such terms and conditions in the agreement indicate that the activity is a sponsored program grant.
A gift, on the other hand, is defined as a contribution with no reciprocal benefit to the donor. In general, the following characteristics describe a gift.
a. No contractual requirements are imposed. However the gift may be for a stated purpose, with the use of the funds restricted to that purpose.
b. The award is typically irrevocable, with no specified “period of performance.”
c. 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 gift stewardship, rather than as a contractual obligation.
The Controller will make routine final determinations of the accounting treatment using a guide for evaluation. This guide is available in the Financial Services office. Any disputes will be resolved by the Chief Financial Officer.
If, after reviewing definitions and considering the intent of the source of funding and nature of the agreement in question, there remains a question about the proper classification of an award, the Controller is available to review the criteria with the PI.
Please also note that the Development Office may deem it appropriate to count some grants towards their individual fundraising goals, send thank you notes, and may even record the foundation or corporation as a donor in the MBL’s glossy annual report for public relations purposes.
4.0 Indirect Cost Recovery Rate
All gifts or grants for Sponsored Programs generally will require some facilities or administrative support that will create costs that may not be incorporated in the award. To properly cover these costs it would be preferable that the indirect cost recovery rate on awards be equal to the rate negotiated with the Division of Cost Allocation of the DHHS (2007 rate is 57.8%). On the other hand many foundations and some corporations are unwilling to provide awards with such a high indirect cost recovery rate. Outlined below are some guidelines that should be followed in negotiating the cost recovery rate on gifts or grants.
4.1 A floor of 10% has been established for all gifts or grants for Sponsored Programs at the MBL. Applications for gifts or grants with indirect less than this floor must include a justification for a requested exception. Any exceptions to this floor must be approved by the Director/CEO before submission.
4.2 This floor can also be realized by incorporating in the direct expenses of the application funds to cover some of the indirect pool costs such as Library usage, IT support, lab rental equivalents, etc.
5.0 Violation of Foundation and Corporation Grants and Gifts Stewardship Policy
Violation of this policy has the potential to put the MBL in an awkward position or, in the worst case, in violation of the law. Therefore, the MBL reserves the right to reject the offer of a grant or gift if this policy is not followed. In addition, employees who violate this policy may be subject to disciplinary action. Any member of the MBL Community having knowledge of violation of this policy should contact the C&F Director, the Controller, or the Compliance Coordinator.
6.0 Policy Clarification and Updates:
Policy clarification and updates are available from the Development or Financial Services Offices.