Faculty-related university development policies
Faculty, staff and volunteers are encouraged to assist in the university’s development efforts but must ensure that all gifts meet the established guidelines and must understand that acceptance of all gifts is subject to the approval of the president of Virginia Commonwealth University and the Board of Visitors. In addition, faculty, staff and volunteers engaged in fundraising activities must abide by these policies and procedures.
The private fund-seeking process at VCU – corporations and foundations
To ensure an organized, professional approach all contacts with any prospective corporate and foundation prospect must be recorded and coordinated through the Office of Corporate and Foundation Relations. Before contacting CFR staff or potential funders, faculty must discuss potential projects and sources of support with their department chair and dean.
Faculty must also solicit the support of their director of development, where applicable, to ensure an internally coordinated approach. CFR staff will work with the director of development and the individual faculty members to design a successful fundraising initiative.
Subsequent phone calls, letters, visits, proposals or reports submitted to corporations, foundations and other organizations must be coordinated through the CFR. In many instances, a funding partnership will require coordination with the VCU Office of Research and Innovation.
Gifts vs. grants
The distinction between gifts and sponsored projects can be subtle. The term “grant” is defined very differently by various corporate and foundation funders and, therefore, can cause confusion. For that reason, CFR replaces the term with “sponsored project.” Please note that the use of the term “grant” by a funding organization does not automatically mean that the award is a sponsored project; instead, the terms of the award should be used to determine its status.
A sponsored project is any externally funded research or scholarly activity that has a defined scope of work and set of objectives that provide a basis for accountability and sponsor expectations. If any one of the following characteristics applies to a project, including commitments made in the proposal or required in the award agreement, it must be processed through VCU’s Office of Sponsored Programs, which is housed in the Office of Research and Innovation:
- Sponsor is the federal, state, or local government OR an agency that has been established simply as a flow-through of federal, state or local government funds for accounting purposes.
- Proposal or award requires a signature from an authorized official binding the university to the terms and conditions of the proposed project.
- Sponsor has written policies requiring indirect cost recoveries. Note: The absence of a policy does not preclude the award from being a sponsored program.
- Award contains provisions regarding ownership of intellectual properties (i.e., patents and copyrights).
- Sponsor requires the delivery of specific goods or services by the university (e.g., technical assistance or training).
- Award requires a detailed technical report (this is generally more than a simple status report that details a project’s progress).
- Award payments are contingent upon programmatic or fiscal reporting (e.g., milestones, invoices).
- Award includes budget restrictions (e.g., prior approval for re-budgeting and restrictions on certain budget categories, equipment or fringe benefits).
- Award includes a provision for audit.
- Award restricts or monitors publications or use of results.
- Award requires protection of sponsor and/or confidential information.
- Project involves the use of human subjects, vertebrate animals, radioisotopes on humans, radioactive materials, recombinant DNA, human body substances, etiologic agents or proprietary materials.
- Project must be submitted for review by the university’s Institutional Review Board (IRB).
Activities supported by a donor that are generally not considered sponsored projects and can be processed as gifts might include the following characteristics:
- Award provides support for broadly defined activities, such as professorships, endowments, building projects, instructional programs or unrestricted research. The donor can restrict the use of funds to a specific program area or purpose.
- Award contains only minimal requirements, generally relating to required donor pledge payments and the university’s commitment to effectuate the donor’s intent.
- Award requires only minimal reporting to the sponsor donor in the form of a general statement or report of how funds were used and the outcomes of the project. The unit or faculty member involved can provide the donor with a brief summary of the results of supported activities and/or a statement that expenditures were made in accord with the intent of the gift.
- Award is irrevocable.
All projects determined to be a sponsored project must be processed through the Office of Sponsored Programs. Activities supported by a donor that are generally not considered sponsored projects can be processed as gifts to the university.
Questions regarding whether a proposal or an award is a gift or a sponsored project should be directed to your school’s dean or to CFR staff in Development and Alumni Relations. In some cases, projects that do not need to go through the Office of Sponsored Programs at the proposal stage become sponsored projects at the award stage because of conditions set forth in the award agreement.
The Office of Sponsored Programs and University Advancement will work together to determine a project’s classification when there is a question about how it should be processed.
For priority projects, CFR staff:
- Assist in determining whether a project is appropriate for foundation funding;
- Brainstorm to identify possible funders for university or school/college/program priorities;
- Share information about foundations researched or visited;
- Alert interested parties to RFPs and other funding opportunities;
- Review and edit letters of inquiry and proposals;
- Facilitate proposal submissions, including gathering supporting documentation and preparing and shepherding cover letters from the president or provost;
- Meet with foundation officials, usually with an academic or administrative head, to discuss possible proposals; and
- Link the development operation with the Office of Sponsored Programs.
The university must have a coordinated approach to all private foundations. Phone calls, letters, visits, proposals or reports submitted to foundations must be coordinated through CFR. In many instances, a funding partnership will require coordination with the Office of Research and Innovation. All university representatives working to secure foundation support for VCU programs must follow the Board of Visitors approval clearance and tracking policies contained in this manual for all foundation contacts.
Qualified corporate sponsorships are classified as charitable donations when there is no expectation of a substantial return benefit other than the use or acknowledgement of the name, logo or product lines of the sponsor’s business. Exclusive sponsorship arrangements can be qualified as contributions, while any service provided would be considered a return benefit under the definition of quid pro quo (for clarification on corporate sponsorships and quid pro quo guidelines see section 10.7.10). The university must establish that a portion of the payment exceeds the fair market value of the benefit received by the business. Exclusive provider arrangements that limit the sale, distribution, availability or use of competing products result in a return benefit and are not a qualified sponsorship. Similarly, advertising revenue is subject to tax, although IRS regulations provide an exemption for advertising in student publications provided that all advertising sales are conducted by students.
University departments or organizations must receive approval to seek sponsorships from school-based development officers or Central development staff members before solicitation. Units must report all corporate sponsorships received to university Advancement Gifts and Records Management to ensure accurate accounting and acknowledgment in accordance with IRS regulations. For clarification, consult IRS Federal register Vol. 67, No. 80, published in April, 2005 (“Taxation of Tax-Exempt Organizations’ Income From Corporate Sponsorships”).
Seeking external support for student activities
While VCU student groups are not formally part of the university, they are identified with the institution. Particular student organizations are programs administered by the Office of the Vice Provost. As such, this office will determine the definition and characteristics of those organizations allowed to raise funds as part of VCU. These student organizations must comply with all university policies regarding external fundraising. Before seeking cash gifts, sponsorships or in-kind donations, these groups must have permission from the vice provost for student affairs. All sponsorships must be awarded to a university-affiliated foundation so that these donors are appropriately recognized and receipted for their charitable support. Student organizations cannot set up individual accounts at university-affiliated foundations for activities without permission from the vice provost and the director of the respective affiliated foundation.
Seeking external support for university-affiliated nonprofits
VCU houses numerous nonprofits that hold 501(c)3 (or similar) tax-exempt status from the IRS. In addition, faculty and staff might serve as directors or board members of nonprofit organizations that are not part of the university or the health system. VCU does not support the external fundraising efforts of these nonprofits. A faculty member should seek advice from university counsel and administration before applying for external funding for a nonprofit, especially when confusion could arise as to responsibilities of the institution. Units must not deposit funds at a university-affiliated foundation to support these nonprofits or nonprofit activities without permission from the vice president for advancement and the director of the respective affiliated foundation. External funding that is intended for contracted nonprofits or agencies must be administered through the Office of Sponsored Programs to ensure compliance with university policies.