Gifts (Donations) for Research

1. Can philanthropic gifts be treated as research income?

Yes, where certain requirements are met.  If a gift is given in connection with a specific programme of eligible research, and directly-related expenditure is incurred against such income in the Oracle Grants module, then the income will be treated as research income.

Breaking this down, there are three key requirements for a gift to be classed as research income:

1. Documentation:  It is an audit requirement for treating income as research income that the funder's intentions to make the gift to a specific research project are clear (i.e. this is reflected in paperwork with the donor). Therefore if a researcher or Department intend to spend a donation on research, they should ask the donor to document that the gift is intended for a named research project / theme.  [A donor who has not indicated the purpose for which a gift may be used, may be willing to include a stipulation in the gift agreement where it is the PI’s intention to spend the gift on research activity.]  If a donor makes a general gift for unspecified purposes, and the department decides (at its discretion) to spend the donation on research, those funds will not be reportable as research income/expenditure. There must be documented evidence that funds were given explicitly to support research at the outset.
2. Eligible Research:  The Higher Education Statistics Agency (HESA) defines research income as "all income … that conforms to the conventions of the Frascati  definition of research”[see http://www.admin.ox.ac.uk/researchsupport/applying/frascati/]
3. Audit of expenditure:  Research income in the University's financial statements is generated by expenditure against research projects (i.e. the project has been (a) set-up in the Oracle Grants module, and (b) the department has incurred expenditure on that project).
   
   With respect to (a), it is an audit requirement for treating a gift as research income that an RPF1 form is issued to Research Accounts by Research Services. Research awards can be set-up on the Oracle Grants Module where:
   
   i.    The funding is in support of "eligible research" as defined by HESA/Frascati, and
   ii.    The activity would be considered under charity law as being exempt from corporation tax under guidance issued by HMRC and the Charity Commission.
   
   With respect to (b), the Department should ensure that a clear audit trail is maintained to demonstrate that the expenditure was incurred on eligible research.  The direct and indirect costs of research are eligible costs in accordance with HESA guidance.

2. Why is it important that research income is categorised and 'counted' accurately?

Research income is important for Departments and the University for four principal reasons:

1. As a research activity and performance measure e.g. in internal department and University reporting and management; for national statistical collections; and various university 'league tables'.
2. Research income informed the determination of quality profiles in the RAE2008 exercise (and hence HEFCE mainstream QR funding). Research income is likely to act as a more quantitative indicator (at least for certain units of assessment) in the forthcoming Research Excellence Framework and future HEFCE mainstream QR allocations. (Oxford received £74.5M of mainstream QR funding in 2009/10.) The allocation of these funds to Divisions is determined by the Planning and Resource Allocation Committee (PRAC).
3. Research income from UK and overseas charities can be eligible for HEFCE Charities Support Funding (CSF). (Oxford received £27.8M of CSF in 2009/10.) HEFCE provides additional funding to institutions in proportion to the eligible income they receive from charities for research, reflecting the fact that charities generally do not meet the full economic costs of research.
4. Research income from UK industry, commerce, and public corporations is used to determine allocations of HEFCE's Business Research Element funding. (Oxford received £3.5M of Business Research Element funding in 2009/10.) HEFCE provides funding to support institutions undertaking research with UK business and industry. This is allocated in proportion to the income they receive from UK business and industry for research.

For information on how both the CSF and Business Research elements of QR flow to Departments see [https://www1.admin.ox.ac.uk/researchsupport/oxonly/awards/qr/].

3. Does Research Services deal exclusively with research grants and contracts and the Development Office with gifts

• ALL donations are supported by the Development Office. The Development Office will support researchers and Departments in the administration of all gifts, including but not limited to, gifts for research.  The usual procedures and checks of the Development Office and CRD will apply to gifts for research.(see below for more detail).

• ALL donations for research are managed via the Oracle Grants Module. Where the Department intends that a gift shall be spent on research, then the Development Office will inform Research Services prior to finalising documentation with the donor.  Research Services will provide advice on the content of the documentation with a view to classifying the gift as research income.  Research Services will arrange for a research account to be set up by Research Accounts on the Oracle Grants module. Please refer to Decision Flow Chart - Donations (37kb) and the points below for further details on how the Offices will work together.

4. Why is it important that ALL donations are administered by the Development Office?

1. All gifts received by the University are recorded in the “Donations Database” by Gift Registry in the Development Office.
2. The Development Office stewardship programme is open to all donors, including those who give for research purposes.
3. All  donations must be subject to scrutiny by the Committee for the Review of Donations.
4. Gift Aid is claimed on all applicable gifts.

5. What is the Development Office role in administering a gift for Research?

HESA require that all reported external research income must be accompanied by documentation which states that the donor intends the gift to be used for a named research project.  Accordingly, the Development Office has agreed to expand their procedures for managing donations to include the following for every gift administered:

1. The PI / Department will be asked whether the donation will be spent on research. [NB: A donor who has not indicated the purpose for which a gift may be used, may be willing to include a stipulation in the gift agreement where it is the PI’s intention to spend the gift on research activity.]
2. Where the PI / Department intend to use the funds for research, the donor will be invited to agree a research theme.
3. Where the PI and Donor have agreed on a named research project or theme, the Development Office will liaise with Research Services to ensure that the documentation governing the donation meets with HESA’s requirements.
4. The appropriate documentation is signed by the sponsor and sent to Research Services, via the Development Office.
5. The Development Office will inform Gift Registry that expenditure on the award will be managed via the Oracle Grants module.

6. What is the role of Research Services in administering a gift for research?

1. The Development Office will inform the relevant Research Services Divisional Team about any donations which the donor and/or the PI/Department intend to be spend on research activity.
2. Research Services will advise the Development Office on the description of research to be included in a gift agreement or exchange of letters which accompanies a gift.  The purpose of the description is to satisfy HESA’s requirements on reporting externally funded research income (ie the Frascati definition).  It is not necessary to include a full project description as there will be no deliverables.
3. Arrange for the Department to prepare an OG. It is for Department to determine whether FEC principles should apply to a gift for research and whether indirect and estate costs will be retained by the Department or allocated to the project for expenditure by the PI.
4. The Development Office will provide Research Services with a copy of the fully executed gift agreement.  On receipt Research Services will:

1. Check that the paperwork accompanying the gift satisfies the Frascati definition of Research; ensure the activity is except from corporation tax.
2. Assess whether the award is eligible for industrial or charitable QR.  The normal rules on QR apply.
3. Raise an RPF1 in respect of the Gift.

7. What is the Department’s role in administering a gift for research?

1. Departments should alert the Development Office to all gifts, including but not limited to, gifts for research.
2. If the gift is intended to be spent on research, the Department should inform the Development Office, who will inform the relevant Divisional Team in Research Services.
3. Researchers and PI’s will work with Research Services to ensure the documentation governing the gift will satisfy the HESA requirements on research income (most particularly, the Frascati definition of research).
4. The Department will provide Research Services with an OG in respect of the gift. The level of detail required in the OG is at the discretion of the Department.
5. Departments will maintain an auditable record of expenditure within the Oracle Grants module which shows that the income was spent on eligible research.

8. How will managing a gift via the Research Grant Module affect the sponsor?

The income given as a gift for research will be managed, from the donor's perspective, the same as a donation for any other purpose including CRD Review, Stewardship, Gift Aid etc.  Although gifts for research must be set up on the Oracle Grants Module to be classified as research income, Research Accounts will not invoice the sponsor where the income is given as a gift.  Instead, Gift Registry will manage the income of funds.  Research Accounts will “invoice” Gift Registry for the funds, so that the income can be spent via the Oracle Grants module.

9. Do the usual FEC rules on research apply to Gifts for Research?

The general advice is that the full economic cost (FEC) of a research project should be identified irrespective of the source(s) of funding that will support the activity. Research projects funded by gifts will incur costs beyond the directly-incurred projects costs in the same way as projects funded by other types of funders. The extent to which income from donors is used to contribute to overhead costs is something that would be agreed on a case-by-case basis by Heads of Department as in the case of other funded projects who do not fix the type and amount of FEC costs that can be recovered.

10. Does research income from gifts for research count towards determining HEFCE QR funding?

Yes, provided Research Services has issued an RPF1 and the project is set up on the Oracle Grants module. Research income from gifts for research contribute to the University's overall research income and hence mainstream QR allocation.

It is unlikely (although not impossible) that genuine gifts for research would meet the eligibility criteria for determining HEFCE Charity Support Funding (i.e. won in open competition following external peer review). However, gifts from UK business and industry which are eligible to be treated as research income count towards the income used to determine Business Research Element funding.

11. What is the difference between a grant, a contract and a gift (or donation)?

HEFCE sets out definitions of grants, contracts and gifts as follows:

A grant is a financial assistance mechanism a sponsor uses to award funds for specific research studies. The responsibility for the performance of the project rests primarily with the grant recipient, who commits resources to fulfill expectations of the sponsor under specified constraints.

A contract is an award establishing a legally binding procurement relationship between the sponsor and the recipient. It obligates the recipient to furnish a project outcome or specific service that is defined in detail in the written contract, and it binds the sponsor to pay for it.

A gift is a voluntary transfer of money by a donor, made with philanthropic intent. After receipt, the gift must be owned in full by the receiving institution, and the recipient institution must retain complete ownership of any resultant work or project. The donor may not retain any explicit or implicit control over a gift after acceptance by an institution.

Research funding awards from Research Councils and UK Charities (Wellcome Trust, CRUK etc) are almost always considered to be research grants. Likewise funding from overseas charitable organisations and foundations (e.g. Gates Foundation, Mellon Foundation) are classified as research grants where they are associated with research activities and where the other elements of a grant-giving arrangement are present. Research contracts are most typically, but not exclusively, entered into with commercial organisations and government departments/authorities (it being the nature and terms of the resulting agreement that determines the status as a grant or contract).

12. A PI/Department has a research project that benefits from lots of (often small) individual gifts. How should this be set-up and managed?

All donations should be administered via the Development Office in the usual way, but the Office will usually consult with Research Services and arrange for the income to be classed as research income where the gift is above £10K.