UCR

UCR Policies and Procedures

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Campus Policy Number: 200-45

Extramural Fund Classification

Policy Owner: Associate Vice Chancellor-Resource Planning and Budget
Effective Date:
5/11/2011

Purpose

This policy was written to accomplish the following:

  • To aid in the proper classification of all extramural funds received by the campus.  The following sources have been identified:
    1. Gifts
    2. Research, Training, and Public Service Contract (including incoming Purchase Orders), Grant, or Cooperative Agreements
    3. Service Agreements
    4. Sale of Standardized University Goods and Services  --  Sales and Service Activities
    5. Auxiliary Enterprises
    6. Agency Accounts
  • To provide definitions and list criteria to help differentiate between gifts, contracts, grants, service agreements, sales and service activities, and agency funds.
  • To establish administrative responsibility for the management of extramural funds.

Classification and Handling/Approval

Judgment must be exercised in the classification of extramural funds in accordance with the intent of University policy since in many situations not all of the specific characteristics listed for each type of extramural fund will be present.  In other words, the decision as to classification cannot be made based upon the presence or absence of a single characteristic or criterion, i.e., each transaction must be reviewed in toto in order to determine its proper classification.

The classification of extramural funds is determined on a case-by-case basis, utilizing the definitions and specific characteristics listed in this policy.  (Note:  The definitions and specific characteristics listed in this policy are representative and are not meant to be all-inclusive.)

The terms contract, grant, cooperative agreement, or service agreement as used in this policy refer to the instruction, research, and public service functions of the University.  As stated in University policy, generally, sales to a non-University customer should be considered a grant or contract, unless the sale is based on established unit prices, and like services or products are sold to other non-University customers or University department based on the same unit prices (allowing for the indirect cost differential charged to non-University customers).

Regardless of the designation of an extramural fund award as a gift, contract, grant, cooperative, or service agreement, it will be subject to the research review process as well as to the administrative rules and procedures that apply to all University funds.  This includes, but is not limited to Regulation 4 as set forth in Academic Personnel Manual section 020 entitled Special Services to Individuals and Organizations.

As stated in APM-020, regulation 4 deals with services to individuals and organizations outside the University. Such service may be justified if it does not interfere with University commitments and if 1) it gives the individual experience and knowledge of value to his teaching or research; 2) it is suitable research through which the individual may make worthy contributions to knowledge; or 3) it is appropriate public service.  Additionally, Regulation 4 states that University laboratories, bureaus and facilities are not to be used for tests, studies, or investigations of a purely commercial character, such as mineral assays, determination of properties of materials, the performance of efficiencies of machines, analysis of soils, water, insecticides, fertilizers, feeds, fuels, and other material, statistical calculations, etc., except when it is shown conclusively that satisfactory facilities for such services do not exist elsewhere. [emphasis added].

The classification and handling or approval of each type of extramural fund is assigned to the office(s) listed below.  Whenever additional guidance or assistance is needed concerning the classification of an extramural fund, the office(s) identified should be contacted.

     

    Definition:

    Gift -- an irrevocable, charitable contribution to the University, including the UCR Foundation, which is intended as a donation, bestowed voluntarily and without expectation of tangible compensation, and for which no contractual requirements are imposed.

    Please note that gifts may be made in the support of research, however to be so classified it must be an irrevocable donation of funds and no contractual obligations may be imposed on the University. Contractual obligations include, but are not limited to, the requirement to perform a specific research project, to provide a research project report, or to complete the research within a defined period of time. Note however, a program report stating in general terms how the funds have been used is not equivalent to a research project report, and does not therefore of itself remove the charitable intent of the donation.

    Specific Characteristics:

    • No requirements for deliverables in excess of customary stewardship communication. Customary stewardship communication includes providing a general statement on how the funds have been used and donor acknowledgement.  The donor does not require any use of University resources including faculty/staff time or use of University facilities.
    • Does not confer Intellectual Property rights or options on the donor.
    • There is no consideration (i.e., quid pro quo) exchanged by the University or its employees for a gift other than to use the gift for the purpose intended by the donor.
    • No requirement to return unexpended funds after a specific period of time.
    • No provisions for audits by or on behalf of the grantor.
    • Gifts may contain a statement of purpose or restriction.

    Chief UCR resource for the classification and handling of Gifts:  University Advancement Office

     

    Definitions and General Characteristics:

    Research Agreement General Definition -- agreements which involve the performance of specific research or other investigative task agreed upon by the granting agency or person and the researcher that are not routine in nature, are likely to result in the addition of new knowledge and to yield publishable results, and require the delivery of technical reports containing interpretive analysis and conclusions.  The research effort must generally benefit the academic program of the University or the public at large, and must recover applicable indirect costs.

    Contract (including incoming Purchase Orders) -- a procurement-type award to perform work of direct benefit to the agency (as compared to a grant, which is a support-type award).  The contract requirements are normally defined by the sponsor, i.e., content of work statement, schedule, format of periodic progress reports, terms and conditions, etc.  Contracts offer competitive opportunities to all types of scientific sources and are used by the awarding agency as a means of fulfilling its program objectives.

    Grant -- a direct assistance award, usually based on a competitive process and for the purpose of obtaining support to accomplish a purpose authorized by governmental statute or by-laws/policy of a corporation or private granting entity.  The specifics/consideration of a project are usually defined by the applicant and approved by the grantor with a resultant award containing more flexible terms and conditions than would be characteristic of a contract agreement with respect to the expenditure of funds.

    Cooperative Agreement -- a direct assistance award utilized when the sponsor expects to have substantial involvement during the performance of the contemplated activity.

    Specific Characteristics:

    Extramural funds which have some or all of the following characteristics will generally be classified as Research, Training, or Public Service Contract (including incoming Purchase Orders), Grant, or Cooperative Agreements:

    • A research protocol or other statement of work.
    • A detailed budget.
    • Provision for audits by or on behalf of the grantor or contracting party.
    • Grantor or contracting party is to receive or be entitled to receive some tangible consideration, such as a detailed technical report of research results or a detailed formal report of expenditures.
    • The research, training, or service is directed toward satisfying specific grantor or contracting party requirements (e.g., terms and conditions stating a precise scope of work to be done rather than a general area of research).
    • A specified period of performance is prescribed.
    • Termination is at the discretion of the grantor or contracting party.
    • Funds unexpended at the end of a specified period shall be returned to the grantor or contracting party.
    • Disposition of Intellectual Property Rights.

    Chief UCR resource for the classification and handling of Research, Training, and Public Service Contract, Grant, or Cooperative Agreements:  Office of Research Affairs

     

    Definitions and General Characteristics:

    Service Agreements agreements which involve a written contract where the tasks to be performed are relatively routine or involve a standardized procedure or one supplied by the other party, where the outcomes are not likely to result in the addition of new knowledge or publishable information, and where any data collected is to be delivered without significant interpretive analysis.  In contrast, Sales and Service activities are categorized by the sale of standardized University goods and services provided by approved service centers based on established price lists, and where no contractual obligations beyond delivery of the standardized good or service are incurred.

    As noted above, Regulation 4 states that “University laboratories, bureaus and facilities are not to be used for tests, studies, or investigations of a purely commercial character, such as mineral assays, determination of properties of materials, the performance of efficiencies of machines, analysis of soils, water, insecticides, fertilizers, feeds, fuels, and other material, statistical calculations, etc., except when it is shown conclusively that satisfactory facilities for such services do not exist elsewhere. [emphasis added].

    Regulation 4 also requires that agencies or individuals outside of the University must be charged amounts sufficient to recover all expenses related to the provision of that good or service, including both direct and indirect costs.

    All Service agreements will contain the following terms: the legal names of the parties involved; the scope of the goods and/or services to be provided; the term of time for which the parties are legally bound by the contractual relationship; the existence and nature of consideration; provisions for insurance, liability, and indemnification; and other legal issues, such as assignment, warranty of authority, complete contract, notices, statutory authority, etc.

    The testing or evaluation of proprietary products ( i.e., the product tested is supplied by the agency) and the results of the test or evaluation could provide potential commercial benefit to the agency are generally classified as service agreements.

    Chief UCR resource for the classification and handling of Service Agreements: Insurance/Risk Management/Business Agreements Office

     

    Definition:

    Sales and service activities are academic and non-academic business activities that provide standardized services or goods on a not-for-profit basis to University and non-University customers based upon approved rates.  As noted in Business and Finance Bulletin A-56, it is the University's policy not to sell goods or services to outside consumers except where such goods or services are unique or where such sales would not be in competition with commercial sources.

    Specific Characteristics

    • Funds are remitted to the University in exchange for the provision of goods or services (i.e., there is consideration for the receipt of the funds).
    • Sales involve the provision of standardized goods and services at established prices.  Sales involving non-standardized goods or services are a contract (including incoming purchase orders), grant, cooperative, or service agreement.
    • No contractual obligations are incurred beyond delivery of a standardized good or service when a sale is made to non-University customers; otherwise, the sale involves a contract (including incoming purchase orders), grant, cooperative or service agreement.
    • Customers have no audit or intellectual property rights; nor may they request a research protocol or other statement of work.
    • The following are examples of activities which are not to be classified as sales and service activities; they represent either a contract, grant, cooperative, or service agreement:

       

    1. Agreements to test a company's drug or devices

       

       

    2. Agricultural marketing board orders

       

       

    3. Sales of survey services (e.g., data collection or analysis); and

       

       

    4. Service to industry agreements.

       

    Chief UCR resource for the classification and handling of Sales and Service ActivitiesAcademic Planning and Budget

     

    Definition:

    Auxiliary Enterprises are self-supporting University-sponsored business activities which provide non-instructional standardized services or goods on a not-for-profit basis to students, faculty, and staff based upon approved rates.  Auxiliary Enterprises are operated primarily for the convenience of University students, faculty, and staff and may only incidentally serve the general public and campus departments.  Auxiliary Enterprises at UCR include Student Housing, Food Services, the Child Development Center, the Bookstore, Commons Direction, and Parking Services.

    Specific Characteristics

    • Auxiliary Enterprises are self-supporting business activities that bear all direct and indirect costs of providing a specific good or service.  Generally, the Campus does not subsidize these activities in any manner.
    • Funds are remitted to Auxiliary Enterprises in exchange for the provision of non-instructional goods or services (i.e., there is consideration for the receipt of the funds).
    • Sales involve the provision of standardized goods and services at established prices.

    Chief UCR resource for the classification and handling of Auxiliary Enterprises:  Academic Planning and Budget

     

    Definition:

    Agency Fund -- University general ledger fund established to facilitate designated activities of University-affiliated entities that promote the mission of the University.  In recognition of the benefits accruing to the University, limited institutional services (e.g., cash receipts and disbursement services) are provided.

    Specific Characteristics

    • The entity is not considered an official organization of the University.  Therefore, funds accepted are not considered tax-deductible donations to the University, and the University of California's name cannot be used in solicitations, advertisements, etc. without prior written approval from the Office of the Chancellor.
    • The University does not exercise any direct fiscal control over the use of the funds in agency accounts; such control remains with the sponsoring entity.
    • The activities of the entity should be closely associated with or related to the mission of the University; examples include agency-designated scholarships, student clubs, and alumni groups.

    Chief UCR resource for the classification and handling of Agency Accounts:  Academic Planning and Budget

  1. GIFTS
  2. RESEARCH, TRAINING, AND PUBLIC SERVICE CONTRACT OR GRANT AGREEMENTS
  3. SERVICE AGREEMENTS
  4. SALE OF STANDARDIZED UNIVERSITY GOODS AND SERVICES  --  SALES AND SERVICE ACTIVITIES
  5. AUXILIARY ENTERPRISES
  6. AGENCY FUNDS

References:

UCR Policies & Procedures section 300-66 entitled Sales and Service Activities: Establishment and Budgetary Review

Academic Personnel Manual section 020 entitled Special Services to Individuals and Organizations

July 28, 1993 letter from Associate Vice President Lawrence C. Hershman and University Controller Joseph A. Pastrone to Accounting and Budget Officers.

Guidelines on University-Industry Relations

UC Business & Finance Bulletin BUS 72 entitled Establishment and Review of Auxiliary Enterprises

UC Business & Finance Bulletin A-56 entitled Academic  Support Unit Costing and Billing Guidelines