Defining a Grant or Contract versus a Gift

How to define funding or support: is it a gift, grant or contract?

It is not always easy to define funding. An award might not meet all of the characteristics in one area and some crossover may occur.  Review guidance from the table, processing instructions, and FAQs below.



Grant or Cooperative Agreement


SourceAwards (money or property) from an individual, corporation, foundation or nonprofit organizationAwards of financial assistance (money or property).  Also called sponsored projectProcurement or purchasing action (bid process)
Scope DefinedDonor voluntarily makes to a qualified organization; may have a specified purposePrincipal Investigator (PI) defined work scopeSponsor defined work scope
Agreement TypeDonor letter or gift agreementCost-reimbursement agreementCost-reimbursement or fixed price agreement
Time PeriodNo donor expressed preferencePeriod of performancePeriod of performance
ReportingReporting or minimal reporting for purposes of gift stewardship or gift renewalTechnical and financial reportsSpecific deliverables, reports and/or milestones
Terms of FundingMay be unrestricted, or restricted to a specific programSpecific financial and performance termsSpecific financial and performance terms, usually with rights reserved by sponsor
Ability of Funder to Recoup FundsGenerally irrevocable transferRevocable in whole or in partRevocable in whole or in part
ManagementWMU FoundationOffice of Research and Innovation (ORI)Office of Research and Innovation (ORI)

Processing Instructions

Gifts: All gifts received by department representatives must be turned in to the WMU Foundation upon receipt any gift paperwork (original letter, other correspondence, checks, etc).  All gifts must be deposited through the WMU Foundation.

If a gift requires a new gift account (Fund 21 or 24), please contact the WMU Foundation Business Manager for a New Designation Form.

Departments receiving in-kind donations (e.g. equipment), should notify the WMU Foundation and complete a Gift-in-Kind form to document the gift.

For more information:

Grants: Grants and cooperative agreements typically are issued by federal and state agencies, private non-profit foundations, and charitable trusts.  Cooperative agreements reflect some direct involvement of sponsor personnel in the project.

Proposals for grants are submitted through ORI starting with the Prior Approval Form.  Financial disclosure forms may also be required depending upon the sponsor.

Guidance on budget preparation can be found at:

WMU may consider deviating from the standard F&A rates for nonprofit sponsors that have an established written policy of supporting a reduced overhead rate.

Selection of a successful grantee is often done by peer-review groups assembled by the sponsor. Awards are accepted on behalf of WMU by ORI. Grants and Contracts will assign an account/fund number to the award so that the expenses benefiting that project can be identified for audit purposes.  

For more information:

Contracts: Contracts are typically issued by private, for-profit companies, although this mechanism is also used by federal, state and local public agencies for procurement of specific services.  

Proposals for Contracts are submitted through ORI starting with Prior Approval Form.  Financial disclosure forms may also be required depending upon the sponsor.

Contract budgets should recover full costs, direct and indirect costs. Guidance on budget preparation can be found at:

ORI will require the contact info of the sponsor’s representative responsible for contracts. Awards are negotiated and accepted on behalf of WMU by ORI. Negotiations can take a few days or several weeks to agree on terms and execute an agreement.  When the agreement is signed by both parties, Grants and Contracts will assign an account/fund number to the award so that the expenses benefiting that project can be identified for audit purposes. 

For more information:

When classification of an award is disputed and cannot be resolved by reference to published policy or procedures, the Vice President for Research and Innovation and the Vice President for Advancement shall jointly review the award. 

Frequently Asked Questions

  • What is the difference between a grant or sponsored project (ORI) and a gift (WMU Foundation)?

    A SPONSORED PROJECT (aka sponsored program funding, award, grant, contract) is a transaction in which there is a specified statement of work with a related, reciprocal transfer of something of value. The agreement would formalize the transfer of money or property from a sponsor to an institution in exchange for specified services (e.g. research). It may require specific deliverables including financial and/or technical reporting by the recipient. The agreement is enforceable by law and performance is usually to be accomplished within a specified time frame. Payment is subject to revocation. A “request for proposal” from a sponsor is a strong indicator the funds are meant to be provided as a sponsored project. (See Table)

    A GIFT is a voluntary contribution with no reciprocal benefit to the donor. No contractual requirements are imposed other than possible recognition and disposition of the gift in accordance with the donor's wishes. The gift may be for a stated purpose, with the use of the funds restricted to that purpose. The award is typically irrevocable. 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 stewardship, rather than a contractual obligation. (See Table)

    *The presence of any single factor does not represent the condition of a sponsored project or gift. All factors should be considered simultaneously.

  • What is a contract?

    A CONTRACT is a legal document of agreement between WMU and another entity for procurement of a particular service (e.g. evaluating the effectiveness of a project) or product (e.g. a report at the end of a research project), in which WMU is paid primarily to benefit the sponsor or to help the sponsor reach a particular goal.

  • What is a cooperative agreement?

    A cooperative agreement is an agreement where the sponsor has substantial involvement in the project. The sponsor and sponsored awardee work together to achieve a specific objective. Cooperative agreements often include ongoing consultations, collaborative development and execution of the project activities, and public dissemination of project materials, products, or results.

  • Who submits and administers a sponsored project/gift/contract?

    Sponsored projects are submitted through ORI. Awarded proposals are managed by Grants & Contracts staff within ORI. Gifts are managed by WMU Foundation.

  • The sponsor only takes submissions from 501(c) 3 nonprofits. Can I apply?

    Applications that require a 501(c) 3 nonprofit can usually be submitted through the WMU Foundation. Contact the WMU Foundation Business Manager for more information. If it is a grant, submission will be coordinated with The Office of Research and Innovation for internal approval via the PAF system.

  • What if there is a limit on the number of proposals an institution may submit?

    Limited submission opportunities are managed through the ORI office A limited submission process is at Limited submissions for private philanthropic support from some corporations and private foundations (i.e. PNC Bank, The Irving Gilmore Foundation, The Stryker Johnson Foundation or the Kalamazoo Community Foundation) require approval from the WMU Foundation; contact the Vice President & Executive Director of WMU Foundation for any such sponsors.

  • Do sponsored project monies cover all the costs relating to a project?

    Sponsored project monies are used to help support projects and usually do not reimburse the university for all of the project costs and related administration.

  • Does the inclusion (or exclusion) of Facilities & Administration (F&A) costs factor into determining whether funds represent a gift or a sponsored project?

    Whether external funds allow for or prohibit facilities and administration costs does not affect the determination of whether funds represent a gift or a sponsored project. Gifts do not typically have F&A. Sponsors of some awards grant a university’s full F&A amount. Other sponsors have published F&A rates that may vary. For more information see

  • Who performs funded activities if it is a gift? If it is a sponsored project? If it is a contract?

    Who performs activities under a gift is often at the discretion of the university, school, department or named individual. Under a sponsored project or contract, key personnel (or the equivalent project leadership team) named in the proposal are the individuals who would carry out the work.

  • Could my gift funds or sponsored project funds be taken back?

    Generally donors provide gifts to support a project or activity. Gift funds are typically only refunded to a donor in cases of misuse, inability to perform the activity reflected in the original proposal (for example, a faculty member with a particular specialty receives philanthropic support, then leaves the institution, and no other faculty member has that particular area of expertise), or non-usage of donated funds over a prolonged period. In the case of a sponsored project, the sponsor may establish the ability to terminate an agreement and/or require the return of unused funds.

  • Who should I work with if I need additional clarification?

    For federal, state, local, national foundations and societies and corporations start by contacting your assigned Research Program Officer (RPO) in the Office of Research and Innovation For local private foundations, inquiries should start with the WMU Foundation via the assigned Development Officer for your college or if not assigned, the Associate Vice President of the WMU Foundation.