Acceptance of gifts and grants to the University of California
Gifts are funds that are given to the university in support of a particular program or a particular advisor's research. With a gift the donor specifies the general program or research the money is given to support, but does not require us to adhere to a strictly defined budget or to provide any reports on how the money was spent or on the research the money supported.
In contrast, a grant is a contractual arrangement where the university agrees to do specific things with that money and report back to the grantor how we spent the money. If we do not carry out our responsibilities as we promised in the grant agreement, the grantor may demand the unspent money back. The grantor is also entitled to any funds that were not spent by the end of the project.
Grants require much more staff time to prepare legal papers, monitor expenses, provide reports, review legal obligations, etc. The university has calculated how much it costs to administer grants and to provide the facilities in which grant activities are conducted. The calculated rate is the overhead rate (also known as the indirect costs rate). The current overhead rate for our CE off-campus grants is, effective July 1, 2009, 22.5 percent, unless the grantor has an established written policy of a rate less than our standard rate. In that case the university decides whether it can and wants to do the job for that rate. Every exception to the standard overhead rate is reported to the Office of President as a loss of income, since the university will have to spend money on facilities and services that support the grant, whether or not it gets reimbursed for those expenses.