What Constitutes a Grant vs. a Gift?

There are very clear factors that differentiate a Grant and a Gift. It is important to be able to recognize the difference so that the grant/gift is set-up appropriately. Grants are set-up by the Office of Sponsored Programs (OSP) and are assigned Department ID numbers. Corporate and/or foundation gifts are set-up by the Corporate & Foundation Relations (CFR) and are assigned Advance ID accounts.

Below is a list of ways one can differentiate a gift that should be set up by CFR and an award which should be set up as a project/grant through OSP.  Here is a checklist you can print to help determine the differences.

Please note that in some cases it may not be readily apparent if the award is a grant or gift. In these cases the Office of Sponsored Programs and Corporate & Foundation Relations will review the documentation and decide which classification is most appropriate.

Grant Vs. Gift




Represents an
"exchange transaction"
in which each party
receives commensurate

Represents a
"contribution," an
unconditional transfer of
cash which is voluntary
and non-reciprocal.


Usually has reporting
requirements or specific
restrictions on how the
money can be spent.

No reporting and no

   Time Period   

Usually has a specified
time period over which
the work will be done (a
start date and an end date).

No specific time period


Sometimes requests
that unused funds must
be returned to the
awarding agency/
foundation/ corporation.

Usually all the money is
received upfront. JMU is
given unconditional rights to
the funds and funds do not
need to be returned to the

 Cost Types

 Includes Personnel costs

Does not include Personnel


The following conditions characterize a sponsored project agreement, and help to distinguish such agreements from gifts. Any analysis of these conditions must also take the intent of the donor/sponsor into consideration.

1. Specific statement of work

Sponsored projects are typically awarded to James Madison in response to a proposal to accomplish a specific statement of work and commitment to a specified project plan. While gifts may be restricted to a general purpose, e.g., cancer research, construction of a building, or library support, a sponsored project will usually entail a more detailed project methodology, e.g., a series of experiments to test a particular hypothesis, or support to perform a particular activity. This statement of work is typically supported by both a project schedule and a line-item budget, both of which are key to financial accountability, described below.

2. Detailed financial accountability

The written agreement typically includes detailed and complex financial accountability, including such conditions as:

a. a line-item budget related to the project plan, including F&A (indirect) costs
b. a specified period of time in which project funds may be expended, usually defined with "start" and "stop" dates
c. a requirement to return any unexpended funds at the end of that period
d. regular financial reporting and audit.

These kinds of conditions generally define the level of financial accountability associated with a sponsored project. They are collectively indicative of the increased level of financial accountability associated with such projects.

3. Disposition of properties ("deliverables")

Sponsored project agreements also usually include terms and conditions for the disposition of tangible or intangible properties, including, for example, hardware, data, or intellectual property. The presence of such terms and conditions in the agreement indicate that the activity is a sponsored project.


A gift, on the other hand, is defined as a contribution with no reciprocal benefit to the donor. In general, the following characteristics describe a gift.

a. No contractual requirements are imposed. However the gift may be for a stated purpose, with the use of the funds restricted to that purpose.
b. The award is typically irrevocable, with no specified "period of performance."
c. 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 as a contractual obligation.

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