Division of Financial Services
Accounting
Funding from an external entity, such as a governmental agency, corporation or private foundation, is recorded as grant and contract revenue (sometimes referred to as “sponsored” revenue) when it is for an activity with a defined budget, period of performance, and scope of work undertaken by the university, and with the expectation of an outcome that directly benefits the resource provider. The agreement with the external entity may take the form of a contract, grant, or cooperative agreement, and is generally in direct support of the university’s mission.
Grant and contract revenue is earned and recognized when expenses have been incurred, except as otherwise provided in the terms and conditions of the award.
The main distinction between grant and contract revenue and educational activity or other revenue lies in the nature of the resource provider and the purpose of the agreement.
The main distinction between grant and contract revenue and contribution (gift) revenue lies in the benefit provided to the resource provider. Entities such as foundations typically intend, and indeed may require the recipient to consider the support a gift. Sponsored agreements will require the university to provide deliverables, such as prototypes, personal property, rights to intellectual property, financial or other reports, audit rights, or some other benefit to the mission or business of the funder. If the resource provider does not anticipate anything in return, or if the benefit provided by the university is primarily a public benefit rather than a proprietary one, then the transaction is a contribution. In some cases, a great deal of judgment is necessary. The Revenue Matrix provides the recommended, detailed criteria used to evaluate if a transaction constitutes grant and contract, contribution, or educational and other revenue.
Note: The classification of the revenue does not necessarily determine which central office provides primary proposal and stewardship oversight. This is determined by the requirements of the agreement and the policies promulgated by the respective offices in Ithaca or at WCMC. In instances where it is unclear which revenue classification is appropriate, contact Sponsored Financial Services (SFS) in Ithaca or Research Accounting at WCMC (WCMC RA), who will consult with the Office of Sponsored Programs (OSP) in Ithaca or the Office of Sponsored Research Administration (OSRA) at WCMC.
| Grants, Contracts, and Similar Agreements | Grants are awards of financial assistance, usually from a governmental agency or foundation, primarily for carrying out a public purpose of support or stimulation. A grant is distinguished from a contract, which is used to acquire property or services for the government's direct benefit or use. Contracts bind the university to a set of specific terms and conditions and involve a related reciprocal transfer of something of value to the sponsor (generally, a corporation). In general, contracts contain a precisely stated expectation of a definable work product on some set schedule as a condition of payment. Also, contracts generally provide for tighter control by the sponsor over the scope of work and utilization of funds. A cooperative agreement is used to enter into the same kind of relationship as a grant, but is distinguished from a grant in that it provides for substantial involvement and interaction between the governmental agency and the university. |
|---|---|
| Required Documentation | Sponsored agreement. |
| Procedural Notes | Agreements that are deemed sponsored (and therefore recorded as contract and grant revenue) must be proceeded by a formal proposal, submitted through OSP/OSRA, unless otherwise authorized by the Office of the Vice Provost for Research. For details on proposal submission, see Proposal Preparation and Submission (Ithaca) or Research Resources (WCMC). Award documents are reviewed, negotiated, and executed by OSP and OSRA on behalf of the university. Principal investigators receiving award documents directly should forward them to OSP/OSRA for processing. SFS and WCMC RA, in conjunction with the unit, establish awards and accounts in the financial system. See Managing Awards (Ithaca) or Research Accounting (WCMC). All cash receipts, revenue recording, and financial reporting on sponsored awards must be done by SFS or WCMC RA. Permitted Ithaca object code:
For Ithaca: Sponsored agreements that have been determined to be contributions, in accordance with the revenue classification guidance provided, should be recorded in accounts with a sub-fund of CGGIFT as gift revenue (object code 4340 Gifts of Cash). |
| Clinical Trials (WCMC only) | Clinical trials are research studies funded by sponsors that are designed to test the safety and/or effectiveness of drugs, devices, or behavioral interventions in humans. |
|---|---|
| Required Documentation | Clinical trial agreement. |
| Procedural Notes | The Joint Clinical Trials Office (JCTO) is a joint venture between NewYork-Presbyterian Hospital and Weill Cornell Medical College to foster and advance industry clinical research. The JCTO provides fully-integrated support to investigators involved in industry clinical research. Services are offered in the areas of contracting, finance, research integrity, study activation, social media, and community outreach all under one umbrella. For details on procedures for industry-funded clinical trials at WCMC, see the Joint Clinical Trails Office website. Federal- and foundation-funded clinical trials are submitted through OSRA. Sponsor documents are reviewed, negotiated, and executed by OSRA. Principal investigators receiving sponsor documents directly should forward them to OSRA for processing. For procedures for federal and foundation funded clinical trials at WCMC, see the Office of Sponsored Research Administration website. Revenue for clinical trials is recognized as expenses are incurred. Permitted WCMC GL code: 41xxxx |
| Training contracts with NYS (Ithaca only) | Training contracts with New York State provide training services to the State of New York and its agencies. For example, training in the use of behavioral restraints to the Office of Children and Family Services. These do not include courses offered to the general public or to Cornell students. |
|---|---|
| Required Documentation | Training contract. |
| Procedural Notes | Due to the complexities of NYS contracting, and the necessity of including such contracts in our Vendor Responsibility Questionnaire, all such agreements should be processed through the OSP. Permitted Ithaca object code:
|
Sponsored awards are charged facilities and administrative (F&A) costs (a.k.a., Indirect Cost [IDC], or Indirect Cost Recovery [ICR]). In and of itself, F&A recovery is not a true revenue to the university; however, it does represent a significant redistribution of resources and is so entwined with grant and contract revenue, that it bears inclusion in this document.
| Facilities and Administrative Cost Recovery (F&A) | Sponsored agreements are allocated and charged a portion of the university’s F&A costs using the ICR, also called the F&A rate. The rates are federally negotiated or university-approved. See Facilities & Administrative Cost Rates (Ithaca) or Indirect Costs Rates and Fringe Benefits (WCMC). |
|---|---|
| Required Documentation | Not applicable. |
| Procedural Notes | Sponsored agreements are charged the negotiated F&A rates, whether identified in the agreement or not, unless the sponsor has a written policy that precludes such recovery, and the university has accepted the award with this restriction. The dean or delegate, after consideration of the proposed agreement, may authorize OSP/OSRA to accept an alternative F&A cost arrangement. To avoid administrative burden, alternate F&A arrangements should conform to existing rate bases (e.g., Modified Total Direct Costs, Total Direct Costs, Salaries and Wages, Gift Exclusions). Contact SFS or WCMC RA for additional information or assistance. Only SFS or WCMC RA or WCMC Indirect Costs and Fringe Benefit Department may record or adjust F&A transactions. For Ithaca: Ithaca units MAY correct distributions of the principal investigator’s (PI) share of F&A on object code 4295. Permitted Ithaca object codes:
Note: The revenue and expense sides of F&A transactions must always net to zero in the general ledger. For financial statement purposes, the expense side of the F&A transaction nets against “direct” grant and contract revenue, enabling presentation of grant and contract revenue as direct or indirect. |
The university has an obligation to reimburse the State of New York for employee benefits on all contract college sponsored projects. An exception to this is where the sponsor is the State of New York, and the money is coming from the state's general fund. Please note that this exemption does not extend to the following:
