A PI may have multiple sources and types of external funding that may comprise their research portfolio, and each has its own requirements and terms that need to be separately understood and managed. This is an overview of the main award types a PI may receive.
Grants
A grant is a funding mechanism that allows an external sponsor to provide funding for a university-developed project (e.g., research, training, conferences), for a scope of work defined in a proposal. Grant awards are used to assist researchers in developing research or service outcomes intended for a public purpose. Grants typically have flexible terms and conditions, limited deliverables, and minimal sponsor involvement in the direction of the project. Most grants are funded on a cost-reimbursable basis, and are most typically used by government agencies and non-profit organizations. Grants awarded by US federal agencies are governed by the Uniform Guidance (UG).
31 USC 6304 provides the federal definition of when a grant should be used.
More information on types of federal grants.
Cooperative agreements are also a type of assistance awards, and tend to largely follow standard grant terms and conditions. However, these awards are viewed as partnerships between the funder and the university, and the funding agency (or multiple funding agencies) may be substantially more involved in the direction of the project.
Contracts
A contract is used as a means of procuring a service or deliverable for the benefit of the funder, generally has more restrictive terms and conditions than a grant, and typically involves more direction and participation from the funder. Typical funders of sponsored contracts include government agencies and industry/corporations. Contracts awarded by US federal agencies are governed by the Federal Acquisition Regulations (FAR).
In general, there are two ways that contracts are paid:
- Cost reimbursable: The sponsor pays up to the stated amount for the research. If any of the committed funds remain unspent, the university is not entitled to them.
- Fixed price: The university proposes a bid amount based on estimated costs to complete a proposed scope of work. The sponsor accepts the bid and agrees to pay the stated amount for the deliverable(s). If the university completes the work and there are funds remaining at the end of the project, the university is entitled to keep those funds. If there are no more funds available and the university has not yet completed the work, it is the responsibility of the university to complete the project (using university funds). This is a risk to the institution, and the unit and PI should take this into consideration before accepting a fixed-price contract.
31 USC 6303 provides the federal definition of when a contract should be used.
Gifts
Gifts are non-sponsored external funds that may generally support research activity, where the donor does not expect anything in return. Gifts do not require any deliverables, do not include any terms and conditions, and do not limit how funds are spent across budget categories (unrestricted). Gifts may be designated for a specific project or purpose based on the donor’s request. UC Santa Cruz University Advancement is the point of contact for incoming gifts. Characteristics of a gift include:
- Funds are irrevocable and largely unrestricted.
- No specific period of performance.
- Minimal to no financial and/or progress reporting.
- No requirement to return funding to the donor.
- No required outcomes or deliverables.
Funding mechanisms
The Funding Mechanisms table describes some of the differences between grants, cooperative agreements, and contracts. Refer to the table to determine the basic purpose that each funding mechanism provides along with general information such as terms and conditions, reporting, and other important guidelines for each funding type.
View the Funding Mechanisms Table
| Feature | Grants | Cooperative Agreements | Contracts (see below for more information) |
|---|---|---|---|
| Basic Purpose | A flexible instrument designed to provide money to support a public purpose. Assistance with few restrictions | A flexible instrument designed to provide money to support a public purpose. Assistance with involvement between parties | A binding agreement between a buyer and a seller to provide goods or services in return for consideration (usually monetary). Procures goods or services |
| Terms & Conditions | Governed by the terms of the grant agreement, and Uniform Guidance if federally funded | Governed by the terms of the cooperative agreement | Governed by Federal Acquisition Regulations, if federally funded |
| Scope | Conceived by PI. Flexible as to scope of work, budget, and other changes | Conceived by PI. Typically flexible as to scope of work, budget, and other changes | Conceived by sponsor. Relatively inflexible as to scope of work, budget, and other changes |
| Solicitation | Application kit or guidelines | Request for application | Request for proposal or quote |
| Effort | Diligent efforts are used in completing research and the delivery of results | Diligent efforts are used in completing research and the delivery of results | Significant emphasis placed on delivery of results, product, or performance |
| Sponsor Involvement | None | Substantial involvement | Approves activity, expects results |
| Payment | Payment awarded in annual lump sum | Payment awarded in annual lump sum unless otherwise specified in the cooperative agreement | Payment based on deliverables and milestones |
| Re-budgeting | Flexible | Usually flexible | More restrictive |
| Reporting | Annual reporting requirements | Reporting requirements determined by the cooperative agreement | Frequent reporting requirements |
| Flexibility | Principal Investigator has more freedom to adapt the project and less responsibility to produce results | Substantial involvement is expected between the executive agency and the state, local government, or other recipient when carrying out the activity contemplated in the agreement. | High level of responsibility to the sponsor for the conduct of the project and production of results |