SECTION 315: Sponsored Projects, Fee-for-Service, and Gifts

1. Basic Policies for Proposal Submission and Administration of Sponsored Projects
   1. Sponsored projects should be developed consistent with the University's goals and policies, as well as applicable laws and regulations.
   2. Sponsored projects should be accepted only if appropriate time, space and facilities can be made available. Provisions should be made for continuity of support in order to stabilize required staff.
   3. The full cost of the sponsored project should be determined before the project is accepted by the University. If grants or contracts are accepted which do not cover direct and indirect costs in accordance with University policy, the University unit responsible for the project will normally be expected to provide the additional financial support with the full recognition that it is making a contribution to the cost of the work.
   4. Sponsored projects should conform to the MSU Patent Policy, approved by academic governance and the Board of Trustees in 2001, as published in the Michigan State University (MSU) Faculty Handbook. Under that policy, “Any discovery or invention which a) results from research carried on by, or under the direction of, any employee of the University which is supported by University funds or by funds controlled or administered by the University, or b) results from an employee's duties with the University, or c) has been developed in whole or in part through the utilization of University resources or facilities not available to the general public shall belong to the University (‘University Inventions’).” The President has delegated authority for administering the policy and managing University Inventions to the Vice President for Research and Graduate Studies (VPRGS).
      1. Under the policy, “the President may authorize exceptions to this policy that she/he determines to be in the best interest of the University.” Administrative review of possible exceptions should be initiated with the VPRGS. For general information on the MSU Patent Policy, please contact MSU Technologies
   5. Sponsored Projects should conform to the MSU Copyright Policy, approved by academic governance and the Board of Trustees in 2001 and revised in 2005, as published in the MSU Faculty Handbook. A wide range of faculty, staff, and students may qualify as royalty-eligible “University Authors” under the policy.
      1. If project sponsors seek promises or impose special conditions regarding copyrights or royalties on project work-products, early discussion should occur with MSU Technologies staff.
   6. In the case of sponsored research projects, the University should retain the right of first publication for its scholars, consistent with the MSU Policy Research & Creative Endeavor: Major Guidelines, adopted by the Graduate Council in 1967 and the Board of Trustees in 1970, as published in the MSU Faculty Handbook.
      1. Administrative review of possible exceptions under the policy should be initiated in the Office of the Senior Associate Vice President for Research & Graduate Studies.
   7. Sponsored projects of any sort are not typically accepted by the University if they contain restrictions on the citizenship of project participants, or if they otherwise entail use or generation of technology or technical data subject to export control at MSU under the U.S. International Trafficking in Arms Regulations (ITAR) or the Export Administration Regulations (EAR). MSU does not accept classified projects.
      1. For more information on ITAR and EAR, or to initiate administrative review of possible exceptions to the MSU policies reflected in this section, please contact Export Control & Trade Sanctions.
      2. The Michigan State University - University Research Organization (URO) focuses on applied research and development activities not generally consistent with the mission of conducting basic and applied research and education in an academic setting. For more information, contact the Office of the Senior Associate Vice President for Research.
   8. All proposals are administered through the Office of Sponsored Programs (OSP) with the exception of proposals to private sector firms or industry trade groups (not agricultural commodity groups) that do not involve governmental funds which should be processed through MSU Business-CONNECT.
2. Conflict of Interest

   MSU is committed to full disclosure and appropriate management of conflicting interests in all of its activities, including sponsored projects. Multiple laws, regulations, and policies govern conflicts of interest, including:

   1. State statutes. - These apply if an MSU employee (i) is personally contracting with MSU, or (ii) is a partner, member, or employee of a partnership or unincorporated association contracting with MSU, or (iii) owns more than 1% of the total outstanding stock of any class if the stock is not listed on a stock exchange, or owns stock with a present total market value in excess of $25,000 if the stock is listed on a stock exchange, or is a director, officer, or employee of a corporation contracting with MSU.
   2. Sponsor policies and regulations. – These may include policies requirements in various forms applicable to all proposals and awards, including projects involving human subjects and animals.
   3. MSU policies. - These include Conflicts of Interest, Faculty/Academic Staff – Faculty Handbook as approved by the Board of Trustees in 2012 and Standards of Official Conduct for Deans, Separately Reporting Directors, and Executive Managers as approved by the Board of Trustees in 2004.

   All University faculty and staff who are responsible for the design, conduct or reporting of a sponsored research project must disclose conflicting interests through the Research Administration System portal by completing an Annual Disclosure and a Project-specific Disclosure. For more information, contact the Faculty Conflict of Interest Officer.

3. Procedures for Sponsored Projects:
   1. Proposals
      1. Proposals are developed and submitted under the leadership of a Principal Investigator (PI) who normally is a member of the ranked faculty. Note that non-regular MSU paid faculty (such as research associates or specialists) may only serve as key personnel (not as PI or CO-PI) on a Michigan State University proposal.
         1. Requests to serve as PI from individuals who are not ranked faculty are reviewed and if deemed appropriate approved by the Vice President for Research and Graduate Studies (VPRGS) or designee. See Who may submit a proposal at MSU for more details.
      2. The proposal, which is generally developed with administrative support in the PI’s department, school or college, should delineate the effort or scope of work to be performed and include a budget and proposed timeframe for project performance. Before the final draft of the proposal is completed, the appropriate central administrative office, OSP or Business-CONNECT, should review for conformity with policies on such matters as allowable direct and indirect costs.
      3. Direct costs are those expenditures that can be identified specifically with a particular project and done so relatively easily with a high degree of accuracy. Examples include salaries, supplies and purchases of equipment. Indirect costs, which are also referred to as overhead or Facilities and Administrative costs (F&A), involve administrative services, maintenance and operation of physical facilities and other expenditures that cannot readily be allocated directly to the sponsored project. Indirect costs are generally computed as a fixed percentage, which varies with the type of sponsored project and the policies of the sponsor. For detailed information regarding F&A costs and how they are computed, see Current Facilities & Administrative Cost Rates.
         1. Only the Vice President for Finance (or the VPF’s delegate) can negotiate Federal indirect cost rates on behalf of the University.
         2. The VPRGS, in consultation with the Provost, may waive F&A costs for individual projects in exceptional circumstances. F&A waiver requests are strongly discouraged. When they must be made, they should be routed to the Office of the VPRGS through the academic line (i.e., the department or school and the college) with an expectation that the academic line will participate in the cost of the waived F&A. Details of the procedure for such requests can be found at the OSP website.
      4. Proposals should not be submitted to an outside agency before they are approved by the unit administrator, the dean, and the appropriate central administrative offices, including either OSP or Business-CONNECT.
         1. Exception: A letter of intent or pre-proposal concept paper without budget or institutional endorsement may be submitted directly to agencies as a means either to determine whether proposal preparation will be invited or to facilitate a later merit review process.
      5. Proposals are submitted to OSP or Business-CONNECT in the Kuali Coeus (KC) system by routing a Proposal Development (PD) document. The PD document includes a number of questions that must be answered by the PI to ensure that MSU can meet the cost sharing, logistical, and regulatory requirements associated with the proposed sponsored project. (Preliminary applications or proposals that include a budget or require an institutional signature should also be routed using a PD document). The KC system is available at the OSP website.
         1. The Proposal Development document alsocaptures the proposed allocation of F&A funds. This information will be integrated into the KC Award Module upon receipt of an award, where the calculation of F&A funds to allocate to departments and colleges will be determined.
         2. In 2009, the Provost and the VPRGS issued the memorandum Establishment of a Default Policy for Indirect Cost Distribution to Colleges and Units, which provides guidance on the latter issue.
         3. Requests for cost sharing commitments should be discussed with the department or school administrator(s) first, followed by the dean(s), and then with the VPRGS and Provost if requesting central support. Such commitments should be obtained prior to the submission of the proposal.
         4. MSU should not volunteer cost sharing that is not actually required by the potential sponsor. Certain funding agencies (e.g., NSF) explicitly prohibit competitive cost sharing that is not required in grant competitions.
      6. Proposals with international activities will require routing approval from International Studies and Programs. “International activities” are efforts conducted by MSU faculty, staff, students, or MSU’s subawardees and/or contractors for research, education, outreach, or capacity building that have significant activity outside the United States or are US-based collaborations with international partners or institutions.
      7. Proposals involving new space, alterations, or renovations of existing space and/or facilities require approval of the Office of Facilities Planning and Space Management.
      8. Some sponsors of proposal competitions limit the number of institutional proposals that MSU and its various institutional peers may each submit.
         1. The OVPRGS coordinates the review and selection of all “institutionally limited” proposals. This applies to all types of proposals (fellowship, individual awards, equipment, training, research, etc.), sponsors (Federal, state, foundation, etc.), and award types (grants, contracts, cooperative agreements, etc.). Institutionally limited fellowships submitted by graduate students are managed by the Graduate School.
      9. To allow for effective coordination of University level initiatives and priorities, requests for support above $20,000 from private and corporate foundations require routing approval by the Office of Corporate and Foundation Relations (CFR) except as noted below.

         Requests for support below $20,000 from private and corporate foundations do not require routing approval by CFR, however, CFR should be made aware that the request is being submitted. To facilitate the notification all Proposal Development documents with foundation sponsors are currently being routed to CFR.

         As indicated in C.1.i. above, institutionally limited proposals need to be coordinated with the Office of the Vice President for Research and Graduate Studies and this includes funding opportunities sponsored by private and corporate foundations.

      10. Sufficient time for processing within the University is required to ensure that the unit, the dean's office and OSP or Business-CONNECT have adequate time to review, submit, and if required to resubmit the proposal after correction of various agency electronic error notifications.

          Refer to the OSP Proposal Development & Submission guidelines for additional information as well as the Proposal Deadline Policy for submission timeline requirements.

   2. Award Negotiation and Account Set Up
      1. OSP and BUSINESS-CONNECT are responsible for negotiating and executing sponsored project terms and condition on behalf of the University. Project personnel must not execute (pre-negotiate or act as signatory) sponsored project award or amendment documents on behalf of the University.
      2. If PIs receive direct notification of awards from sponsors, the notifications should be forwarded to the appropriate central administrative office (OSP or Business-CONNECT).
      3. If human subjects are involved in a sponsored research project, approval by the Institutional Review Board is required before an account number can be assigned. However, if there is an initial planning or development phase prior to the human subject phase of the project, the Office of Human Research Protection may approve a request to establish an account for non-human subject work.
      4. If animals are to be used in a sponsored research project, approval by the Institutional Animal Care and Use Committee (IACUC) is required before an account number can be assigned (with limited exceptions for projects with non-animal work required prior to using animal).
      5. Sponsored projects which call for use of radioactive isotopes require approval through the Office of Environmental Health and Safety.
      6. Use in a sponsored project of some forms of recombinant DNA, as well as some hazardous organisms, biological samples, or chemicals, requires approval of the appropriate regulatory oversight committees, either the Institutional Biosafety Committee, or the Chemical Hygiene Committee.
      7. Sponsored projects that may involve export controlled technologies or materials, or projects that have interactions with international entities that may be subject to trade sanctions must be reviewed by the Office of Export Control & Trade Sanctions (EC&TS). For these projects and projects awarded by specific Federal agencies that are listed on the OSP website, an Export Control and Open Research Review Worksheet (ECORRW) must be completed and signed by the PI and processed by EC&TS before an award can be accepted or an account number can be assigned. For additional information regarding export controls, visit the EC&TS website or contact EC&TS.
      8. In some cases, compelling reasons may exist to commence a sponsored project before OSP or Business-CONNECT have completed contract negotiations with a Sponsor.
         1. Advanced Accounts (AAs) may be issued when one of the above offices has received a contract and believes it can be successfully negotiated. For additional information on how to request an advanced account visit OSP.
         2. Hardship Accounts are for those cases where the PI’s department wants an account number to be assigned and project expenses to occur on the correct project account even though there is not enough evidence that the award will be made. For additional information on how to request a hardship account visit OSP.

         Neither Advanced Accounts nor Hardship Accounts may be established until a Proposal Development document has been processed and all required regulatory approvals have been secured.

      9. The Principal Investigator (PI) is responsible for all fiscal and technical aspects of the sponsored research project. It is the PI’s responsibility, with support from department and central administration, to make sure that all costs charged to the project are allowable in accordance to MSU or sponsor policy (whichever is more restrictive). If the project is from a Federal sponsor, please review MSU’s Federal Cost Policy.
      10. The Office of the Contract & Grant Administration (CGA) supports MSU faculty and staff in the financial and contractual administration of the project after the award has been finalized, i.e. post-award. CGA duties include: assignment of sponsored project account numbers, approval of certain higher risk expenses, completing financial reports, cash management, other post-award project modifications, account close-out, point-of-contact for financial audits, and post-award questions. Accounting for sponsored project activity within MSU’s finance system should be done through restricted contract or grant accounts (RC sub-fund for sponsored projects requiring individual accounting/reporting or RG sub-fund for sponsored projects not requiring individual accounting/reporting).
      11. The conduct of sponsored projects utilizing subcontractors or sub-recipients (as distinct from vendor or personal services agreements) often entails special obligations, such as expense coding and sub-recipient performance monitoring. OSP, Business-CONNECT, and CGA are responsible for negotiating and executing subawards on behalf of the University. PIs undertaking such projects are responsible for consulting with OSP, Business-CONNECT or CGA regarding their subcontracting-related duties at project inception.

1. Principles Governing Fee-for-Service Activities in Academic Settings
   1. The Office of the Vice President for Research and Graduate Studies (OVPRGS) is responsible for the final decision as to whether or not a service activity (in academic research settings) is a sponsored project or a Fee-for Service subject to these guidelines.
   2. Fee-for-Service work in academic settings can include activities performed in unique MSU facilities and/or by a group of faculty (constituting what is referred to as a fee-for-service entity) providing services that would satisfy the definition of fee-for-service work, as opposed to scholarly work or research.
   3. Determining whether an activity is a sponsored project or fee-for-service work can be difficult. It is the responsibility of the University Administrator overseeing the work together with the faculty/staff to ensure that a sponsored project is not classified as fee-for-service work. MSU Business-CONNECT is authorized by the VPRGS to assist in making this decision when there is doubt [II.C.1 below]. Section IX provides additional guidance to differentiate between a sponsored project and fee-for-service work. The University makes no claim of ownership with respect to the resulting observational data, information, or other results specified in the statement of work for the fee-for-service project. The University does not seek a proprietary position in the Applicant’s intellectual property.
   4. The VPRGS is responsible for oversight of all University fee-for-service conducted in academic setting entities.
   5. While providing such fee-for-services to clients outside of MSU is typically not a principal component of the University’s mission, such activity is justified for several reasons including:
      1. Fee-for-service work supports the land grant mission of the University to share its expertise and knowledge with the community and to contribute to the economic development of the state and the country.
      2. Fee-for-service arrangements provide a mechanism for University investigators to establish relationships with companies and organizations that can lead to sponsored projects.
      3. Excess capacity exists in research facilities at MSU. Projects that can be undertaken to use the excess capacity help to pay for the facilities and to provide some funding to keep the facilities current. Utilizing excess capacity does not deprive faculty, students and other staff from access to the equipment for their University work.
   6. Fee-for-Service work sponsored by Federal or other governmental sources must be reviewed by the Office of Sponsored Programs which will determine (due to the associated rules and regulations), if the activity can be processed as fee-for-service work, or if it needs to follow the procedure set forth in Section I.C above, i.e. as a sponsored project. Fee-for-service activities that operate with publically advertised catalogs/web sites using established service rates may be considered for management as fee-for-service.
   7. Clinical trials are a type of clinical research designed to evaluate the efficacy and safety of medications, medical devices or medical diagnostics or procedures by monitoring their effects on humans. Due to the highly regulated nature of clinical trials, MSU treats them as sponsored projects. The Office of Clinical Research (OCR) within the Clinical & Translational Sciences Institute (CTSI) is established to assist in the preparation and negotiation of clinical trial protocols and budgets. Business-CONNECT is responsible for contract negotiation of industry-sponsored trials, while OSP negotiates federally and non-profit sponsored trials.
   8. Certain activities are excluded from these guidelines including credit and non-credit training and teaching programs. There are also fee-for-service activities that fall outside the scope of the guidelines, wherein the service is clearly outside of the academic research realm (i.e., Sparty’s, sale of farm surplus, Dairy Store, Meat Sales, etc.). All entities engaging in fee-for-service should assume that these guidelines apply. Business-CONNECT should be consulted if there is a question as to whether or not an activity is subject to these guidelines.
   9. Faculty consulting is governed by the University’s Outside Work for Pay policy rather than as a Fee-for-Service arrangement.
   10. MSU business practices require a formal commitment by the client to pay the established and advertised rates for the fee-for-service work and for the University to make the service available to all clients equitably up to the available capacity. The fee should be sufficient to cover all direct costs incurred by MSU to perform the service (including use of MSU equipment, supplies, and personnel engaged in carrying out and overseeing the work) and indirect costs (Facilities & Administrative (F&A) costs, and possibly Federal Unrelated Business Income Tax) as proscribed by MSU policy. F&A collected in the course of fee-for-service work will be distributed according to the MSU F&A distribution policy. The University reserves the right to suspend or discontinue services and/or not accept some materials.
   11. The administrator of a unit overseeing the fee-for-service work (referred to as the Unit-Admin) should use all reasonable efforts to conduct the service as advertised and in accordance with accepted professional standards. Administrative units should exercise reasonable care of materials delivered to the University.
   12. A company or an individual may view their funding to a faculty member as a gift, when in fact it is targeted for fee-for-service or even a sponsored project since deliverables may be required. The MSU gift policy guidelines, Section III below, provide further assistance for faculty, administrators and donors to clearly understand the difference between gifts and funding for fee-for-service or sponsored project. If there is a question of whether the proposed work qualifies as fee-for-service, the Unit-Admin should consult with MSU Business-CONNECT before agreeing to perform the work as fee-for-service.
2. Procedures for Fee-for-Service Activities

   The University makes a distinction between individual faculty and staff who might occasionally engage in fee-for-service work with a client and groups of faculty and/or technical staff that operate a fee-for-service entity who routinely engage in, or even actively solicit, fee-for-service work with external clients. The latter activity provides a means to offset the costs of maintaining those facilities or centers for the benefit of University research.

   1. When occasional fee-for-service work is proposed, the Unit-Admin reviews the Fee-for-Service Activity Form that the project leader must submit to the Unit-Admin before any work begins for an organization/client or is proposed to an organization/client. If assistance is needed to review and secure a University authorized signature or to obtain guidance concerning the use of the MSU Standard Agreement, the central point of contact is Business-CONNECT when dealing with a for-profit client, and General Counsel for all other clients. To determine how to proceed when there is no agreement submitted by the client, contact Business-CONNECT.
   2. MSU provides the opportunity for a unit to provide oversight for routine/higher volume fee-for-service entities within the unit through a University approved Fee-for-Service Activities Office (FSAO).

      A FSAO has limited delegated signature authority (see II.B. 2 below) to engage in the fee-for-service activity as a self-directed operation. Of particular importance is that if a project satisfies the non-intervention criteria, the FSAO is authorized to act on its own to sign an agreement for the project with a client.

      1. The client uses the unmodified Standard MSU Agreement (see Exhibit 315-B below).

         If there is no agreement submitted by the client, either in the form of a PO or executable document, accompanying a fee for service project and payment for the proposed project and there are no other compliance issues, as listed on the Fee-for-Service Activity Form, the FSAO is allowed to proceed as if a standard agreement was utilized.

      2. The project does not include any of the special compliance situations described in Section I.C.2.c, d, e, f, and g above. To assist units in checking for compliance situations, as well as to provide a means to keep track of details about a fee-for-service project, the FSAO may, but is not required to, ask the fee-for-service project director to use the Fee-for-Service Activity Form to keep a record of the activity.
      3. Over the entire duration of a project, the revenues and expenses do not exceed an authorized amount set by MSU, currently $5,000. Division of a larger project into segments lower that this threshold, simply for the purpose of avoiding this non-intervention criterion, could lead to revocation of FSAO's signature authority.

      A FSAO must consult with Business-CONNECT, General Counsel, or CGA when a project goes outside of these criteria. Further information concerning the proper use of signature authority including the appropriate use of the authorized amount for a project is available from Business-CONNECT or CGA.

   3. A unit desiring to appoint a FSAO must first obtain approval from its administrative entity and then from the VPRGS. The unit must provide the VPRGS with detail of how it will provide adequate monitoring of the fee-for-service entities, financial oversight and support for the entities, and oversight of an entity’s interaction with an external client. Since the unit is granted authority to directly handle certain interactions with external clients via a FSAO, it is necessary to ensure that their monitoring complies with all the guidelines imposed by MSU as well as Federal law (e.g., UBIT, private use regulations). The unit must consult with Business-CONNECT concerning the information that it must provide. Business-CONNECT together with Controller’s Office and CGA will advise the VPRGS as to the advisability of establishing an FSAO, the degree of authority it should have, and to whom signature authority can be given, when in compliance with MSU guidelines. The VPRGS with Internal Audit or a designated unit of the VP for Finance may initiate periodic audits of a unit with an established FSAO to assure that the FSAO is operating as expected, and to determine whether the FSAO’s authority should be broadened or reduced. Further details concerning the establishment and operation of a FSAO is available at OVPRGS.
   4. Each fee-for-service entity (a large facility, individual laboratory, etc.) is established within a unit with the approval of the unit and the VPRGS. Whether or not the unit has appointed a FSAO, the entity must comply with fee-for-service guidelines contained in this section and any others established by the VPRGS. The unit is responsible for ensuring that the fee-for-service entity is in compliance with the guidelines, and the fee-for-service entity must provide information about its operation which is reviewed by OVPRGS with the assistance of Business-CONNECT and the unit. Further information concerning the reporting responsibility of an approved FSAO is available at OVPRGS.
   5. A unit is expected to have a “sunset provision” for each fee-for-service entity within the unit. This provision requires the unit to review a fee-for-service entity at least every five years. The unit develops for each entity under its purview a set of performance objectives that will be used to judge whether or not the entity should continue operation. The performance objectives and the outcome of each review are discussed with the VPRGS. While performance objectives can vary across entities, they should include expectations that confirm the viability of the entity, its meeting of the University’s justification for engaging in such work (see II.A.4. above), and its compliance with all University guidelines.
   6. All University faculty and staff who are responsible for the design, conduct or reporting of a fee-for-service project must report conflicting interests to their Unit Admin.
3. Operational Guidelines
   1. Business-CONNECT is delegated oversight responsibility by the VPRGS for all Fee-for-Service in academic settings entities.
   2. A Proposal Development document is required for all fee-for-service projects for which academic credit is sought by the academic unit to the faculty/staff associated with the project.
   3. Billing is the responsibility of the FSAO or the administrative unit for entities without an FSAO. For proper University accounting and reporting, each fee-for-service entity must establish a unique DY Account (Designated Fund DY – Fee-for Service in Academic Settings) account, by submitting a new account request via the finance system. The unique DY account should be used to account for all revenues and expenses, both internally and externally generated, of the fee-for-service entity, including salaries and fringe benefit costs. In a unit without an FSAO, a DY will be assigned to the unit for the service project when the proposed project is routed through the system via Business-CONNECT. Contract and Grant Administration (CGA) and Controller’s Office staff are available to assist units in evaluating the most effective and efficient account structure (including sub-account structure) to expedite college and University reporting requirements.

      Once the DY account(s) have been established, approved billing rates need to be on file.

   4. Each fee-for-service entity must have University approved billing rates. A FSAO works with Business-CONNECT along with the Controller’s Office and CGA to establish rates for each activity under its purview.
      1. Billing rate information is available from Financial Reporting. All fee-for-service entities should also consider unrelated business income tax (UBIT) when establishing rates. Certain commercial research activities may be considered taxable income. Information concerning UBIT is available from Tax Services.
   5. Rates are reviewed by the Controller’s Office at least every two years. As specified in Section I.A.3., the rates need to account for the full cost of providing the service. Any subsidies of services must be explicitly justified.
   6. Facilities and Administrative Costs (F&A) will be assessed to external revenues according to MSU policy.
      1. External revenues are defined as revenue received for services rendered to parties/customers external to the University and deposited into the financial system. Funds received in exchange for services rendered are not considered a reimbursement of expenses. All questions concerning revenue or expenditure classifications should be directed to Financial Reporting or the Accounting Department.
   7. Students participating in fee-for-service work must be informed in writing, signed by the faculty/staff member in charge of the project prior to their work on a project
      1. that the samples and other material used and data generated MAY BE proprietary and MAY BE the property of the client;
      2. that the work in which they are engaging in and of itself MAY NOT qualify as scholarly work that alone would satisfy degree requirements for a thesis or dissertation; AND
      3. To the extent that the fee-for-service contract is permissive of public disclosure:
         1. that a graduate student’s advisor/guidance committee will decide if, when, or how much of the work on a fee-for-service project can be incorporated into a thesis or dissertation,
         2. that a graduate or undergraduate student's course instructor or authorized unit administrator will decide if, when, or how much of the work on a fee-for-service project can be incorporated into any course project or undergraduate thesis.

         Any questions concerning the incorporation of fee-for-service work into a thesis or dissertation should be directed to the Associate Provost for Graduate Studies and Dean of the Graduate School.

   Further information concerning operational details, including the new accounting system for fee-for-service projects, is available at OVPRGS and at CGA.

1. Principles

   A gift is a voluntary transfer of funds or property by a person or organization to Michigan State University without any valuable consideration or compensation to the donor.

   Depending on the case, it may be difficult to distinguish a gift from support for a sponsored project. See Section IX for additional guidance concerning the differences, including indicators of the two types of awards to help in classifying a questionable transaction. If after a review of definitions, the intent and expectations of the funding source, and the nature of the funding agreement there remains a question about the type of award, the question should be addressed with the appropriate dean or designated associate dean, who will, if necessary, consult with the Vice President for Research and Graduate Studies (VPRGS), the Vice President for University Advancement, and other University offices to make a final determination.

2. Basic Polices for Administration of Gifts
   1. Gifts to MSU will be processed by University Advancement to ensure that:
      1. All gifts are properly receipted and recorded, in accord with MSU policies.
      2. Each donor receives a prompt and appropriate acknowledgment.
      3. Members of the Board of Trustees, the administration, faculty and volunteer organizations are kept fully informed.
      4. MSU maintains a central record of all gifts.
      1. Inquiries may be directed to University Advancement.
   2. Gifts to Michigan State University should be forwarded immediately by departments to University Advancement, 535 Chestnut Road, Room 300, for processing. Any correspondence from the donor should be attached. Please complete and send the gift transmittal form with all gifts.
   3. Gifts of more than $5,000 for the support of research should be routed through Contract and Grant Administration (CGA) with appropriate forms attached (see procedures in I.C.1.e, above).
   4. Official acceptance of all gifts to Michigan State University will be made by the Board of Trustees based upon a consolidated periodic report from the Offices of the Vice President for University Advancement and the Vice President for Research and Graduate Studies. Only those gifts that conform to the needs of the University will be accepted. The University reserves the right to refuse any gift which is judged to be inconsistent with institutional needs or for which University resources are too limited for properly administration. In addition, only those gifts which are to be utilized on a nondiscriminatory basis will be accepted.
   5. In certain cases, accepting outside funds as a gift may be considered inappropriate due to particular restrictions imposed by the donor. By its very definition, a gift cannot be associated with a private benefit that would jeopardize the charitable contribution deduction under Internal Revenue Code (IRC) Section 170. For example, if the donor and beneficiary of the restricted gift have less than an arms-length relationship. In particular, in the capacity of donor, an individual cannot subsidize his/her own salary, travel funds, or fringe benefits. See Section III.C for further details concerning donations from employees in support of their own scholarly programs.
3. Donations from Employees in Support of Their Own Programs
   1. The University from time to time is offered monetary donations from University employees or companies in whom an employee has a vested interest to support their own research or other programs in their units. The University also is offered monetary donations from members of University employees’ families or from corporations in which an employee holds a significant or controlling interest.
   2. These donations are important to the University’s intellectual life and operational success. However, it is important for these donations to be handled appropriately by following specific guidelines.
      1. The unit is responsible for ensuring that expenditures of donated funds comply with all relevant University requirements. The unit head and the employee/donor will determine the guidelines for appropriate use of the funds, record that understanding in writing, and keep it on file in the department in accordance with University Archives records retention schedules.
      2. The employee/donor is advised to consult a personal tax advisor to determine whether the gift is considered a deductible charitable contribution according to Federal Treasury regulations. (See Section III.B.5 above). The donation may not be fully deductible where the funds are used to support the employee/donor’s travel or entertainment in which the employee/donor (or family members) participates. To avoid the appearance of a conflict of interest (COI), the University prohibits the use of donated funds (or substituted equivalent amounts from institutional funds) to fund any or all of the employee/donor’s salary. Donated funds may be used for the employee/donor’s travel only when it is determined that such travel is exclusively for University business. For further information, see the University policy regarding conflict of interest.
      3. Where these funds are to be used on projects or activities in which the employee/donor has a consulting relationship or other interaction with personal business activities, special care should be exercised in the use of donated funds. The Guidelines on Conflict of Interest at MSU should be reviewed and the Conflict of Interest Officer consulted.

1. Gifts of real and personal property and gifts-in-kind must be documented on a Consignment/Non-Cash Gift Form and approved by the Secretary to the Board of Trustees for submission to the Board for acceptance. The Office of University Advancement or the MSU Foundation is to be contacted immediately if gifts of this nature are contemplated.
2. All property or equipment received by the University as a loan should be processed according to instructions in Section 224 – not as a gift-in-kind.
3. A donor must have a written appraisal from an independent, qualified appraiser for non-cash gifts of $5,000 or more. The appraisal must conform to current IRS guidelines. It is the donor's responsibility to secure, arrange and pay for appraisals of gift property, with assistance from University Advancement. The University may request a second independent appraisal or may conduct its own appraisal prior to accepting a gift. Contact University Advancement or the MSU Foundation for further information.
4. Tax Requirements: Internal Revenue Form 8283, Noncash Charitable Contributions, is required from a donor if the non-cash gift is over $500. This form must be signed by the MSU Foundation if the gift is over $5,000.

   The Internal Revenue Service requires Form 8282 to be completed when the donated property over $500 has been sold, exchanged, consumed or disposed of within two years after the date the original donee received the property. The MSU Foundation must be notified of any disposition of noncash gifts within the first two years so that they may prepare the proper notification. NOTE: The donor receives a copy of this form. If the selling/disposal price is much lower than the gift value, the donor's charitable gift value could be challenged.

1. Colleges, departments and individuals should process all checks immediately upon receipt. Checks received for sponsored projects should be forwarded to CGA for processing.
2. Checks for gifts should be forwarded to University Advancement, unless they (i) exceed $5,000 and (ii) are intended to support research, in which case they should be forwarded to CGA (See Section II.B.1, above.)
   1. Please include the following information: account number, amount, and the name of the faculty member or administrator being supported.
3. When payment for sponsored programs is not received in advance, CGA is responsible for cash management for all sponsored projects, except for non-Federal clinical trial projects, according to the terms of the grant or contract. Colleges and departments still retain responsibility for overdrawn accounts or non-payment (e.g., over-drafts, unallowable costs, late deliverables, bankruptcy).

1. Project leaders will be responsible for preparing technical reports as required by the terms of the sponsored projects.
2. Financial reports for sponsored projects will be prepared by CGA and forwarded to sponsors as required.
3. Reports of gifts will be prepared and/or coordinated by the Office of the Vice President for University Advancement, except as otherwise delegated.

Exhibit 315-A. Sponsored Projects vs. Fee-for-Service Activities

MSU Business-CONNECT serves the MSU community by assisting in building alliances between the University and industry. Part of its role is to ensure that MSU’s alliances with industry comply with University policies and with state and Federal laws. In that capacity it serves as a liaison between industry and faculty to insure that support coming to the University is properly categorized according to the policies of MSU.

If it is not clear whether a company supported project is a sponsored project - which may include research and scholarly activity, training, instruction and instructional design - or fee-for-service, request Business-CONNECT to preview the Statement of Work before cost is estimated, any draft budget is shared with a company, or the Proposal Development document is routed.

The following guidelines may help MSU investigators to understand how Business-CONNECT reviews Statements of Work associated with a proposed fee-for-service work.

Definitions: The following definitions have been accepted by many companies and universities, including MSU

Rules of Thumb: Business-CONNECT may ask the following questions when reviewing a Statement of Work.

Exhibit 315-B. Standard Services Agreement for Fee-For-Service Activities

Note: This form is available on the VPRGS website.

If a fee-for-service agreement with a client does not require Business-CONNECT, General Counsel, Regulatory Affairs, or CGA intervention (for example, the need for purchase orders, a formal agreement that differs from the Standard MSU Agreement shown below, or the special compliance situations described in Section I.C.2.c, d, e, f, and g above), an established Fee-for-Service Activities Officer that is authorized by the VPRGS to do so can act on its own to approve fee-for-service projects.

The person who has been given delegated signature authority in the FSAO can sign the Standard Services Agreement provided that the dollar amount of the project is less than an authorized amount, currently $5,000 (see OVPRGS for further details).

Note that in certain cases, the University may employ Fee-for-Service contractual arrangements other than those listed above as approved by VPRGS and MSU General Counsel. A FSAO must engage with Business-CONNECT and General Counsel for all matters for which it does not have authority.

SERVICES AGREEMENT WITH
MICHIGAN STATE UNIVERSITY

1. Purpose. Michigan State University (hereinafter “MSU) will perform the services and provide the deliverables described in Exhibit A.
2. Payment. {Company} (hereinafter “Company”) agrees to pay a fixed price total of $xx,xxx first due upon signing,
3. Confidentiality. “Confidential Information” means any materials, written information, and data marked “Confidential” that Company provides. If Company provides material verbally that Company wants treated as confidential, Company will write down that information, mark it as Confidential, and forward it to MSU within 30 days of first sharing the information. Confidential Information does not include information in the public domain, or independently known, or obtained by MSU or disclosure is required by law or court order. MSU agrees to treat Confidential Information with the same degree of care that it uses to protect its own confidential information, and, to the extent allowed by law, keep the Confidential Information confidential for a period of three (3) years from the termination date of this agreement. Notwithstanding the aforementioned, MSU shall be permitted to publish the name of the Company, the title of the Project, the Contract Period, and the amount of funding of the Project in a manner consistent with MSU policy and State and Federal law.
4. Intellectual Property. Any intellectual property Company provides to MSU will remain Company’s intellectual property. Any intellectual property that MSU provides to the project will remain the intellectual property of MSU. Any copyrighted deliverables provided to Company under this agreement will be considered Works for Hire and become Company’s property upon payment in full.
5. Export Control. Company will not provide any export controlled data or materials to MSU without MSU agreeing in writing in advance.
6. Termination. Either Company or MSU may terminate this agreement by giving 10 days written notice to the other. Company will pay all reasonable costs and non-cancelable obligations incurred by MSU at the time of the termination. At Company’s request and expense, MSU will return to Company or destroy all unused material provided by Company.
7. Independent Contractor. MSU is an independent contractor providing testing services to Company. Company and MSU do not have the relationship of partners, joint venturers, principals or agents.
8. Liability. IN NO EVENT WILL MSU BE RESPONSIBLE FOR ANY DAMAGES OR PENALTIES RESULTING FROM MSU’S FAILURE TO PROVIDE, OR DELAY IN PROVIDING, THE TESTING SERVICES OR DELIVERABLES. IF A SERVICE OR DELIVERABLE IS FOUND, WITHIN SIX MONTHS OF INVOICE, TO BE SUBSTANTIALLY DEFECTIVE, MSU WILL CORRECT THE DEFECTIVE PORTION OF THE SERVICE OR DELIVERABLE AT NO COST TO COMPANY. THIS IS COMPANY’S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT. THE TESTING SERVICES AND DELIVERABLES ARE PROVIDED “AS IS” AND MSU EXPRESSLY DISCLAIMS ANY WARRANTIES EXISTING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, THOSE WHICH ARE EXPRESS OR IMPLIED, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT WILL MSU BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES WHATSOEVER, NOR WILL THE MSU’S AGGREGATE LIABILITY TO COMPANY EVER EXCEED THE AMOUNT PAID BY COMPANY UNDER THIS AGREEMENT.
9. Conditions Beyond Control. Company and/or MSU will be excused from the obligations of this agreement if the performance is delayed or prevented by circumstances (except financial) reasonably beyond control, including, but not limited to, by fire, lack of water, labor or materials, storm, flood, war, rebellion, insurrection, riot, strike, differences with workmen, failure of carriers to transport or furnish facilities for transportation, as a result of some order, requisition or necessity of government, mechanical breakdown, plant shut down, and unavailability of raw materials.
10. General. This agreement is non-assignable and non-transferable. The State of Michigan’s laws apply to this agreement, excluding its choice of law provisions. This agreement, with its Exhibit A, is the entire agreement between the parties and can only be modified in a written change signed by both Company and MSU. For clarity, any invoice, purchase order, or similar document issued by either party in support of the project shall be for administrative convenience only, and shall not alter or supplement the terms of this Agreement.