UNIVERSITY OF CINCINNATI
GUIDELINES FOR ACCOUNTING FOR OUTSIDE REVENUE

The most common sources of outside revenue are generated from sponsored projects (grants and contracts), gifts or sales and service activities. Sometimes it is difficult to distinguish between these types of revenues. The guidelines listed below are to help departments determine the appropriate classification of the external funding that they are seeking or have received.

Government as Source

Revenue from government sources would always be considered as a sponsored project (grant or a contract) with the appropriate overhead charged, depending on the nature of the activity.

Non-Governmental Sources

If an arrangement with an outside entity to provide revenue to the University results in any benefit to the outside entity, or preferential access to research results, the revenue is NOT a gift. Where the revenue results in a benefit solely to the University or for the public welfare, then it will be considered to be a gift.

If the activity to be funded is research or developmental in nature, it is a sponsored project and should be assessed overhead. These activities are generally one time in nature or are part of an ongoing identifiable project having a defined purpose, but whose outcome is generally unknown.

If the activity to be funded is commercial or service related in nature, it is sales and service, and should be treated as designated income. These activities would include the delivery of products or specific services, the outcome of which is known or is generally predictable. These activities also will be reviewed for unrelated business taxable income implications.

The above definitions are not absolute, but are to be used as guidelines in determining the appropriateness of fund type. Documentation for each outside revenue source may be required for establishment of a fund. Absence of documentation or vague documentation may result in a sponsored project classification. Appeals of decisions will go to the Grant and Contract Policy Committee. Please check the Fiscal Operating Policies & Procedures (FOPP) Manual for the appropriate forms to establish a gift, sponsored project, or sales and service account.

Disclosure of Foreign Gifts & Contracts

The U.S. Department of Education requires that all gifts, grants and contracts exceeding $250,000 from a foreign source be reported to them semi-annually.

Foreign source means a foreign government, including an agency of a foreign government; a legal entity, governmental or otherwise; an individual who is not a citizen or a national of the United States, a trust territory or protectorate thereof; or an agent, including a subsidiary of an affiliate of a foreign legal entity, acting on behalf of a foreign source.

Departmental personnel should report known foreign gifts, grants or contracts to the Financial Reports Office (556-1151) to assist them in complying with this regulation.

PROCEDURES:

When it is determined what type of fund will be used, the following forms should be used:

Information on these forms is included in the forms section of the FOPP Manual.