Sponsored Programs vs. Fee for Service
Sponsored Program
A sponsored program refers to an externally funded project or activity that is governed by a formal written agreement—such as a grant, contract, or cooperative agreement—between the university and a sponsor. Sponsored programs have a defined scope of work and/or set of objectives for research, instruction, training, or public service which provides a basis for sponsor expectation and are subject to terms and conditions set by the sponsor, including financial, administrative, and performance-related requirements. These programs are facilitated by the Office of Research, Innovation, and Economic Development to ensure compliance with all applicable regulations and obligations.
To accurately determine whether an activity qualifies as a sponsored program, the following review points can be considered:
- Is there a formal written agreement (grant, contract, etc.) from an external sponsor?
- Is funding provided by an external entity (e.g., federal or state agency, corporation, nonprofit, or foundation)?
- Is there a specification of a performance period during which activities are to be conducted?
- Are there specific project objectives, scope of work, or deliverables approved and/or defined by the sponsor?
- Is the sponsor entitled to receive or review results or outcomes of the project?
- Are the funds revocable?
- Is there a requirement for detailed financial accountability, such as budget restrictions or reporting?
- Does the sponsor require progress, technical, or final reports?
- Are unspent funds subject to return or other disposition requirements at the end of the project?
- Is there potential for audit or oversight by the sponsor?
- Are there terms related to intellectual property, publication rights, or confidentiality?
If the answer is “yes” to most or all these questions, the activity is likely a sponsored program and should be routed through the Office of Research, Innovation, and Economic Development.
Fee-for-Service
A fee-for-service activity refers to an externally funded agreement where the university provides standardized services, testing, or data collection for a set fee, typically using established protocols or procedures. These projects do not involve the creation of new knowledge or original scholarly activity but instead rely on the application of existing expertise, facilities, or equipment. Fee-for-service activities are usually governed by a service agreement or sales contract, and they are not classified as sponsored programs because they do not involve a public purpose or meet the definitions of research, instruction, training, or public service.
To accurately determine whether an activity qualifies as fee-for-service project, the following review points can be considered:
- Is the work being conducted primarily for the benefit of the external customer or client, not for public dissemination or academic inquiry?
- Is the activity based on the application of established methods, procedures, or protocols with no expectation of original research or new knowledge creation?
- Is there no requirement for hypothesis-driven research or a defined scope of work intended to answer a research question?
- Are there no requirements for technical or scientific reports beyond standard service documentation (e.g., test results, invoices)?
- Is the university being paid a set price or rate for defined services or deliverables?
- Is the external entity considered a customer rather than a sponsor (i.e., the relationship is transactional rather than collaborative)?
- Is the project managed through a university service center, core facility, or business/contracts office rather than through the sponsored programs office?
- Is there no expectation that intellectual property will be created and/or owned by the university?
If the answer is “yes” to most or all these questions, the activity is likely a fee-for-service activity and should be routed through the University Contracts Office within the Division of Finance & Administration.
Sponsored Program or Gift?
This information will assist you in identifying the distinctions between a gift and a sponsored program (contracts and grants).
Companies often use the terms “gifts” and “grants” interchangeably, but they have very distinct meanings for the university. In general, “gifts” are charitable contributions for which the company does not receive any tangible benefits in return. It is, essentially, a donation. A “sponsored program” (contract and grants) differs in that the sponsor has outlined a specific statement of work and there are expectations by the sponsor in exchange for the financial support provided.
The university and the sponsoring agency are legally bound to uphold these expectations (commonly referred to as “deliverables”) which are specifically defined by each party in a written agreement. Thus, when making the determination between a “gift” and “sponsored program,” there are three basic questions to ask:
- Are there deliverables?
- Is there a written agreement?
- Does the sponsor have specific and expected returns?
If you answer yes to one or more of these questions, then the funding is considered a “Sponsored Program” and should be processed through the Division of Research Administration.
If you answered no to all questions, then the funding is considered a “gift” and should be processed through the UT Foundation.
Deliverables
- Products
- Services
- Technical or scientific reports
- Fiscal reports including invoices and expenditure reports
Agreements
- Administrative terms and conditions for use of the funds
- Provisions for intellectual property
- Provisions for reporting
- Provisions for publication rights
- Any other legal provision
Specific and Expected Returns
- Statement of work detailing the work to be performed
- Providing sponsor access to the research results
- Identification of a begin and end date for the project
In some cases, the distinction between gifts and sponsored programs can be difficult to make. For assistance with this determination, please contact the Division of Research Administration at (865) 974-3466 or osp@utk.edu.