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Definitions

(a) Principal Investigator

A Principal Investigator is the person designated on the Proposal Approval Form (PAF) as the individual responsible for the administrative and programmatic aspects of the proposed project. The Principal Investigator must have the technical competence and substantive capabilities (scientific, administrative, and otherwise) to carryout a sponsored project.

The Standard Practice Guide states that a Principal Investigator has the ultimate responsibility for the administrative and programmatic aspects of the project including ensuring funds are spent in accordance with University and sponsor guidelines. The Principal Investigator must be treated by the appointing unit as an independent investigator and by the University as a non-temporary employee.[1]

 

Under these broad criteria, tenure-track faculty (Instructor through Professor) and research faculty (Research Investigator through Research Professor) are eligible to serve as Principal Investigators (as are Emeritus appointments in these ranks).

(b) Sponsored Project (generally external funding sources)

The Office of Research & Sponsored Projects (ORSP) has defined a sponsored project as "any externally funded research or scholarly activity that has a defined scope of work or set of objectives which provides a basis for sponsor expectations."[2]

Characteristics of a sponsored project are published on the ORSP website, which states among other things that the existence of one factor alone may not be determinative. Multiple factors should be considered in order to decide whether a sponsored project exists.[3]

 

(c) Research Proposal

"Any written presentation to a potential sponsor for a research program in an academic unit or a sponsored program that provides pricing or cost estimates is considered a proposal, subject to the provisions of federal cost accounting standards. All proposals that will result in funding for sponsored projects if accepted require review and coordination through [ORSP], utilizing a Proposal Approval Form (PAF)."[4]

  • Formal proposals are prepared and submitted to a potential sponsor and outline the scope of activities to be undertaken in response to a Request for Proposal (RFP) or other requests from a potential sponsor (e.g. RFQ). Informal discussion may also result in the submission of a written proposal to be evaluated by the external organization before a commitment is made to provide funds to support the program or project envisioned.
  • Unsolicited proposals may be submitted to a potential source of external funds, which then would be reviewed and acted upon much in the same manner as a formal proposal.
  • Gift solicitations may describe a general area or program to be supported by the requested funds, but do not take the form of a proposal (that is, gift solicitations do not include a description of the scope of activities or a statement of work to be undertaken). If directed toward a sponsored project, a gift solicitation is considered a proposal.[5]

(d) Cost Sharing

Cost sharing is a split of expenses between the University of Michigan and the sponsor(s). Some sponsors specify a minimum percentage for cost-sharing expenses.[6]

(e) In-Kind Contributions

In-Kind Contributions are the goods or services contributed by the University of Michigan to a project. Sponsors may or may not allow accounting of in-kind contributions as cost sharing.

(f) Direct Costs

Direct Costs are any expense that can be assigned to project with a high degree of accuracy. Examples of Direct Costs include salaries & benefits of employees working on a project, certain supplies, approved equipment, student personnel, and travel.

(g) Indirect Costs

Indirect costs are expenses to the University of Michigan associated with the administration or physical plant of a project that generally cannot be assigned to a specific project (e.g. lights, water supply, maintenance of buildings and equipment, internet connections, phones, and University personnel who support research). Indirect costs are sometimes referred to as “overhead” or the “cost of doing business with the University.” Sponsors may publish a percentage of a total project budget that is the maximum allowable indirect cost rate, require a waiver of indirect costs, or allow the University to negotiate indirect costs.

(h) University Taxes[7]

The University's central administration applies various tax rates to SMTD revenues, depending on the revenue type.

Research Tax - The Research Tax is 11% on externally supported grants and contracts. Adjustments to the Research Tax include the exclusion of expenditures on subcontracts over $25,000, student financial aid, and capital expenditures, among others.

General Tax - A General Tax is levied on the adjusted expenditure base other than externally sponsored grants and contracts. The general tax rate varies according to the type of unit. Schools and Colleges are taxed at 24%. In all cases adjusted general expenditure is the residual after externally sponsored research and auxiliary-like activities are subtracted.


(i) Gifts

A gift is a voluntary transfer of money or material goods from an individual or entity to the University without a return of commensurate value. It may or may not be given for any specific purpose.

(j) Grants

A grant is an award of funds or other property by a sponsor to achieve some general or specific purpose(s). The relationship between a sponsor and a grant recipient has not explicitly been defined by law. A grant is construed, generally, to allow greater discretion than a contract in the conduct of the research and to provide less specificity in the definition of the intended outcome of the research. While a grant is not as exacting in its provisions, it should be treated with the same respect as a contract.

(k) Contracts

A contract involves a promise, or set of promises, the performance of which is recognized in law as a duty and obligation and for breach of which the law provides remedies. Each contract document contains a statement of work or a description of the services to be provided, or in the case of a gift agreement, the donors payments and uses for the donated funds by the University. The terms and conditions of a contract should be negotiated with great care. A breach of contract may exist if the University/contractor fails to deliver the results anticipated or to perform the work defined in the statement of work.

Purchasing Services maintains signature authority for all procurement contracts and agreements. Contracts and agreements requiring a University signature should be forwarded to Purchasing Services for processing along with the online requisition. All information pertaining to the contract or agreement must be included. Note that license agreements and maintenance contracts are specifically included with other types of contracts. These contracts or agreements are then forwarded to Purchasing Services for approval and may require approval from the Office of the General Counsel. Only those with specifically delegated authority may sign contracts on the University’s behalf; therefore departmental end users who sign contracts or agreements may incur a personal liability. [SPG 507.01][8]


{A separate, printable version of these footnotes is available, here.]

 

1. spg.umich.edu,. 2014. "Fiscal Responsibilities | SPG" http:// spg.umich.edu/policy/500.01 [Return]

 

2. orsp.umich.edu,. 2014. "Definitions For Administration Of Contributions Or Contracts" http://orsp.umich.edu/policies/um/ definitions_contributions.html [Return]


3. orsp.umich.edu,. 2014. "What Is A Sponsored Project Or A Gift? - Processing Proposals" http://orsp.umich.edu/proposals/ processing/sponsoredvsgift.html [Return]

 

4. orsp.umich.edu,. 2014. "Definitions For Administration Of Contributions Or Contracts" http://orsp.umich.edu/policies/um/ definitions_contributions.html [Return]


5. Additional information regarding processing grants and contracts: orsp.umich.edu,. 2014. "Processing Proposals" http:// orsp.umich.edu/proposals/processing/index.html [Return]


6. For more in-depth discussion on cost sharing, see Cost Sharing in Sponsored Research. orsp.umich.edu,. 2014. "Cost Sharing In Sponsored Research" http://orsp.umich.edu/funding/costsharing/ cost_sharing_questions.html [Return]

 

7.These are excellent, current resources that explain the university's taxation and budgeting process:

 

ur.umich.edu,. 2014. "Budgets And Budgeting At The University Of Michigan -- A Work In Progress" The University Record, November 26, 1997. http://www.ur.umich.edu/9798/Nov26_97/budget.htm

 

Budgeting with the UB Model at the University of Michigan

Paul N. Courant and Marilyn Knepp (October 2000)
Updated by Philip J. Hanlon and Glenna L. Schweitzer
April 7, 2008 http://www.provost.umich.edu/budgeting/ ub_model.pdf [Return]

 

8. spg.umich.edu,. 2014. "General Policies And Procedures | SPG" http://spg.umich.edu/policy/507.01 [Return]

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