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ACCEPTANCE OF FUNDS

Sources of Revenue | Consideration for Acceptance of Honoraria or Consulting Fees

 

SIBCR accepts funds in support of the research and education mission of VAPSHCS. All funds deposited in the Institute and all equipment purchased with Institute funds are the property of the Institute and are subject to policies and procedures established by the Board of Directors. Such policies and procedures will be consistent with applicable federal and state statutes and regulations.

 

The Institute may only invest in instruments backed by the full faith and credit of the U.S. Government.

 

Grantors or donors may send funds by check or electronic transfer. For direct deposits to SIBCR’s account, the Director of Finance will provide necessary information.

 

All checks or other funds directed to SIBCR should be made payable to the Seattle Institute for Biomedical and Clinical Research, Employer Identification Number (EIN) 91-1452438. Checks made payable to other individuals or organizations cannot be accepted. A cover letter stating the purpose of the donation should accompany the check. In order to allow the broadest and most flexible use of the funding, we request that donations or other support be unrestricted whenever possible and this can be specifically stated in the cover letter.

 

If funds are received in support of a specific research proposal, except for reasonable and usual preliminary costs for project planning before its approval, no funds may be expended until that project has received approval from the VAPSHCS R&D Committee.

 

If funds are received in support of a specific educational or training activity, except for reasonable and usual preliminary costs for activity planning before its approval, no funds may be expended until that activity has received approval from the VAPSHCS designated education committee.

 

The SIBCR Board of Directors has formally determined that gifts from members will be accepted only if completely unrestricted or used for a research program other than the member’s program. Use of the funds will be approved by the Board.

 

SOURCES OF REVENUE

 

The general categories for revenue include federally-funded programs; corporate sponsored or funded projects or educational activities; voluntary health agency, private foundation or association grants; transfer funds and other miscellaneous revenue.

 

SIBCR administration of the funding may vary depending on the stipulations of the funding source.

 

Funds derived from indirect support provided by the sponsored research or education activities administered by the Institute will be used to support the operations of the Institute. These institutional funds may also be used to respond to the needs for direct or indirect research costs or educational and training support as identified by the SIBCR Intramural Funds Committee, the SIBCR Board of Directors and the VAPSHCS R&D Committee. The Board of Directors must approve all support provided.

 

Federal Programs

 

This category consists of grants, cooperative agreements or contracts from federal agencies, other than VA, but including the National Institutes of Health and Department of Defense. An indirect cost rate is negotiated with the relevant agency. For SIBCR, this is the Department of Health and Human Services, Division of Cost Allocation. The indirect costs are provided to the grantee institution in addition to the direct costs provided for support of the studies.

 

voluntary Health Agency / Private Foundation / Association Funds

 

Funding in this category is derived from various entities to support a specific research or education proposal. Indirect cost reimbursement rates vary among sponsors. Some sponsors in this category have written policies that either state the organization does not provide overhead costs or that set limits for this support. The investigator should review the proposal and budget with SIBCR prior to submission to the sponsor. If required by the funder policy, SIBCR may accept and administer these sponsored awards with less than the negotiated indirect cost rate.

Corporate Sponsored Research or Education

 

Funding in this category is usually provided by pharmaceutical or other commercial sponsors involved in the development of new drugs or devices, or in the support of medical research or education. The studies may be investigator-initiated or sponsored by the pharmaceutical company. Negotiations for this type of award should ensure that the SIBCR indirect cost rate is provided as an additional cost to the funding required for the study. The applicable rate should be reviewed with SIBCR administrative staff.

 

The Department of Veterans Affairs Office of General Counsel has determined that the appropriate mechanism for industry-sponsored or funded research is a Cooperative Research and Development Agreement (CRADA).

 

The Veterans Health Administration (VHA) Directive (2007-044) requires the use of a CRADA for industry-funded or sponsored research studies effective March 26, 2008. Other types of research agreements with industry partners may not be used.

 

The process for corporate funded education programs is described under Education and does not require a CRADA.

 

SIBCR cannot accept funds where the sponsor will acquire any services or product, other than review of intellectual materials or results, as an outcome of the research being supported.

 

Transfer Funds

 

Members may transfer to SIBCR funds from accounts at other nonprofit institutions. Indirect costs may have already been deducted or may not have been requested on these funds. Transfer funds will not be subject to SIBCR administrative overhead charges. Such exemption does not extend to funds in support of an active project being transferred; rather, project funds will follow the stipulations or guidelines of the funding agency or institution.

 

Miscellaneous Support

 

Sources for funding in this category may be broad and may include gifts or other donations from individuals or public or private entities. Single awards or donations of $2,000 or less will not be charged overhead unless the award represents a portion of a larger contribution. Awards or donations totaling more than $2,000 generally will have an overhead rate applied.

 

CONSIDERATIONS FOR ACCEPTANCE OF HONORARIA OR CONSULTING FEES

  • Ethical considerations: VA investigators sometimes request to have an honorarium, consulting, or speaker fee directed to a VA-affiliated nonprofit corporation such as SIBCR as a donation in lieu of accepting it personally. Federal ethics regulations at 5 CFR §2635.807 allow federal employees to earn fees for presentations related to their official duties only if they are teaching a course requiring them to make multiple presentations during a program of education or training sponsored and funded by the federal government or by an institution of higher education, an elementary school, or a secondary school. This appears to be the only exception; there is no exception for turning the payment into a donation to a nonprofit. Therefore, if the investigator cannot accept the funds, SIBCR cannot accept for them.
  • Tax implications: Investigators may think that they will not be assessed personal income taxes on a speaker fee if they instruct the payer to send the check to a nonprofit. However, the IRS is likely to view as income amounts earned any time there is a quid pro quo -an exchange of goods or services for payment - or when an individual exercises control over dispensation of payment. Such payments may be taxable to that individual regardless of whether payment goes to a nonprofit or the individual accepts it personally. This is referred to as constructive receipt. Acceptance of such funds may be viewed as tax avoidance by the IRS, affecting both the investigator and the nonprofit.

  • Personal benefit concerns: Investigators may expect that their donation of speaking fees, writing fees and consulting payments will be available to support their own research program.

In IRS terms, their expectation is that use of the gift is “restricted” to their own research. However, the IRS has asserted that such contributions could provide a prohibited actual or perceived benefit to the donor if the donor subsequently controlled or even influences use of the gift. This jeopardizes the nonprofit’s exempt status because no nonprofit assets may benefit an individual associated with the organization.

 

One option is for SIBCR to send a letter to the sponsor requesting an unrestricted donation to SIBCR in lieu of an honorarium. These funds may be deposited into general funds. Use of the funds will be under the control of the Board of Directors and any requests for use of these funds should be directed to the Board. Members should contact the SIBCR Executive Director if such a donation request is contemplated.

 

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