University System of New Hampshire

IV. Financial Policies

Table of Contents

UNH University of New Hampshire :: IV. Financial Policies

B. Sponsored Program Administration

1. Sponsored Programs
2. Cost Transfers on Externally Sponsored Programs [ Changed. See UNH VIII.R ]
3. Supplies Charged to Federally Sponsored Agreements [ Changed. See UNH VIII.Q ]
4. Not-fully-executed Spending Accounts on Externally Sponsored Programs [ Changed. See UNH VIII.O ]
5. Salaries, Wages, and Fringe Benefits Charged to Federally Sponsored Agreements
6. Cost Sharing on Externally Sponsored Programs [ Changed. See UNH VIII.M ]
7. Facilities and Administrative Costs Waivers on Externally Sponsored Programs

C. Policy/Guidelines on Spousal/Partner Expenses

1. Intent of Policy
2. Definition of "Compelling Business Reason"

D. Management of Equity Interests in Start-up Companies

1. Introduction
2. Policy Statement
3. Administrative Infrastructure and Processes
4. Equity Received When Licensing Technology
5. Interactions with Start-up Company
6. The Divestiture and Sale of Equity
7. Distribution of the Proceeds of Divestiture

B. Sponsored Program Administration

(Note: OLPM sections on this page may be cited following the format of, for example, "UNH.IV.B.1.1". These policies may be amended at any time, do not constitute an employment contract, and are provided here only for ease of reference and without any warranty of accuracy. See OLPM Main Menu for details.)


1.   Sponsored Programs

1.1   Definition: Sponsored Programs are externally-funded activities in which a formal written agreement, i.e. a grant, contract, or cooperative agreement is entered into the University of New Hampshire (UNH) and by the sponsor. A Sponsored Program may be thought of as representing the voluntary transfer of money or property by a sponsor in exchange for the specifically enumerated performance of services, often including rights and access to results of this performance, and always including some formal financial and/or technical reporting by the recipient as to the actual use of money or property provided. The agreement is enforceable by law, and performance is usually to be accomplished under time and fund use constraints with the transfer of support revocable for cause.

1.2   Policy: If any one of the following indicators exists, the Sponsored Program Administration (SPA) shall have responsibility for solicitation, negotiation, receipt, and administration of the grant, contract, or cooperative agreement (hereinafter referred to as "award") on behalf of the University of New Hampshire (University), with the exception of student financial aid awards.

1.2.1   The original source of the award is a governmental or quasi-governmental entity, the exception being the State of New Hampshire for the University's biennial and capital budgets.

1.2.2   The award is from a private sector sponsor and is characterized as follows:

1.2.2.1   The award will support the work of a specific faculty or staff member(s) and requires the use of University facilities or other resources.

1.2.2.2   The work scope and programmatic goals are defined in the proposal and/or award document.

1.2.2.3   The work is to be accomplished within a specific time and budget framework.

1.2.3   The award is a fellowship or quasi-fellowship, resulting from a competitive proposal process, for which compensation to the "fellow" is made through the University's payroll system.

1.2.4   The award is for equipment resulting from a competitive proposal process and requiring a financial, performance, or use/disposition report.

1.2.5   The sponsor places restrictions on the use of funds or property and/or retains the right to revoke the award in part or in total. Examples of restrictions include disallowance of pre-award costs, requirement of sponsor's prior approval for deviation from originally approved budget items, return of any unexpended funds to the sponsor at project period end, or restrictions on publication of data from studies supported by the award.

1.2.6   A detailed fiscal or activity report or external audit is required at intervals during and/or at the end of the project period.

1.2.7   The award supports studies to be conducted on substances, products, processes, etc., owned by the sponsor.

1.2.8   The agreement provides for either the transfer or disposition of tangible property (e.g. biological materials, equipment records, technical reports, theses or dissertations), and/or intangible property (e.g. rights in data, copyrights, inventions) which may result from the activities being sponsored. (Refer to the University's "Intellectual Property" policy.)

1.2.9   The sponsor expects to gain direct economic benefit as a result of the activity to be conducted under the agreement, and the expense is perceived by the company as a "cost of doing business" rather than a charitable gift. The award and related documents, if any, reflect this intent. (Refer to UNH Foundation, Inc., policy on "Gifts or Donations" appended for informational purposes to UNH III.C)

1.3   Procedures

1.3.1   Any proposal that would result in an award as specified above must be routed with a completed "University of New Hampshire Request for Internal Approval of Grant or Contract application to External Sponsor" form for endorsement by the appropriate department or unit head and approval by the appropriate institute/center director, college/school dean, vice president, or Provost.

1.3.2   The completed proposal and form are then routed to SPA.

1.3.3   Prior to submission to an external sponsor, the completed proposal is reviewed by SPA for compliance with University policies, prospective sponsor requirements, and all applicable laws and regulations.

1.3.4   For each proposal approved for submission to a prospective sponsor, the authorized SPA individual or the Senior Vice Provost for Research signs the routing form and all required sponsor forms on behalf of the University.

1.3.5   SPA submits the proposal package to the prospective sponsor.

1.3.6   SPA negotiates the award terms and conditions on behalf of the University.

1.3.7   If appropriate, SPA or its designee provides the sponsor with acknowledgement of the award.

1.3.8   SPA and the Principal Investigator have joint responsibility for financial and administrative aspects of the award, while the project director is solely responsible for the technical requirements of the award. SPA interacts with the sponsor on behalf of the University.

1.3.9   SPA provides stewardship functions and maintains records that can be audited.

2.   Cost Transfers on Externally Sponsored Programs [ Changed. See UNH VIII.R ]

3.   Supplies Charged to Federally Sponsored Agreements [ Changed. See UNH VIII.Q ]

4.   Not-fully-executed Spending Accounts on Externally Sponsored Programs [ Changed. See UNH VIII.O ]

5.   Salaries, Wages, and Fringe Benefits Charged to Federally Sponsored Agreements

5.1  Background. This policy reflects the requirements of the Federal cost principles contained in 2 CFR 200, which establish the rule that salaries of clerical and administrative personnel should normally be treated as Facilities and Administrative (F&A) or indirect costs. The policy also describes those particular circumstances where it is appropriate to charge administrative and clerical salaries directly to sponsored agreements. Salaries of Principal Investigators and technical staff shall be treated as direct costs wherever identifiable to a particular sponsored agreement.

5.2   Definitions:

5.2.1 Salaries, wages, and fringe benefits are compensation paid currently or accrued by the University for employee services rendered. Fringe benefits also include University contributions or expenses for social security, retirement plans, health and life insurance, workers' compensation, tuition, benefits administration costs, and other staff benefits.

5.2.2 Integral means essential to the project's goals and objectives, rather than necessary for the overall operation of the institution.

5.3   Policy

5.3.1   In accordance with OMB Circulars A-21 and A-110, all salaries, wages, and related fringe benefits charged to a federally sponsored* agreement (including federal pass-through) must meet all four of the following criteria in order to be allowable as direct charges:

5.3.1.1   Reasonable. The employee services must be necessary for the performance of the sponsored agreement. The cost must conform to all applicable government requirements and be consistent with institutional policies.

5.3.1.2   Allocable. The employee services are solely to advance the work of the particular sponsored agreement during its performance period. If the personal services benefit more than one program or activity, the compensation must be allocated proportionately to each one according to the degree of benefit. However, if the benefit to an individual program or activity cannot be determined due to the interrelationship of the work involved, the cost may be allocated to benefited projects on reasonable bases.

5.3.1.3   Consistent. The compensation must be treated consistently as either a direct or indirect cost in like circumstances throughout the institution.

5.3.1.4   Limitations. The compensation must conform to limitations imposed by the sponsor's policies and the agreement itself.

5.3.2   Salaries, wages, and related fringe benefits are normally charged directly to a sponsored agreement for those employees performing the research, scholarly, or outreach activities for that agreement.

5.3.3   Charges follow the level of effort on the project and include reasonable amounts for activities contributing and closely related to work under the agreement such as conducting laboratory research, delivering special lectures about specific aspects of the ongoing activity, writing reports and articles, participating in appropriate seminars, consulting with colleagues and graduate students, and attending meetings and conferences.

5.4   Administrative and clerical compensation (business and financial staff)

5.4.1   Is normally charged indirectly to sponsored agreements through the institution's federally negotiated facilities and administrative (F&A) cost rate. However, under appropriate circumstances, such compensation and associated fringe benefits may be charged directly to the sponsored agreement if:

5.4.1.1   Administrative or clerical services are Integral services to a project or activity;

5.4.1.2   Individuals involved can be specifically identified with the project or activity;

5.4.1.3   The costs are not also recovered as indirect costs; and

5.4.1.4   Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency.

5.5   Examples: It may be allowable to directly charge a sponsored agreement for a program assistant or program support assistant whose function is directly related to the purpose of the agreement, such as assisting with a conference or staffing a program administrative office.


References:

For awards made prior to 12/26/14

OMB Circular

A-21: C.2 Factors affecting allowability of costs

C.3 Reasonable costs

C.4 Allocable costs

C.7 Limitations on allowance of costs

C.11 Consistency in allocating costs incurred for the same purpose

D.1 Direct Costs, General

D.2 Application to sponsored agreements

F.6.b Departmental administration expenses

J.8 Compensation for personal services

A-21 Appendix A, CAS 9905.502 Consistency in Allocating Costs Incurred for the Same Purpose by Educational Institutions

OMB Circular A-110: Subpart C,   .27 Allowable costs


For awards made prior to 12/26/14

2 CFR § 200.413
2 CFR § 200.430


Administrative Responsibility: UNH Vice President for Research and Public Service

Effective date: July 1, 1995

Issue date: October 21, 1994, in "UNH Financial Management Compliance Policies and Procedures for Federally Funded Grants and Contracts"

Current revision issued and effective on December 26, 2014


6.   Cost Sharing on Externally Sponsored Programs [ Changed. See UNH VIII.M ]

7.   Facilities and Administrative Costs Waivers on Externally Sponsored Programs

7.1   Background. UNH applies its federally-negotiated Facilities & Administrative (aka, indirect or overhead) cost rates to all externally-sponsored programs. These negotiated rates should be accepted by all Federal awarding agencies. However, some Federal agencies may use a rate different from the negotiated rate when required by Federal statute or regulation, or when approved by a Federal awarding agency based on a documented justification. UNH also recognizes that many non-profit foundations have policies either limiting or precluding the use of their funds for overhead expenses.

7.2    Definitions.

7.2.1   Facilities and Administrative ("F&A") costs are actual costs incurred for common or joint objectives which cannot be identified readily and specifically with a particular sponsored program. (See OMB Circular A-21 or 2 CFR 200 for awards made after 12/26/14). F&A costs include library use, student services, building operations and maintenance, building and equipment depreciation, departmental administrative assistance, general office supplies, and administration.

7.2.2   Waived F&A costs on a specific University of New Hampshire ("UNH") sponsored program represents an agreement that UNH will charge F&A Costs at a lower rate than the applicable negotiated rate. A lower rate than official sponsor-imposed limitations, or a smaller base against which to apply the applicable rate.

7.3  Policy

7.3.1   It is UNH policy to recover full costs on its sponsored programs, both direct and indirect (F&A). It is the program's Principal Investigator's responsibility to structure each proposal budget fully recover total costs. However, UNH recognizes that there are circumstances in which it is not possible to fully recover all costs.

7.3.2   A Federal awarding agency may use a rate different from the negotiated rate when required by Federal statute or regulation, or when approved by an agency based on documented justification. In these cases, UNH does not consider the foregone F&A costs to be waived. Information substantiating the allowable sponsor rate, amount, and/or base must be submitted to SPA as part of the completed proposal package.

7.3.3   Many non-profit foundations have policies that either limit or preclude the use of their funds for F&A expenses. Where a foundation has an official written and publicly disclosed policy in this regard that is applied on a consistent basis, or where they publicly solicit proposals subject to a defined limit on indirect cost recovery as a condition of the program, UNH will normally accept these requirements and not consider the foregone F&A costs to be waived. The foundation's policy statement or program solicitation must be submitted to SPA as part of the completed proposal package.

7.3.4   An F&A waiver must be approved prior to the submission of a proposal (1) when there is no published, sponsor-imposed policy or regulation limiting the F&A rate, amount, and/or base; or (2) when published policies exist, but UNH decides its interests are best served by foregoing part or all of the applicable F&A costs on a specific program or project. For example, a sponsor might require that UNH contribute some of its own funds to the program.

7.3.4.1   The authority to negotiate and approve waivers of F&A costs on individual programs or classes of programs rests with the Senior Vice Provost for Research ("SVPR"). The SVPR may delegate this authority in writing in part or in full to other UNH officers.

Approval of a F&A costs waiver in no way negates the prerogative of the principal investigator's dean/institute director/other authorized Yellow Sheet signatory from declining to approve submission to a prospective sponsor of a proposal that fails to meet other institutional criteria.

7.3.4.2  Waiver requests are initiated by the Principal Investigator and must be endorsed by their department chair and approved by the appropriate institute/center director or dean's office before being sent for approval to the SVPR. The decision whether to grant or deny a waiver is at the sole discretion of the SVPR. In determining the merits of such requests, the SVPR may take any or all of the following into consideration:

  • The equity of granting the waiver when the projects of other Principal Investigators faculty carry full overhead;
  • The total cost to UNH;
  • The likelihood that an award would be seriously jeopardized without a waiver, and the potential effect of the loss on the principal investigator's overall research program;
  • The benefit of the waiver to new principal investigators or in support of research efforts in new directions which otherwise might not be sufficiently developed to attract peer-reviewed awards; and
  • The effect of a waiver to increase direct costs available for student support.

7.3.5   Approved F&A waiver forms become part of the official awarded proposal files maintained by the SPA for UNH and are available to auditors and other examiners of UNH sponsored programs records. The SVPR will maintain annual records of the amount of F&A foregone for those awarded proposals in which the F&A is waived in part or in full.

7.3.6   A residual balance left at the end of a fixed-price agreement will be used first to repay the F&A waiver if a waiver had been granted for the pertinent project.

C. Policy/Guidelines on Spousal/Partner Expenses

(Note: OLPM sections on this page may be cited following the format of, for example, "UNH.IV.C.1.1". These policies may be amended at any time, do not constitute an employment contract, and are provided here only for ease of reference and without any warranty of accuracy. See OLPM Main Menu for details.)


1.   This policy is intended to supplement and be consistent with USNH Financial and Administrative Procedure 8-007 which stipulates that expenses for spouses, partners, and families of USNH employees are generally not paid or reimbursed by USNH unless there is a "compelling business reason," the expense is reasonable and prudent, and prior written approval has been obtained from the campus CFO.

2.   UNH Defines a "compelling business reason" for spousal/partner reimbursement to encompass:

2.1   Official University events (held on or off campus) designed to honor one or more UNH employees on the occasion of a service milestone, retirement, promotion, or special award. In such cases, the costs associated with the spouse(s)/partner(s) of the invitee(s)/honoree(s) would be a legitimate University expense. An official event is one hosted by a person who is in a supervisory capacity relative to the invitee(s)/honoree(s).

2.2   Meals customarily associated with recruitment efforts where finalists are accompanied by their spouses/partners in the final stages of the process.

2.3   Travel and meals associated with advancement/alumni relations activities where the spouse/partner of the UNH employee is expected to perform as a co-host.

2.4   Travel and meals associated with a professional meeting that a UNH employee must attend and where the spouse/partner has an independent role on the meeting agenda. In this case, the spouse/partner should submit a separate travel expense report.

2.5   Meals hosted by the President for the purpose of advancement and alumni relations, town-gown relations, USNH relations, government relations, and/or faculty/staff/student morale.

D. Management of Equity Interests in Start-up Companies

(Note: OLPM sections on this page may be cited following the format of, for example, "UNH.IV.D.1". These policies may be amended at any time, do not constitute an employment contract, and are provided here only for ease of reference and without any warranty of accuracy. See OLPM Main Menu for details.)


1.   Introduction. In the course of events a research university may be presented with new and varied opportunities to fulfill its mission to transfer the results of its research to the public. In the area of intellectual property advances, such opportunities may take the form of patents and copyrights and their transfer to external entities through research and development ("R&D") agreements, licenses, and sometimes new ventures known as "start-up" or "spin-out" companies.

This policy pertains to the decision making processes required during consideration of a new start-up company based on intellectual property held by the University; the transfer of intellectual property ownership to such a company in exchange for equity value; interactions with start-up companies during their formative phases; and finally, the decision by the University to divest itself of equity holdings in such companies.

2.   Policy Statement. New start-up companies may be formed by university faculty/staff inventors, members of the UNH administration, or by an independent party in consultation and agreement with the University. Resulting conflicts of interest and commitment presented to the faculty/staff inventor will be managed through stringent application of the USNH and UNH policies on conflict of interest. An oversight committee, appointed by the UNH President, will make business decisions regarding this technology transfer process. The oversight committee will also make recommendations to the UNH President regarding the timing of divestiture. Divestiture will occur when the earlier of the following occurs: a) the earliest date on or following the initial public offering (IPO) date in which the trading of the equity is not restricted by law or underwriting agreement; or b) the date that the company is acquired through merger, acquisition, or other tendered offer for UNH equity. Distribution of divestiture proceeds will follow the UNH Intellectual Property Policy.

3.   Administrative Infrastructure and Processes. Exhibit A depicts the sequence of events and decision criteria leading to a recommendation from the UNH Office of Intellectual Property Management (OIPM) to the UNH Vice President for Research and Public Service to form a new company based upon intellectual property held by the University. Any such recommendation will be based upon a carefully considered judgment that formation of a start-up company will provide the highest public benefit and the most timely transfer of the technology. Because a start-up company’s survival is tied to the development of the licensed technology, its effort is focused on that technology. As a result, a start-up company may represent the best opportunity for the development of the technology.

Receiving such a recommendation, the UNH Vice President for Research and Public Service will convene the Oversight Committee for Start-up Companies.

The Oversight Committee is a standing committee of the University comprised of the UNH Provost, the Vice President for Finance and Administration, the Vice President for Research and Public Service, and the Dean of the Whittemore School of Business and Economics; with the Director, OIPM, and the USNH General Counsel serving in advisory roles. The Committee will seek advice and counsel from the external community as appropriate.

The Oversight Committee will have responsibility for business decisions focused on promoting the success of the venture, and, with the relevant dean or director, personnel-related decisions designed to manage the likely conflicts of interest and commitment presented to the inventor. The UNH Policy on Financial Conflict of Interest in Research (UNH II.D) and the USNH Policy on Conflict of Interest (USY.V.D.7.1) shall apply to the relationship between the faculty/staff inventor, the University, and the potential new business venture, and all other aspects of this project, as set forth in those policies.

The Oversight Committee will use the same criteria depicted in Exhibit A to confirm the decision to license the technology to a start-up company. Following this review a recommendation will be made to the UNH President who will authorize the next appropriate action.

4.   Equity Received When Licensing Technology. Equity that represents a fair valuation of the technology may be accepted as a substitute for cash value when licensing UNH technologies. Equity serves as compensation to UNH when the start-up company has limited cash. The equity is viewed as a reasonable business solution to enhance the overall financial arrangement - acceptable to the company and its investors, while providing an opportunity for UNH to increase its potential return. The University's ownership percentage in the start-up company will be negotiated by the Director, OIPM, as directed by the Oversight Committee. The faculty/staff inventor may also be permitted to hold a separate equity position in a start-up venture, as recommended by the Oversight Committee and guided by the USNH/UNH policies on conflict of interest. Inventor(s) are responsible for all financial, tax, and legal consequences related to the equity they receive.

The equity will be held by the USNH Treasurer.

5.   Interactions with Start-up Company. UNH may hold a voting or non-voting membership on the start-up company's board of directors, as recommended by the Oversight Committee and agreed to by the company. Criteria for this decision will include the University's percentage of equity ownership and the relationship of the technology to the University's strategic directions. The faculty/staff inventor may serve as an officer, board member, or employee of the start-up company, as recommended by the Oversight Committee and under stringent adherence to the USNH/UNH conflict of interest policies.

6.   The Divestiture and Sale of Equity. UNH will strive to maximize its potential return on the technology. Liquidation of stock will be recommended to the UNH President by the Oversight Committee at the earlier of: a) the earliest date on or following the initial public offering date in which the trading of the equity is not restricted by law or underwriting agreement; or b) the date that the company is acquired through merger, acquisition, or other tendered offer for UNH equity.

7.   Distribution of the Proceeds of Divestiture. When stock in the start-up company is sold, the proceeds of the sale will be distributed according to the royalty sharing guidelines in the UNH Intellectual Property Policy (formerly VI-B-2.1). Before this distribution occurs, UNH will recover all costs directly associated with development of the technology, including patent protection, prosecution, and commercialization.