In general, classify funds as gifts when the following characteristics exist:
- donor does not impose contractual requirements
- funds are awarded irrevocably.
In general, classify funds as grants when the following characteristics exist:
- provision for audits by or on behalf of the grantor;
- the grantor is entitled to receive some consideration such as a detailed technical report of research results or a report of expenditures;
- testing or evaluating of proprietary products is involved;
- the research is directed to satisfying specific grantor requirements (e.g., terms and conditions stating a precise scope of work to be done rather than a general area of research);
- a specified period of performance is prescribed or termination is at the discretion of the grantor;
- funds unexpended at end of period shall be returned to the grantor;
- patent rights requested by grantor.
Since in many situations all of the above characteristics will not be present, judgment must be exercised in order to classify the gift/grant in accordance with the intent of this policy. The decision as to whether a particular award should be considered a gift cannot be made based upon the presence or absence of a single characteristic or criterion. Rather, one must look at the award in toto in order to make a judgment as to its proper classification.
The Office of Contract and Grant Administration also has helpful information you can find here.