Research Grants - how to make them and how to use them

Research Grants – how to make them and how to use them

This note is especially relevant for those universities and higher education institutions which carry out research funded by grants, as well as individual researchers and those who are their employers

When is a research grant freed from charitable trusts?

This all depends on who receives it.

Grants to individuals

Where a charity makes a grant to an individual to carry out research, that grant may come with conditions, but the recipient does not become a trustee of that grant. They hold the funds beneficially.

Some grants are subject to conditions. Such conditions may be contractual, for example making the grant repayable if a specified piece of work is not carried out.

This is a matter of contract, not trust, law.

If no conditions are specified, the recipient can apply the funds as they see fit in line with the purpose of the grant.

Grants to institutions

Charities

A grant to another charity will invariably be to further its charitable purposes. The funds will be held on the trusts of the receiving charity unless a restriction was imposed.

Grants to non-charities

Where a grant is being made to a non-charity, it must be restricted for application for a charitable purpose only. It will, however, be freed of charitable trusts in most cases. The non-charity could be appointed trustee of those funds to apply them for strict charitable purposes. Conditions should almost always be imposed to restrict use, report back and recover if necessary.

Complications

Complications can arise when individual research grants are held alongside institutional funds. Most charity grants are one-off payments for a specific expense. The grant is awarded, the item is acquired and the charity receives confirmation that the funds were applied as intended for the public benefit. Where research grants are made the lines can be blurred. A charity can make research grants (or academic grants) to a researcher or a team of researchers to investigate a particular issue of concern, for example, how to detect pancreatic cancer. It is almost certain that any professionals looking into this will be employed by a hospital, university or corporate pharmaceutical/medical company. This means that the charity making the grant will probably be dealing with two separate bodies – the researcher(s) and the employer.

The grant is unlikely to be made to the researcher’s personal bank account, but more likely to an account recorded by and administered by the employer. This is a typical arrangement at universities.  The grant is still a personal grant to the researcher or research team. The local arrangements for handling the funds and ensuring any conditions are met should be agreed by the donor charity. The funds are not the property of the employer and the employer does not hold them on trust even if the employer is itself a charity.

If the grant is made directly to the employer for them to apply in supporting research within their institution, the situation is different. The grant would then form part of the funds of the institution concerned and be accounted for in the normal way. Where the institution was itself a charity, the funds would be held on trust for the restricted charitable purposes of the grant. Where the institution is not a charity, it could only be applied for charitable purposes for the public benefit.

What should trustees think about when making a grant

• The trustees’ obligations are discharged when they use their discretion to award the grant. Once the grant had been made, the funds normally cease to be impressed with charitable trusts.
• Think about the three Rs – restrict, report, recover.
  • Should the use of the grant funds be restricted in any way?
  • What reporting back to the charity to demonstrate impact and public benefit is needed?
  • What conditions would need to be breached to trigger recovery?
• Make grants in line with your grants policy
• Consider if different approaches are needed when making grants to individuals and to institutions
• Consider imposing conditions – reporting on impact as a minimum and possibly extending to repayment if the activity is not completed.
• Be clear about whether unspent funds can be transferred to a different institution if the lead researcher changes employer/institution but the research will continue under their leadership. Including such a provision assists institutions to transfer funds when employees move on.