University of Arizona Foundation: Direct Funds Transfer (DFT)

Direct Funds Transfer (DFT)

A direct funds transfer is when the UA Foundation (Foundation) subawards to the University of Arizona (UA) from a sponsor who requires a proposal to be submitted by a 501(c)(3) designated entity who will also receive that award. When there are regulatory compliance requirements for the proposal and award, the funds are transferred to the UA from the Foundation through the DFT mechanism. Items for consideration of a DFT can be found here as well as more information for gift considerations found on the Financial Policies site section 8.12 Gifts.

The  University Development Fee (UDF) is a six percent fee assessed on gifts of $1,000 or more. If necessary, arrangements can be made to use funds from other sources to contribute to the gift fee (e.g., an equivalent contribution could be made from other department funds on hand). Of the six percent gift fee, four percent will be distributed to fund development activities, one percent will be distributed to fund the University President's development activities, and the remaining one percent will be distributed for the respective college’s development activities.

Policy for Indirect Costs with Direct Funds Transfer:

When a charitable award is made to the University of Arizona Foundation (“Foundation”) that requires a level of regulatory compliance oversight or follows the Financial Services Policy for Considerations for Routing Proposals and Awards, the award should be subawarded to the University of Arizona (“UA”) from the Foundation by a direct funds transfer (“DFT”). 

When indirect costs are considered in the DFT, the following should be applied:

  1. For indirect costs up to 10% of the total project cost (10% Total Direct Costs or, if Total Costs allowed, 11.11% TDC), half will go to the Foundation, and half will go to UA.
  2. Any indirect costs beyond 10% will be allocated entirely to UA.


In cases where projects are not initially anticipated to be subawards but become so after donor approval, the 6% University Development Fund ("UDF") fee will already be budgeted for indirect costs. In these instances, the Foundation will retain the fee.

When planning subawards, the Foundation will collaborate with the unit and donor to budget the maximum allowable indirect costs. If a donor doesn't permit any funds for indirect costs, the Foundation requires the requesting unit cover the 6% fee.


  1. If a donor allows 10% indirect costs on a project to be subawarded by DFT, the available 10% indirect costs will be divided equally, with 5% going to UA and 5% to the Foundation.
  2. If a donor permits up to 15% indirect costs for a DFT subawarded project, the full 15% will be budgeted. Of the available indirect costs, 10% will go to UA, and the remaining 5% will go to the Foundation.
  3. If a nonprofit funder has agreed to pay the UDF as part of an award, and it's later determined that the funding is best managed through a DFT, the available 6% will be split evenly, with 3% going to UA and 3% to the Foundation.
  4. If a donor has a stipulation of 0%, the UA will honor the donor stipulation and does not collect indirect costs. The Foundation requires the requesting unit cover the 6% UDF.


The following flow chart outlines how to determine when to work directly with the UA Foundation or in concert with SPS.



 If the sponsor has a 0% stipulation, the UDF should not be captured in the UAR. The UA honors the stipulation from the sponsor. The Foundation, however, will require that the requesting unit cover the 6% fee from other department funds.

If a rate of 15% is allowed, of the available overhead, 5% goes to the U Foundation and the remaining 10% goes to the UA. The stipulated rate should be budgeted in the UAR and the UDF will be deducted from the total funding received prior to the transfer to the UA.


The UDF is calculated based on Total Costs.

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