2001 Sales And Service Activities

Document purpose

The University may engage in sales and service activities in support of its tax-exempt charitable mission of instruction, research, and public service. Effective financial management of such sales and service activities requires adherence to all University Financial Policies. These include but are not limited to Inventories, Extension of Credit to Outside Third Parties for Sales and Services, Collection, Reporting and Payment for all States Sales and Use Tax, Sales and Service Activities, and Internal Control Policies.


December, 1986


October, 2021


April, 2024

Responsible Office



Research Services

The Policy

  1. Sales and service activities are generally limited to those activities that are substantially related to the University’s tax-exempt purposes of instruction, research and public service. Even though the University primarily engages in sales & services activities related to its mission, there can be instances where other sales or services activities are conducted that may not be substantially mission related.

    These non-mission related activities can be generally classified into three general categories: (1) sale of “tangible personal property”, (2) sale of “digital property”, and (3) “Fee for Services” arrangements.

    (1) Tangible Personal Property – is property that can be seen, weighed, measured, felt, and touched. Examples of sold tangible property would be the sale of computers, software, equipment, supplies, books, etc.

    (2) Digital Property – is property delivered through electronic means.  Examples are books, music, photographs, videos, etc.

    (3) Fee for Service Arrangements – Fee for Service activities can include both Facilities and/or Equipment Use Arrangements, as well as Provision of Services Arrangements.

    • Facilities and/or Equipment Arrangements are generally requests by a third person to rent or otherwise use University-owned equipment or research facilities, on a limited basis, for a purpose unrelated to research being conducted at the University, and without any assistance or intellectual input from University personnel.
    • Requests by a third person to have a University faculty member, staff member or student perform non-research-related and technical services, using University-owned facilities or equipment, on a limited basis, for the sole or principal benefit of the third person, can be an example of a Provision of Services Arrangement.

    Fee for service arrangements may exist for scientific, or research-oriented, activities, or for professional consulting in the fields of business, education, and community service.  Scientific/research-oriented agreements will typically be considered fee-for-service when the following conditions exists:

    1. The facilities or equipment, or the services to be performed, is commonly available to the public or readily available from a private entity provider. The facilities or equipment must be provided at a predetermined, fixed price (e.g., hourly or daily rate to use the facility or equipment, or to perform the specialized services).
    2. The service does not involve any intellectual contribution from University faculty, staff, or students (e.g., no design advice, no analysis of data or results).  The proposed payor designs and defines the project without contribution from University faculty, staff, or students.
    3. No intellectual property or new knowledge is anticipated to result from the activity or service. The project does not involve the exploration or testing of a hypothesis with an outcome that is unknown at the beginning of the project.
    4. No publications are anticipated and there is no intent to publish.
    5. It is not anticipated that the University will subcontract any portion of the services to an outside party.

    A project that requires the academic expertise or unique, specialized skills of University faculty, staff, or students, that is not professional consulting in the fields of business, education, or community service is a sponsored program, and not a sales or service activity, and is subject to all of the sponsored program policies.

  2. All proposed new sales and service activities must be reviewed by the Office of the Comptroller for possible unrelated business taxable income (UBTI) considerations and, for Facilities or Equipment Use arrangements, possible sales and use tax.

  3. Accounting for sales and service activity will be in accordance with the AICPA Audit Guide for Colleges and Universities.

  4. Sale and service activity that is transacted on credit cards is subject policy 2006 – Credit Card Sales PCI Compliance.

  5. All Fee for Service activity should be documented with a contract or other documentation acceptable to the Office of Research Services or and Office of the General Counsel.

  6. Proper financial management of sales and service activities is the responsibility of the school/department’s dean or director.

  7. The responsible dean or director must ensure that the approved purpose for which the sales or service activity was organized is maintained. Any significant deviation from the original purpose must be approved by the Senior Planning Group.

  8. Separate accounting records must be maintained for each unique sales and services activity.

  9. Deans and directors of responsibility centers are required to report annually to the Office of the Comptroller the nature of any sales and services activity so that a proper determination of UBTI exposure can be performed.