Disclosing Financial Interests: Non-Federal Sponsored Research

The State of California mandated in 1982, that principal investigators are required to disclose their financial interests when their research project is being funded or supported in whole or in part by a non-federal sponsor, such as a non-profit foundation or for-profit company.

In addition, State of California law also requires financial disclosure when a gift is received from a non-federal sponsor and has been designated for a specific principal investigator or a specific research project.

The State of California created 700-U Form as the Statement of Economic Interest for Principal Investigators. It is used for the disclosure of financial interests when projects are being funded by non-federal sponsors.

Prior to making any financial disclosures, be sure to check the list of sponsors who are exempt from the financial disclosure requirement.

Keep in mind that having an outside financial interest is not automatically a conflict of interest. It is also important to remember that some financial interests are of such low value and/or limited duration that they do not meet the definition or threshold of disclosable financial interests, or are so small or inconsequential that the research support from the sponsor can be accepted with no further action. And, almost all disclosed financial interests and resulting conflicts of interest can either be reduced, eliminated, or managed so that the research project can be accepted and funded by the proposed sponsor. The University of California has issued a policy on Disclosure of Financial Interests and Management of Conflicts of Interest in Private Sponsors of Research as mandated by Fair Political Practices Commission.

• Non-Governmental Sponsored Projects, which include:
  • Gifts
  • Private Grants
  • For Profit Contracts, which include:
    • Research Agreements
  • UC Discovery Grant Program, which includes:
    • bio - Biotechnology
    • com - Communications and Networking
    • dig - Digital Media
    • ele - Electronics Manufacturing and New Materials
    • itls - Information Technology for Life Sciences
    • MICRO - Microelectronics

Please Note: For UC Discovery Grant Program, the Principal Investigator (PI) must submit both the 700-U form and the Fed (non-PHS) disclosure. Other Investigators on UC Discovery Grants must submit the Fed (non-PHS) disclosure only, and not the 700-U.

• Material Transfer Agreements (MTA): please fill out the MTA Process form first, before proceeding with the 700-U, as the 700-U may not be required.
• Clinical Trial Agreements
• Lab Service Agreements

The 700-U form is required with:

• Initial proposal
• Renewal proposal
• Additional funding

The 700-U form is required:

• Whenever the PI has a change in reportable financial interests during the term of an award for which disclosure is required.
• Prior to final acceptance of a contract, grant, or gift.
• Any time a change of investigator is made, which could include a change of PI.

• Non Profit entities on the Sponsors who are Exempt list, which includes all non-profit tax exempt educational institutions and foreign governmental entities.

• Principal Investigator

Please Note: Financial interests must be reported for the principal investigator and their spouse or registered domestic partner, and dependent children. If a positive financial interest is disclosed, a conflict of interest Addendum form must also be completed by the principal investigator. The Addendum provides the opportunity for the principal investigator to more fully describe their financial interest and indicate whether that financial interest could directly and significantly affect the sponsored project.

• Equity holdings in the sponsor
• Management positions with the sponsor
• Consulting income received from the sponsor
• Honoraria received from the sponsor
• Principal investigator's spouse or registered domestic partner being an employee of or having a financial interest in the non-federal sponsor

Positions with the sponsor:

These can include positions as founder, partner, director, manager, officer, trustee, employee, or any other position of management with the sponsor within the past 12 months.

Investments in the sponsor:

Investments in the sponsor, within the past 12 months, can include stocks, bonds, and stock options, including margin or brokerage accounts that have a value totaling $2000 or more.

Income from the sponsor:

Income received from the sponsor within the past 12 months, which can include salaries, consulting income, honoraria from speeches or other services that were performed, royalty payments, and stock dividends and/or interest earned, or the proceeds from any stock sales. In addition, income also includes compensation received by the University of California Health Sciences Compensation Plans.

Gifts from the sponsor:

Gifts from the sponsor, which includes the gift or the promise of a gift received from the sponsor of $50 or more, or multiple gifts from a single sponsor totaling $50 or more, within the past 12 months. Keep in mind that it is the acceptance of the gift, not the ultimate use of the gift, that imposes your obligation to disclose. Therefore, you must disclose the personal gift even if you never use it or even if you give it away to another person. If the exact amount of the gift is not known, you must make a good faith estimate of the item's fair market value. Some common examples of disclosable gifts include: tickets or passes to sporting or entertainment events, or amusement parks, parking passes, transportation and lodging, and forgiveness of a loan received by you from the sponsor.

Loans from the sponsor:

Loans from the sponsor require disclosure if the outstanding balance has exceeded $500 within the past 12 months. This also includes community property interest in loans received by the spouse or registered domestic partner.

Travel Reimbursements from the sponsor:

And our last financial interest category is the reimbursement from the sponsor for travel expenses within the past 12 months, which includes per diem, payments for transportation outside California, travel advances, lodging, and meals that were received from the sponsor.

• Travel payments received from any state, local, or federal government agency for which you provided services equal or greater in value than the payments received.
• Travel payments received from your employer in the normal course of your employment.
• Payments or reimbursements for transportation within California in connection with an event at which you gave a speech, participated in a panel or seminar, or performed a similar service.
• Food, beverages, and necessary accommodations received directly in connection with an event held inside or outside California at which you gave a speech, participated in a panel, or provided a similar service.
• A travel payment which was received from a Non Profit entity exempt from taxation under IRS Code section 501(c)(3) for which you provided equal or greater consideration. Check the box, on the 700-U form Section 3, part F, to indicate if the payment was a gift or income, report the amount, and disclose the date(s) if applicable.

• Investigators must complete and submit disclosure in Kuali COI system.

• If no financial interest exists, then the 700-U form is approved. This is referred to as a Negative Disclosure. The Conflict of Interest Office will inform the proposal review office.
• If a financial interest exists, this is referred to as a Positive Disclosure:
  • The 700-U form and the Addendum are forwarded to the Independent Review Committee (IRC) for further review
  • The IRC recommends a conflict of interest management strategy(s) to the Chancellor
  • The Chancellor either endorses or disagrees with the recommended strategy
  • A memo is issued by the Conflict of Interest Office advising the researcher of the Chancellor's decision

Please Note:   Once the disclosure of financial interests forms have been submitted, they can be made available, upon request, to the public, under the California Public Records Act.

• Failure to file the required Statement of Economic Interests or failure to report a financial interest may subject the individual to civil liability, including fines, as well as University discipline (Government Code sections 81000-91014).

To assist you with a better understanding of what a conflict of interest may look like for a principal investigator here at UCSD, and how they may occur, let's take a look at a couple of basic, straight-forward non-federal examples and/or scenarios.

Scenario #1:

Dr. Donnie Dimension is a computer graphics researcher. IBM will be hosting a computer graphics and imaging conference in Denver, Colorado. Dr. Dimension will be attending the conference and will be giving a lecture about some of his recent research findings. IBM will be reimbursing Dr. Dimension's travel expenses, totaling $2,958. Two months later, IBM sponsors a research project on 3D picture rendering with Dr. Dimension as the principal investigator.

• Does Dr. Dimension have a financial interest that may result in a potential conflict of interest?

• Yes, Dr. Dimension received travel reimbursement, which is considered income, from IBM within the past 12 months.

Scenario #2:

Dr. Blair Tuesday's research is in the area of molecular biology. For the past 2 years, she has been a consultant for Amgen, Inc. Dr. Tuesday consults twice a month on the subject of viral cell structure and function and receives $25,000 annually in consultant fees. Amgen is sponsoring a research project in viral cell structure manipulation with Dr. Tuesday as the principal investigator.

• Does Dr. Tuesday have a financial interest that may result in a potential conflict of interest?

• Yes, Dr. Tuesday received consultant fees, which is considered income, from Amgen within the past 12 months. In addition, the nature of Dr. Tuesday's consulting and the proposed research project is the same. This also raises issues pertaining to the ownership of intellectual property, as it may be difficult to determine if any invention was made during permissible consulting activities or as a result of the sponsored research.