Incentives versus Compensation
What is the difference between incentives and compensation?
A: Incentives are low value payment instruments/goods given to participants to encourage them to participate in the research. In order to be considered an incentive, the payment/goods must be provided to all persons in the study and the value of the payment/item must be less $20.00 or less.
Compensation is payment to research participants provided after participation in a research activity. Payments to individuals in research studies will be recorded in the form of other income. Payment types may include, but are not limited to checks, cash, gift certificates, personal property, and other items of value. Iowa State University has adopted the following procedures to ensure research participant payments are reported in accordance with state and federal income reporting requirements, while maintaining an appropriate level of confidentiality.
Q: How are incentives documented?
A: Researchers must maintain lists of all persons in the study who received the incentive but are not required to obtain a receipt for the incentive.
Research Participant Payment Process
This page will discuss the payment process to research participants who are paid from university resources. University resources include all funds managed by the university or the foundation through the use of program, grant, project or spendable gift worktags within Workday. These requirements are not applicable when incentives/compensation are funded solely from personal, non-university resources.
Iowa State University (ISU) balances its responsibility to maintain confidentiality of information about human research subjects with record keeping requirements of the State of Iowa, grantor agencies, and the Internal Revenue Service.
Research participants should be informed that information collected allows the University to meet government reporting obligations and precautions are in place to keep their information secure. Participants may be given the opportunity to participate without receiving payment if they do not wish to provide identifying information.
Research Participant Receipt Form (RFPF)
Participant payments must be properly documented for audit purposes, proof of payment, and potential tax reporting.
All research participants receiving compensation are required to complete an Iowa State University Research Participant Receipt Form (RPRF) with ONE exception below**.
There are two forms:
- Research Participant Receipt Form (RPRF) greater than or equal to $100.00.
The participant must provide a Social Security number and address to comply with IRS reporting requirements. See section below for payments to non-resident aliens. As indicated on the RPRF, it is necessary to forward a copy of the RPRF to the Controller’s Department for IRS reporting purposes. To ensure proper tax reporting and withholding, we strongly encourage you to pay by Supplier Invoice, rather than by cash or gift certificate when the amount is $100.00 or more. The Accounting Office will retain the documentation in secure storage. If a research participant’s total compensation from ISU equals or exceeds $600, ISU is required to issue an IRS Form 1099-MISC.
- Research Participant Receipt Form (RPRF) less than $100.00.
These forms are DocuSign enabled which allows for electronic signatures. Please see DocuSign Instructions on how to establish DocuSign for this purpose.
**For ELECTRONIC gift cards under $100 ONLY, the gift card purchase receipt provided by the card supplier (US Bank, Tango, Amazon) including the recipients’ names and email addresses is allowed as documentation for the participant payments.
RPRFs are considered confidential and are handled by employees in the Controller’s Department and Procurement Services who have signed confidentiality statements. The University recommends Departments with staff involved in the processing of payments to human subjects and/or the retention of documentation require their staff to sign similar confidentiality statements. Researchers and other employees and students must be aware of and follow University policy on Social Security Number Protection.
Research Participant Payments to Non-resident aliens
Due to tax reporting considerations, we strongly recommend paying a non-resident alien on a supplier invoice for research participation, rather than with cash or gift card.
Non-resident aliens should complete a W-8BEN to apply for exemption from 30% withholding. Exemption from withholding requires 1.) having a U.S. social security number or individual taxpayer identification number, 2.) being a citizen of a country that has an applicable tax treaty with the U.S., and 3.) being in the U.S. for fewer than the maximum allowable days. A 1042-S form will be submitted to the IRS, regardless of the amount.
It is crucial to properly identify non-resident aliens. If we do not withhold the proper amount, your department will be assessed for the adjustment for withholding.
How do I Pay Research Participants?
- Direct Payments by Check
Direct payments of less than $100.00 to research participants by check will be made by using an Ad Hoc Payment. Direct payments of $100.00 or more to research participants by check will be made by using a Supplier Invoice. The appropriate RPRF must be completed prior to payment processing and attached as documentation to the Supplier Invoice or Ad Hoc Payment. To maintain confidentiality, minimal business purpose information is required on a Supplier Invoice or Ad Hoc Payment and an RPRF should be attached.
All check payments to research participants should use this spend category: SC10619 Participant Payment
- Direct Payments by Cash
Payments to research participants by cash or with external bank accounts is discouraged as primary method of payment. The suggested method of payment is through the purchase of gift cards which is discussed in more detail below.
In the event that payment will be made via cash, a petty cash request would be requested using an Ad Hoc Bank Transaction. Departments should follow the University’s outlined petty cash process. Research participants must sign an RPRF at the time they actually receive their cash payment. Departments will document use of their petty cash advance by processing an Accounting Journal to clear the advance and attaching the RPRFs. A copy of the RPRF must be sent to Accounting for payments $100 or more.
- Payments by Gift Certificates/Gift Cards or Other Property
If the Principal Investigator elects to provide compensation using gift certificates/gift cards or other property, procurement of such items can be made via multiple channels.
- Purchasing Gift Cards with an ISU P-Card or T&H Card:
Purchases by P-Card or T&H Card must comply with procurement and travel and hospitality card policies. The department must complete an RPRF for each gift certificate/gift card or property given. The RPRF (s), along with the original vendor receipt, should be kept with the P-card or T&H Card transaction records in the department as well as attached to the Workday transaction (PCV or Expense Report).
T&H Card: May be used to purchase gift cards from restaurants or coffee shops. Cannot be used to purchase Amazon Gift Cards.
P-Card: May be used to purchase gift cards from retailers other than restaurants and coffee shops (Hy-Vee, local businesses, etc.). Cannot be used to purchase Amazon Gift Cards.
When the amount is $100 or more, we strongly encourage you to pay by Supplier Invoice, rather than by cash or gift certificate, to ensure proper tax reporting and withholding.
If gift certificates/gift cards or property cannot be purchased using your P-card or T&H Card because of transaction limits, a vendor’s non-acceptance of Visa, or for any other reason, contact Procurement Services for assistance.
- Purchasing Gift Cards via a Request to Procurement:
Request gift cards via Procurement Service’s website at: Gift Card Request Form | Procurement Services | Iowa State University.
The department must complete an RPRF for each gift certificate/gift card or property given. The RPRF(s) should be provided when requesting the cards and provide the worktag utilized for paying for the gift cards requested. If the participants are not known at the time of request or you are still completing or obtaining signatures on these forms, they can be attached to the Journal Entry in Workday by emailing email@example.com (please make sure to include the JE Number that is emailed to you by firstname.lastname@example.org).
Note: Grant Worktags should only be used when the gift cards are to be handed out immediately. The length of time between the gift card request to the time the cards are distributed should be minimized.
- Use of Mechanical Turk (MTurk) or other online data collection platforms:
Funds are loaded into the Amazon program for MTurk using an ISU P-Card. In the settlement process of the charges on the procurement card, the information regarding the number of and amount of participants payments actually paid should be attached to the P-Card (PCV) transaction. An RPRF form is not required but documentation of the individual payment amounts (how the payment added to the platform was utilized) is required to support the charge. This is available in the transaction history within these platforms. Any funds not used must be returned to the P-Card.
Expense Coding for Research Participant Payments
All check payments to research participants should use this spend category: SC10619 Participant Payment.
For gift cards ordered, Procurement will create a journal entry to charge the Worktag provided on the request form. For sponsored awards, these transactions are viewed as prepaid expenses and thus not subject to the 90 day threshold of the ISU Cost Transfer Policy.
Refunds and Cash Repayments
Any gift certificates/gift cards or other property that are not used should not be charged to a grant worktag. Only gift cards/gift certificates given to participants to should be charged to a grant worktag. The unused portion of a cash advance/petty cash should be deposited back into the account from which it was originally charged within 30 days from when the cash advance/petty cash was issued. Instructions on that reconciliation process can be found here: Replenishing a Petty Cash Fund.
Questions regarding the processes for making payments to research participants may be directed to one
of the following individuals:
Dave Baker, Controller's Department
Cory Harms, Procurement Services
Questions regarding implementing the requirements while maintaining confidentiality requirements for the Institutional Review Board (IRB): Kerry Agnitsch, Office for Research Ethics.
This page was last updated on April 29, 2022.