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The University of Connecticut Foundation, Inc.'s EIN is 06-6070722.
What Is The Relationship Between UConn And The Foundation? [Top of page]
Since 1994, the University and the Foundation have established a fee-for-service partnership, secured by an annual Memorandum of Understanding (MOU), which stipulates that the Foundation will conduct private fundraising on behalf of UConn. The MOU details the two organizations’ mutual fundraising goals and objectives, as well as the financial arrangements agreed upon to accomplish such goals.
This is a long-standing, perfectly legal and common practice at UConn and most other major public universities. It is also fully consistent with Connecticut statutes governing the proper University-Foundation relationship. A 1995 State Attorney General’s Opinion confirmed that the University's Board of Trustees has the authority to enter into contracts to aid the performance of its mission. The opinion states that “(i)t is equally clear that the University's Board may retain a contractor (in this instance, the Foundation) to provide fundraising services and the University may pay the Foundation for its fund-raising services."
Recent findings by the Council for the Advancement and Support of Education (CASE) have shown that with the stock market decline during the past 18 months, the number of institutionally related foundations now receiving some form of institutional support has climbed above 50 percent. (In addition, it is worth noting that at a great many more institutions the fundraising staffs are employed by the university, whereas at UConn these costs are borne by the Foundation.)
In fiscal year 2009, the University agreed to provide $7.5 million to support Foundation operations. In response, the Foundation was charged with raising $48 million to benefit people and programs at the University. In fact, the Foundation raised a total of $48.5 million. Of this amount, $33.5 million was raised for programs; $4.7 million for faculty, nearly $1 million more than last year; and $10.3 million for scholarships, besting last year’s total by $3.4 million. Forty-nine new endowments were established, bringing the total number of these funds to 1,297; in 1998 the number of these funds, designated by donors to provide direct support for faculty and students at the University, was 601.
What Are The Reasons For A Separate Foundation? [Top of page]
As separate tax-exempt corporations, institutionally related foundations can perform many functions more effectively than state offices. CASE has articulated reasons why public colleges and universities establish institutionally related foundations:
What Are the Benefits To The University of Connecticut? [Top of page]
The partnership holds extraordinary financial benefits for UConn. In order to receive funding from UConn, the Foundation is charged with raising substantial amounts of money to return to the University. Since 2005, the University has invested $52 million in the Foundation and received $536 million back in direct operational and endowment support over the same period of time. This is a greater than 10:1 return on the University’s investment in the Foundation–a very wise and profoundly advantageous investment for UConn to make.
The real beneficiaries are the students and the faculty. Due to declining state budget support nationwide, public universities depend increasingly on the ability of their institutionally related foundations to carry out the universities’ missions. The UConn Foundation has been and will continue to be an extremely productive partner for the University.
Why Are The UConn Foundation’s Donor Records Not Open To The Public? [Top of page]
The UConn Foundation is a private, not-for-profit corporation, not a public agency. This separate foundation structure, which is utilized successfully to support public universities nationwide, legally preserves the private nature of gifts received in the same manner that donor privacy is ensured in the case of most charitable institutions.
An independent UConn Foundation can better serve the University and donors if its private nature continues to be respected. It accomplishes this in a number of important ways:
Under state law the UConn Foundation is specifically exempted from the Connecticut Freedom of Information Act, which is crucial to safeguarding donor privacy and advancing the Foundation’s mission. In support of this important policy, Connecticut law in fact requires the Foundation to disclose to donors their right to require confidentiality as to their identity. Requiring that broader information concerning potential and actual donors be public information could have a chilling impact on the Foundation’s ability to raise private funds and undermine support for the University of Connecticut.
Does The Foundation Have An Independent Board Of Trustees? [Top of page]
The UConn Foundation has an independent volunteer Board of Directors (link: Board of Directors) of which at least forty percent must be former students of the University of Connecticut. In addition, the UConn Foundation Board comprises 10 ex-officio positions for key University administrators, including, pursuant to state statute (see Conn. Gen. Stat. Sec. 4-37f), the University President, an elected student representative, and an elected faculty representative. This ex-officio membership is the norm among institutionally related foundations and arises from the fact that, by their very nature, institutionally related foundations take their mission and funding priorities from the university with which they are affiliated. Ex officio members have a voice in Board deliberations, but no vote.
The Foundation Board of Directors executes its fiduciary responsibilities under the strictest of guidelines. Many members of the Board are Presidents and CEOs of major corporations. They understand the need for transparent and ethical dealings (link: Statement Regarding Conflicts of Interest, Duty of Care, and Duty of Loyalty) in all matters so as not to jeopardize our status as a 501(c)3 non-profit corporation. Many also happen to be UConn alumni and major donors to the Foundation. As a Connecticut non-stock corporation, the Foundation is required to disclose through an annual non-stock corporation report filing the name, title, residential address and business address of board members.
What Is The Source Of University Funds To Support The Foundation? [Top of page]
The funds invested in the Foundation from the University are from its operating fund, but they are made up of non-appropriated money, not state dollars. No state appropriations—taxpayer dollars—are paid from the UConn operating fund to the Foundation.
What Is The Difference Between Restricted And Unrestricted Gifts? [Top of page]
The vast majority of gifts the Foundation receives are designated for specific purposes at the University. In fiscal year 2009, more than 99 percent of the gifts it accepted were “restricted” by the donors to support a particular scholarship, faculty or program fund. The Foundation has a fiduciary responsibility to comply with donor intentions with respect to the charitable gifts it accepts and may not expend funds in a manner inconsistent with the terms of the gift provided by the donor. It cannot appropriate any of these restricted funds for the operating expenses of the Foundation, for example, or for any other purpose not in keeping with the specific provisions laid out by the donors when making their contributions.
The University regularly receives detailed expenditure reports on Foundation accounts. Both the University internal auditors and the Foundation independent auditors also conduct audits of Foundation expenditures to test for compliance with donor intent. The Foundation is subject to the enforcement authority of the Connecticut Attorney General to protect charitable gifts pursuant to Conn. Gen. Stat. Sec. 3-125.
Why Doesn’t The Foundation Pay Its Administrative Costs From The Money It Raises? [Top of page]
In most cases, contributors donate for a specific purpose. For example, if a donor specifies that their gift is to support a particular UConn scholarship, the Foundation must restrict application of that gift to that specific scholarship. The Foundation is strictly limited from spending restricted funds on operating costs, since that wasn’t what the money was donated for.
The UConn Foundation receives very few unrestricted gifts that can be used to fund its operations. The only other sources of income for the Foundation in addition to the fee-for-services payment from the University are 1) a management fee assessed on the endowment for overseeing the investment of these assets; 2) investment earnings on non-endowed funds; and 3) a gift fee recently enacted in response to declining revenues from the endowment management fee. All fees are fully disclosed to donors through pledge agreements and other gift documents. It is worth noting that unlike some larger public research university foundations of longer standing (e.g., the University of Wisconsin), the Foundation does not possess a large enough endowment to generate sufficient management fees that would enable it to be self-funding.
Is The Foundation Serviced By University Personnel? [Top of page]
The UConn Foundation employs it own staff to fill some 95 positions. These employees are recruited, hired, trained, and managed subject to the Foundation’s human resources policies and procedures. They are housed in a variety of locations, all of which are paid for by the UConn Foundation. The Foundation reimburses the University for expenses related to certain employees’ presence in University space including, without limitation, office space, storage space, office furniture and equipment, utilities, mail, photocopying, and telephone services. All computer equipment in these offices is owned and paid for by the Foundation.
The Foundation is also serviced by a small number of University personnel. However, the Foundation is required by contract to reimburse the University for any such services of UConn employees. This reimbursement includes a portion of the salaries and fringe benefits of those individuals utilized in support of fundraising. As these employees retire or move on to other positions at the University, the Foundation may replace them with individuals who are wholly employed and paid by the Foundation. Currently nine University employees are covered under this arrangement, down from fourteen employees in fiscal year 2009. Ultimately, any individual who performs duties for the Foundation will be employed by the Foundation.
The notion of the Foundation reimbursing the University is in keeping with the fact that the Foundation is not a public agency and is an entity separate from the University.
What Control Is Exercised Over Disbursements? [Top of page]
The Foundation is limited by both state and federal law concerning how the funds it receives may be expended. The Foundation’s Certificate of Incorporation also provides limitations, consistent with federal requirements, on how the Foundation’s net earnings may be distributed.
Under state statute, no officer or employee of the University may receive a salary, fee, loan or any compensation or other thing of value from the Foundation, or withdraw funds from a Foundation account for any purpose, without the written approval of the University President.
The University Board of Trustees has approved a policy entitled “Policies Regarding Financial Transactions with The University of Connecticut Foundation, Inc.” The University and the Foundation have jointly established these policies to promote and ensure that disbursements from Foundation funds: are properly authorized in the context of C.G.S. Sec. 4-37e et. seq., are reasonable business expenses within the context of the Internal Revenue Code, and are compliant with all state laws applicable to University employees.
The guidelines require signatories on Foundation accounts to represent to the best of their knowledge that disbursements from Foundation accounts comply with all donor imposed restrictions; support the University’s mission and programs; represent reasonable, legitimate and arm’s length business transactions; comply with Foundation disbursement policies; comply with the Board of Trustee guidelines and comply with applicable laws. Under the Foundation’s agreement with the University, the University’s Internal Auditor conducts an annual audit of Foundation disbursements for compliance with University policies related to disbursement of Foundation funds.
In addition to the Board of Trustees policy noted above the Foundation maintains a policy entitled “Policy and Procedures for Disbursements to the University of Connecticut,” which details specific requirements and procedures for disbursing funds from Foundation accounts.
What Is The Level Of Public Disclosure? [Top of page]
The UConn Foundation’s financial dealings are subject to public disclosure in the following ways:
In addition, the UConn Foundation is subject to outside scrutiny by debt rating agencies such as Moody’s and Standard & Poor’s. Also the Foundation submits financial information to the National Bond Depositories, which is available for public inspection. Finally, the UConn Foundation, in accordance with its Board-approved information disclosure policies, voluntarily discloses a number of documents and other information related to its activities, including a conflict of interest policy for our Board of Directors and a whistle blower policy to encourage staff reporting of any corruption, unethical practices, violation of state laws or regulations, mismanagement, waste of funds, abuse of authority or danger to public safety.
Conclusion [Top of page]
All public and private universities raise funds from their alumni and friends, and every one of their budgets carries an expense for this purpose. Most public universities elect to delegate fundraising to their affiliated foundations—one of the reasons is in order to separate their gift assets (private funds) from their public assets (state appropriations). The institutions would not make these investments if their foundations did not generate a reasonable return. And UConn’s $10 return on a $1 investment in the Foundation is excellent by any standard.
Other FAQ [Top of page]
For your convenience, the links in these questions point to other pages on our Web site where you can find the relevant information.