Section V Financial Affairs
Please NOTE: This policy does not go into effect until July 2008. To read the current policy visit this link: V.E. (prior 7/2008)
E. Gifts and Affiliated Foundations
- Purpose of the Policy.
- The Board recognizes the importance of voluntary private support and
encourages grants and contributions for the benefit of the institutions, school,
and agencies under its governance. Private support for public education is an
accepted and firmly established practice throughout the United States.
Tax-exempt foundations are one means of providing this valuable support to help
the institutions, school, and agencies under the Board's governance raise money
through private contributions. Foundations are separate, legal entities, tax-exempt
under Section 501(c) of the United States Internal Revenue Code of 1986, as amended,
associated with the institutions, school, and agencies under the Board's governance.
Foundations are established for the purpose of raising, receiving, holding, and/or
using funds from the private sector for charitable, scientific, cultural, educational,
athletic, or related endeavors that support, enrich, and improve the institutions, school,
or agencies. The Board wishes to encourage a broad base of support from many sources,
particularly increased levels of voluntary support. To achieve this goal, the Board will
cooperate in every way possible with the work and mission of recognized affiliated foundations.
- The Board recognizes that foundations:
- (1) Provide an opportunity for private individuals and organizations to contribute to the
institutions, school, and agencies under the Board's governance with the assurance that the
benefits of their gifts supplement, not supplant, state appropriations to the institutions,
school, and agencies;
- (2) Provide assurance to donors that their contributions will be received, distributed, and
utilized as requested for specified purposes, to the extent legally permissible, and that
donor records will be kept confidential to the extent requested by the donor and as allowed by
law;
- (3) Provide an instrument through which alumni and community leaders can help strengthen the
institutions, school, and agencies through participation in the solicitation, management, and
distribution of private gifts; and
- (4) Aid and assist the Board in attaining its approved educational, research, public service,
student loan and financial assistance, alumni relations, and financial development program objectives.
- The Board, aware of the value of tax-exempt foundations to the well being of the institutions,
school, and agencies under the Board's governance, adopts this policy with the following objectives:
- To preserve and encourage the operation of recognized foundations associated with the
institutions, school, and agencies under the Board's governance; and
- To ensure that the institutions, school, and agencies under the Board's governance
work with their respective affiliated foundations to make certain that business is conducted
responsibly and according to applicable laws, rules, regulations, and policies, and that such
foundations fulfill their obligations to contributors, to those who benefit from their programs,
and to the general public.
- Institutional Foundations.
The foregoing provisions are designed to promote and
strengthen the operations of foundations that have been, and may be, established for the
benefit of the public colleges and universities in Idaho. The intent of this policy is to
describe general principles that will govern institutional relationships with their affiliated
foundations. It is intended that a more detailed and specific description of the particular
relationship between an institution and its affiliated foundation will be developed and committed
to a written operating agreement, which must be approved by the Board. Technology transfer
organizations, including the Idaho Research Foundation, are not subject to this policy.
- Board Recognition of Affiliated Foundations.
- The Board may recognize an entity as an affiliated foundation if it meets and maintains
the requirements of this policy. The chief executive officer of each institution must ensure
that any affiliated foundation recognized by the Board ascribes to these policies. The Board
acknowledges that it cannot and should not have direct control over affiliated foundations.
These foundations must be governed separately to protect their private, independent status.
However, because the Board is responsible for ensuring the integrity and reputation of the
institutions and their campuses and programs, the Board must be assured that any affiliated
foundation adheres to sound business practices and ethical standards appropriate to such organizations
in order to assure the public that the foundation is conducting its mission with honesty and
integrity.
- Upon the effective date of this policy, the institution chief executive officer shall provide
a list of current affiliated foundations and an implementation plan to bring each foundation before
the Board to be formally recognized as a nonprofit corporation or affiliated foundation to benefit
a public college or university in Idaho, for one or more of the purposes previously described in
this policy. Each foundation shall be brought into substantial conformance with these policies and,
upon so doing, the institution shall provide prompt notice to the Board in order that the Board may
recognize the affiliated foundation. Upon recognition by the Board, the organization of the nonprofit
corporation or foundation is ratified, validated, and confirmed, and it shall be deemed to have been
organized as if its organization had taken place under authority of this policy. Likewise, any new
foundations established subsequent to implementation of this policy must be brought to the Board for
formal recognition before such foundation begins operations.
- General Provisions Applicable to all Affiliated Foundations recognized by the Board.
- All private support of an institution not provided directly to such institution shall be
through a recognized affiliated foundation. While an institution may accept gifts made directly
to the institution or directly to the Board, absent unique circumstances making a direct gift to
the institution more appropriate, donors shall be requested to make gifts to affiliated foundations.
- Each affiliated foundation shall operate as an Idaho nonprofit corporation that is legally
separate from the institution and is recognized as a 501(c)(3) public charity by the Internal
Revenue Service. The management and control of a foundation shall rest with its governing board.
All correspondence, solicitations, activities, and advertisements concerning a particular foundation
shall be clearly discernible as from that foundation, and not the institution.
- The institutions and foundations are independent entities and neither will be liable for
any of the other's contracts, torts, or other acts or omissions, or those of the other's trustees,
directors, officers, members, or staff.
- It is the responsibility of the foundation to support the institution at all times in a cooperative,
ethical, and collaborative manner; to engage in activities in support of the institution; and,
where appropriate, to assist in securing resources, to administer assets and property in accordance
with donor intent, and to manage its assets and resources.
- Foundation funds shall be kept separate from institution funds. No institutional funds, assets,
or liabilities may be transferred directly or indirectly to a foundation without the prior approval
of the Board except as provided herein. Funds may be transferred from an institution to a foundation
without prior Board approval when:
- A donor inadvertently directs a contribution to an institution that is intended for the
foundation. If an affiliated foundation is the intended recipient of funds made payable to the
Board or to an institution, then such funds may be deposited with or transferred to the affiliated
foundation, provided that accompanying documents demonstrate that the foundation is the intended
recipient. Otherwise, the funds shall be deposited in an institutional account, and Board approval
will be required prior to transfer to an affiliated foundation; or
- The institution has gift funds that were transferred from and originated in an affiliated
foundation, and the institution wishes to return a portion of funds to the foundation for
reinvestment consistent with the original intent of the gift.
- Transactions between an institution and an affiliated foundation shall meet the normal tests
for ordinary business transactions, including proper documentation and approvals. Special attention
shall be given to avoiding direct or indirect conflicts of interest between the institution and
the affiliated foundation and those with whom the foundation does business. Under no circumstances
shall an institution employee represent both the institution and foundation in any negotiation,
sign for both the institution and foundation in a particular transaction, or direct any other
institution employee under their immediate supervision to sign for the related party in a
transaction between the institution and the foundation.
- Prior to the start of each fiscal year, an affiliated foundation must provide the
institution chief executive officer with the foundation's proposed annual budget, as approved
by the foundation's governing board.
- Each foundation shall conduct its fiscal operations to conform to the institution's fiscal
year. Each foundation shall prepare its annual financial statements in accordance with Government
Accounting Standards Board (GASB) or Financial Accounting Standards Board (FASB) principles, as
appropriate.
- Institution chief executive officers shall be invited to attend all meetings of an affiliated
foundation's governing board in an advisory role. On a case by case basis, other institution
employees may also serve as advisors to an affiliated foundation's governing board, as described
in the written foundation operating agreement approved by the Board.
- The foundation, while protecting personal and private information related to private individuals,
is encouraged, to the extent possible or reasonable, to be open to public inquiries related to
revenue, expenditure policies, investment performance and/or other information that would normally
be open in the conduct of institution affairs.
- A foundation's enabling documents (e.g., articles of incorporation and bylaws) and any amendments
are to be provided to the institution. These documents must include a clause requiring that in
the event of the dissolution of a foundation, its assets and records will be distributed to its
affiliated institution, provided the affiliated institution is a qualified charitable organization
under relevant state and federal income tax laws. To the extent practicable, the foundation shall
provide the institution with an advance copy of any proposed amendments, additions, or deletions
to its articles of incorporation or bylaws. The institution shall be responsible for providing
all of the foregoing documents to the Board.
- Foundations may not engage in activities that conflict with federal or state laws, rules and
regulations; the policies of the Board; or the role and mission of the institutions. Foundations
shall comply with applicable Internal Revenue Code provisions and regulations and all other applicable
policies and guidelines.
- Fund-raising campaigns and solicitations of major gifts for the benefit of an institution by
its affiliated foundation shall be developed cooperatively between the institution and its
affiliated foundation. Before accepting contributions or grants for restricted or designated
purposes that may require administration or direct expenditure by an institution, a foundation
will obtain the prior approval of the institution chief executive officer or a designee.
- Foundations shall obtain prior approval in writing from the institution chief executive
officer or a designee if gifts, grants, or contracts include a financial or contractual
obligation binding upon the institution.
- Foundations shall make clear to prospective donors that:
- The foundation is a separate legal and tax entity organized for the purpose of encouraging
voluntary, private gifts, trusts, and bequests for the benefit of the institution; and
- Responsibility for the governance of the foundation, including investment of gifts and
endowments, resides in the foundation's governing board.
- Institutions shall ensure that foundation-controlled resources are not used to acquire or
develop real estate or to build facilities for the institution's use without prior Board approval.
The institution shall notify the Board, at the earliest possible date, of any proposed purchase
of real estate for such purposes, and in such event should ensure that the foundation coordinates
its efforts with those of the institution. Such notification to the Board may be through the
institution's chief executive officer in executive session pursuant to Idaho Code 67-2345 (1) (c).
- Foundation Operating Agreements.
Each institution shall enter into a written operating agreement with
each recognized foundation that is affiliated with the institution. Operating agreements must
be signed by the chairman or president of the foundation's governing board, and by the institution
chief executive officer. The operating agreement must be approved by the Board prior to execution
and must be re-submitted to the Board every two (2) years, or as otherwise requested by the Board,
for review and re-approval. Foundation operating agreements shall establish the operating
relationship between the parties, and shall, at a minimum, address the following topics:
- Institution Resources and Services.
- Whether, and how, an institution intends to provide contract administrative and/or
support staff services to an affiliated foundation. When it is determined that best
practices call for an institution employee to serve in a capacity that serves both the
institution and an affiliated foundation, then the operating agreement must clearly define
the authority and responsibilities of this position within the foundation. Notwithstanding,
no employee of an institution who functions in a key administrative or policy making capacity
(including, but not limited to, any institution vice-president or equivalent position) shall
be permitted to have responsibility or authority for foundation policy making, financial
oversight, spending authority, investment decisions, or the supervision of foundation employees.
The responsibility of this position within the foundation that is performed by an institution
employee in a key administrative or policy making capacity shall be limited to the coordination
of institution and affiliated foundation fundraising efforts, and the provision of administrative
support to foundation fundraising activities.
- Whether, and how, an institution intends to provide other resources and services to an
affiliated foundation, which are permitted to include:
- Access to the institution's financial systems to receive, disburse, and account
for funds held (with respect to transactions processed through the institution's financial
system, the foundation shall comply with the institution's financial and administrative
policies and procedures manuals);
- Accounting services, to include cash disbursements and receipts, accounts receivable
and payable, bank reconciliation, reporting and analysis, auditing, payroll, and budgeting;
- Investment, management, insurance, benefits administration, and similar services; and
- Development services, encompassing research, information systems, donor records,
communications, and special events.
- Whether the foundation will be permitted to use any of the institution's facilities and/or
equipment, and if so, the details of such arrangements.
- Whether the institution intends to recover its costs incurred for personnel, use of facilities
or equipment, or other services provided to the foundation. If so, then payments for such costs
shall be made directly to the institution. No payments shall be made directly from a foundation
to institution employees in connection with resources or services provided to a foundation pursuant
to this policy.
- Management and Operation of Foundations.
- Guidelines for receiving, depositing, disbursing and accounting for all funds, assets, or
liabilities of a foundation, including any disbursements/transfers of funds to an institution
from an affiliated foundation. Institution officials into whose department or program foundation
funds are transferred shall be informed by the foundation of the restrictions, if any, on such
funds and shall be responsible both to account for them in accordance with institution policies
and procedures, and to notify the foundation on a timely basis regarding the use of such funds.
- Procedures with respect to foundation expenditures and financial transactions, which must
ensure that no person with signature authority shall be an institution employee in a key
administrative or policy making capacity (including, but not limited to, an institution vice-president
or equivalent position).
- liability insurance coverage the foundation will have in effect to cover its operations and the
activities of its directors, officers, and employees.
- Description of the investment policies to be utilized by the foundation, which shall be conducted
in accordance with prudent, sound practice to ensure that gift assets are protected and enhanced,
and that a reasonable return is achieved, with due regard for the fiduciary responsibilities of
the foundation's governing board. Moreover, such investments must be consistent with the terms
of the gift instrument.
- Procedures that will be utilized to ensure that institution and foundation funds are kept separate.
- Detailed description of the organization structure of the foundation, which addresses conflict of
interest in management of funds and any foundation data.
- Foundation Relationships with the Institutions.
- The institution's ability to access foundation books and records.
- The process by which the institution chief executive officer, or
designee, shall interact with the foundation's board regarding the
proposed annual operating budget and capital expenditure plan prior
to approval by the foundation's governing board.
- Whether, and how, supplemental compensation from the foundation
may be made to institutional employees. Any such payments must have
prior Board approval, and shall be paid by the foundations to the institutions,
which in turn will make payments to the employee in accordance with normal practice.
Employees shall not receive any payments or other benefits directly from the foundations.
- Audits and Reporting Requirements.
- The procedure foundations will utilize for ensuring that regular audits are conducted
and reported to the Board. Unless provided for otherwise in the written operating agreement,
such audits must be conducted by an independent certified public accountant, who is not a
director or officer of the foundation. The independent audit shall be a full scope audit,
performed in accordance with generally accepted auditing standards.
- The procedure foundations will use for reporting to the institution chief executive officer the following items:
- Regular financial audit report;
- Annual report of transfers made to the institution, summarized by department;
- Annual report of unrestricted funds received, and of unrestricted funds available for use in that fiscal year;
- A list of foundation officers, directors, and employees;
- A list of institution employees for whom the foundation made payments to the institution for supplemental compensation
or any other approved purpose during the fiscal year, and the amount and nature of that payment;
- A list of all state and federal contracts and grants managed by the foundation; and
- annual report of the foundation's major activities;
- An annual report of each real estate purchase or material capital lease, investment, or financing
arrangement entered into during the preceding foundation fiscal year for the benefit of the institution; and
- An annual report of any actual litigation involving the foundation during its fiscal year, as well as
legal counsel used by the foundation for any purpose during such year. This report should also discuss any potential
or threatened litigation involving the foundation.
- Conflict of Interest and Code of Ethics and Conduct.
A description of the foundation's conflict of
interest policy approved by the foundation's governing board and applicable to all foundation directors, officers,
and staff members, and which shall also include a code of ethics and conduct. Such policy must assure that transactions
involving the foundation and the personal or business affairs of a trustee, director, officer, or staff member should be
approved in advance by the foundation's governing board. In addition, such policy must provide that directors, officers,
and staff members of a foundation disqualify themselves from making, participating, or influencing a decision in which
they have or would have a financial interest. Finally, such policy must assure that no director, trustee, officer, or
staff member of a foundation shall accept from any source any material gift or gratuity in excess of fifty dollars ($50.00)
that is offered, or reasonably appears to be offered, because of the position held with the foundation; nor should an offer
of a prohibited gift or gratuity be extended by such an individual on a similar basis.
- Foundations for Other Agencies and Idaho School for the Deaf and the Blind (ISDB).
Other agencies and ISDB under the Board's jurisdiction may establish foundations to accept gifts
made for the benefit of the agencies' or school's operating purposes. These agencies and school
are subject to the same policies as the institutional foundations. However, agency/school foundations
with annual revenues less than $100,000 are not required to obtain an independent audit. These
agencies/school must instead submit an annual report to the Board of gifts received and the disposition
of such gifts.
- Idaho Educational Public Broadcasting System Foundations and Friends Groups.
Foundations and
Friends groups that exist for the benefit of the Idaho Educational Public Broadcasting System (IEPBS) are
required by Federal Communications Commission (FCC) regulations to have specific spending authority designated
by the Board. Audits of the IEPBS Foundation and Friends groups will be conducted by the State Legislative Auditor.
- By action of the Board, the Idaho Educational Public Broadcasting System Foundation, Inc., has been designated
to accept gifts made for the benefit of public television in the state of Idaho. The Foundation will conduct its
activities in a manner consistent with the Federal Communications Commission (FCC) regulations and the FCC license
held by the Board.
- By action of the Board, the Friends of Channel 4, Inc., has been designated to accept gifts made for the Benefit
of KAID TV, Channel 4. The Friends of Channel 4, Inc., will conduct its activities in a manner consistent with the
Federal Communications Commission (FCC) regulations and the FCC license held by the Board.
- By action of the Board, the Friends of Channel 10, Inc., has been designated to accept gifts made for the benefit
of KISU TV, Channel 10. The Friends of Channel 10, Inc., will conduct its activities in a manner consistent with the
Federal Communications Commission (FCC) regulations and the FCC license held by the Board.
- By action of the Board, the Friends of KUID, Inc., has been designated to accept gifts made for the benefit of KUID TV,
Channel 12. The Friends of Channel 12, Inc., will conduct its activities in a manner consistent with the Federal
Communications Commission (FCC) regulations and the FCC license held by the Board.
- Acceptance of Direct Gifts.
Notwithstanding the Board's desire to encourage the solicitation and acceptance of
gifts through affiliated foundations, the Board may accept donations of gifts, legacies, and devises (hereinafter "gifts")
of real and personal property on behalf of the state of Idaho that are made directly to the Board or to an institution,
school, or agency under its governance. Gifts worth more than $250,000 must be reported to and approved by the executive
director of the Board before such gift may be expended or otherwise used by the institution, school, or agency. Gifts worth
more than $500,000 must be approved by the Board. The chief executive officer of any institution, school, or agency is
authorized to receive, on behalf of the Board, gifts that do not require prior approval by the executive director or the
Board and that are of a routine nature. This provision does not apply to transfers of gifts to an institution, school,
or agency from an affiliated foundation (such transfers shall be in accordance with the written operating agreement between
the institution, school, or agency and an affiliated foundation, as described more fully herein).
Additional Resources
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