UConn Foundation FAQ

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The University of Connecticut Foundation, Inc.'s EIN is 06-6070722.


Updated: February 19, 2014

 

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, under the terms of 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 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 fundraising services."

 

What Are The Reasons For A Separate Foundation?  [Top of page] 

The UConn Foundation exists solely to promote the educational, research, and outreach missions of the University of Connecticut. The Foundation solicits, receives and administers gifts and financial resources from private sources to enhance the University. These private gifts provide additional support beyond the University's state appropriations, revenue and grant income. Among other things, funds donated to the Foundation are used by UConn to provide scholarships, fellowships and other forms of financial assistance to students; provide support for endowed faculty chairs and professorships to help recruit and retain faculty to teach and perform beneficial research at the University; and fund various academic and professional development activities within each of UConn's schools and colleges in order to enhance learning opportunities and the pursuit of knowledge.

Foundations can invest beyond the low-risk, low-return strategies often mandated by states, thereby increasing the opportunity for greater investment return and, consequently, the revenue available to the primary institution. Donors often feel more secure making a major gift to a foundation governed by individuals with extensive legal, business, and financial management skills. Foundation boards can operate in a businesslike manner and provide an engaging role for powerful and successful individuals who want to help advance an institution. Foundations can also serve to safeguard the privacy of donors who may not want the details of their personal finances to become a matter of public record.

 

What Are the Benefits To The University of Connecticut?  [Top of page] 

The support the Foundation provides the University is critical as it significantly augments UConn's other revenue sources. In these difficult economic times, this support is more important than ever.

Since 2000, UConn has provided roughly $90 million in non-state appropriated funding to the Foundation in support of their fundraising operations. During this same period, the Foundation has raised $ 711 million from private sources for direct operational and endowment support at the University. This is nearly an 8 to 1 return on the University's investment in the Foundation, making it a very wise and profoundly beneficial investment for UConn.

In fiscal year 2013, the University agreed to provide $8.0 million in non-state appropriated funding to support Foundation operations. In response, the Foundation raised a total of $63.3 million besting last year's total by $8.6 million. Of this amount, $26.5 million was raised for programs; $9.2 million for faculty, nearly $8 million more than last year; $7.6 million for capital improvements; and $20.0 million for scholarships. Seventy five new endowments were established, bringing the total number of these funds to 1,614; in 1998 the number of endowed funds designated by donors to provide direct support for faculty and students at the University was 601.

 

 Why Are The UConn Foundation’s Donor Records Not Open To The Public?  [Top of page] 

The UConn Foundation is a separate tax-exempt 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 separate nature continues to be respected. It accomplishes this in a number of important ways:

  • It receives gifts from donors who prefer not to have their contributions placed in state accounts.
  • It provides donors with an extra level of assurance that their gifts will be used in accordance with their wishes.
  • Gifts made to the Foundation on behalf of the University provide program enhancement, rather than replacement of state support.
  • It ensures donor privacy when requested, as well as the confidentiality of donor information.

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.

In addition, the Foundation's ability to engage investment managers would be more limited were it subject to the Freedom of Information Act, as many managers require confidentiality. This would have a potentially negative effect on the University's endowment performance, as well as the daily operations of investment management.

  

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 is designated for specific purposes at the University. In fiscal year 2013, more than 90 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 Office of Audit, Compliance and Ethics and the Foundation independent auditors also test Foundation expenditures for compliance with donor intent.

 

Why Doesn’t The Foundation Pay Its Administrative Costs From The Money It Raises?  [Top of page] 

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 (MOU) 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. 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.

Keep in mind that 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 the donor's primary purpose.

 

 Is The Foundation Serviced By University Personnel?  [Top of page] 

The UConn Foundation employs it own staff to fill some 116 positions. These employees are recruited, hired, trained, and managed subject to the Foundation's human resources policies and procedures. The Foundation reimburses the University for expenses that the University would not otherwise have incurred in relation to Foundation employees' presence in University space. 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 with a contract to provide services for the institution.

 

What is the Oversight of the Foundation?  [Top of page] 

The UConn Foundation is accountable to its Board of Directors and must adhere to a variety of federal and state regulations and laws.

Independent Board Oversight:

The UConn Foundation has an independent volunteer Board of Directors that 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 in all matters so as not to jeopardize the Foundation's 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, and address of board members.

The Board of Directors comprises more than 50 members. At least forty percent must be former students of the University of Connecticut and there are 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 Board has eight committees that actively oversee the audit, development, investment, finance and human resource activities of the Foundation.

State Oversight:

Foundations that support state agencies are governed by Conn. Gen. Stat. Sec. 4-37e to 4-37k. Below are excerpts from the Office of Legislative Research Report 2004-R-0781, which summarizes current state law:
Under the law, a foundation is a tax-exempt organization that supports a state agency. The foundation must have a governing board to oversee its operations. There must be a written agreement between the foundation and its agency governing their relationship. The payment of compensation to an agency official or employee from the foundation requires the written approval of the agency's executive authority, e. g. , the head of a department or the president of a constituent unit of a higher education. The foundation must undergo an audit conducted for any fiscal year in which it has receipts and interest earnings of more than $100,000. Each foundation must develop written policies regarding allegations of corruption and other whistle-blowing complaints.


Audits

A foundation that has receipts and interest earnings of more than $100,000 in any fiscal year must have an audit conducted for that year. The audit must be conducted in accordance with generally accepted auditing standards. It must be conducted by an independent certified public accountant (CPA) or by the Auditors of Public Accounts if requested by the agency supported by the foundation. The UConn Foundation conducts this audit at its own expense, relieving taxpayers of this cost.

The audit report must include financial statements, a management letter, and an opinion as to whether the foundation's operating procedures conform with the law governing agency foundations. The financial statements must include the foundation's total receipts and investment earnings for the year and the amount and purpose of each receipt of funds by the agency from the foundation. The audit report must also disclose any receipt of or use by the foundation of any public funds in violation of the law. The report must go to the agency's executive authority.

If an independent CPA conducts the audit, the agency's executive authority and chief financial officer must review the report. After doing so, they must sign a letter stating that they have done so and send the report and letter to the Auditors of Public Accounts. If the report indicates that (1) funds for deposit in state accounts have been deposited in foundation accounts or (2) state funds, personnel, services, or facilities may have been used in violation of the law, the Auditors of Public Accounts may conduct a full audit of the foundation's books and accounts pertaining to such funds, personnel, services, or facilities. The Auditors of Public Accounts have access to the CPA's relevant working papers.

Additionally, under the Foundation's agreement with the University, the University's Office of Audit, Compliance and Ethics annually conducts testing of Foundation disbursements for compliance with University policies related to disbursement of Foundation funds.

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.

Federal Compliance & Reporting:

The Foundation is required to comply with all federal laws governing 501(c)(3) non-profit organizations and annually file IRS Form 990, which requires disclosure of:

  • Balance sheet: assets, liabilities and net assets, revenues and expenditures for the year
  • Expenditures summarized under the following functions: support for the University, management and general, and fundraising
  • Revenues summarized by activity creating the revenue: e.g., contributions; investment gains or losses
  • Governance of the Foundation
  • Compensation of Foundation officers, board members and key Foundation employees
  • List of five highest paid independent contractors
  • Information regarding the Foundation's Conflict of Interest Policy and specific transactions with employees and board members
  • Expenditures for lobbying
  • Summary of revenues and expenditures from fundraising events

 

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 Office of Audit, Compliance and Ethics annually conducts testing 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:

  • The Memorandum of Understanding between the University and the Foundation is signed by the President of the University, the Chief Financial Officer of the University, the Chair of the Foundation Board of Directors, the Foundation President and the Executive Vice president of the Health Center. It is then sent for approval by the Attorney General's Office in Hartford.
  • Existing state law requires foundations supporting state agencies with receipts and earnings from investments totaling in excess of $100,000 per year or more to retain an independent certified public accountant to perform a full audit of the foundation's books and accounts. The Foundation retains PricewaterhouseCoopers to conduct this audit.
  • The audit results are reviewed by the President of the University and its Chief Financial Officer. The University is then required by statute to file a copy of the audit results with the Auditors of Public Account (see Conn. Gen. Stat. Sec. 4-37f(8)).
  • The Foundation publishes an annual report that includes its audited financial statements and significant fundraising activities. The annual report is available on the Foundation's Web site.
  • The UConn Foundation is required by various states' laws to register and make annual filings in order to solicit charitable funds in such jurisdictions. These Foundation filings are a matter of public record.
  • The UConn Foundation is required by federal law to file a newly expanded annual Form 990, in the same manner as numerous other public charities across the country.

In addition, the UConn Foundation is subject to outside scrutiny by debt rating agencies such as Moody's and Standard & Poor's. The Foundation also 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 near $8 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.

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