University of Virginia Library

APPROVAL OF MANAGEMENT PRINCIPLES AND GUIDELINES PERTAINING TO
UNIVERSITY-RELATED FOUNDATIONS

• The following resolution was adopted:
• WHEREAS, consistent and expanding private support is essential to the mission and goals of the University; and
• WHEREAS, University-related foundations are organized and operated to benefit the University or one or more of the University's schools or departments; and
• WHEREAS, the University has a vital interest in such University-related foundations, especially when they solicit funds in the University's name when they manage and invest gifts and property for the University's benefit, and when they promote or sponsor programs in support of the University's activities;
• WHEREAS, the Board of Visitors is committed to providing high quality support for the fundraising efforts of each University-related foundation, and to that end seeks to promote efficiency and coordination among, as well as maintain independence and integrity within, all University-related foundations; and
• WHEREAS, the Board of Visitors recognizes the benefit to the University of University-related foundations that are operated in accordance with sound and generally accepted principles for the management of foundations, and in a manner consistent with the University's purpose, mission, policies and procedures;
• WHEREAS, the University's representatives, on behalf of the Board of Visitors, should review the activities of all University-related foundations, at least annually;
• NOW THEREFORE BE IT RESOLVED, that the accompanying Management Principles for Relationships with University-related foundations (Principles) and Guidelines for related foundations (Guidelines) be and they are hereby approved; and
• NOW THEREFORE BE IT FURTHER RESOLVED, that all University-related foundations (including subsidiaries of such Foundations) comply with the Principles and Guidelines and that the Vice President for Business and Finance proceed to seek acknowledgment by existing University-related foundations of their compliance with the Principles and Guidelines prior to June 30, 1990.

MANAGEMENT PRINCIPLES FOR
RELATIONSHIPS WITH
UNIVERSITY-RELATED FOUNDATIONS

University-related foundations exist to benefit the University or one or more of the University's schools or departments. The Board of Visitors should be advised of the purpose of the foundation and the scope of its activities, including grants and fund raising, even though the Board's policy is not to control the activities and functions of its related foundations. A representative of the Board of Visitors will review related foundation activities at least annually to assure that the foundation's operations are consistent with the University's purpose, mission, policies and procedures.

Any related foundation offering courses, seminars, workshops or other related similar instruction should clearly disclose its independence from the University. Any use of the University's name in conjunction with the course or program should identify only the foundation as the official offeror of the program.

Transactions between the University and a related foundation should meet the normal tests for ordinary business transactions, including proper documentation and approvals. The University will not borrow funds from a related foundation without first obtaining the approval of the respective Boards and complying with the requirements of state law.

Any transfer of endowments or other assets between the related foundation and the University for investment management or other purposes should comply with the fiduciary requirements of the respective Boards and assure that any restrictions governing the future distribution of funds are observed.

A related foundation should provide assurance that its financial activities are carried out and reported in accordance with generally accepted business and accounting practices. Special attention should be given to avoiding direct or indirect conflicts of interest between the University and the related foundation and those with whom the foundation does business.

GUIDELINES
FOR UNIVERSITY-RELATED Foundations

A. STRUCTURAL GUIDELINES

1. A University-related foundation[1] (Foundation) is an organization that is created and operated exclusively to benefit the University or one or more of the University's schools or departments. A Foundation as defined for purposes of these Guidelines is one which uses the University's name, consumes University resources, occupies University space, or enters into transactions with the University which require the concurrence of the University. A Foundation has as its purpose one or more of the following:

• a. To facilitate fund raising programs and contributions from private sources for the benefit of the University or one or more of its schools or departments;
• b. To manage and invest private gifts and/or property for the benefit of the University or one or more of its schools or departments; or
• c. To promote, sponsor, and complement educational, scientific, research, charitable, or cultural activities for the benefit of the University or one or more of its schools or departments.

2. Foundations may be created only with the approval of the Board of Visitors after a review of the purpose of the Foundation, its proposed organizational format, and the scope of its activities.[2]

3. Each Foundation should select a representative of the Board of Visitors, or a senior administrator of the University designated by the Board of Visitors from the areas supported by the Foundation, to serve on the Foundation's governing board.

4. Each Foundation should establish an Audit Committee to report to the board of the Foundation.

5. Each Foundation's charter and by-laws should provide that in the event of dissolution of the Foundation, the Foundation's assets will be distributed in the best interest of the University and, if applicable, the school or department within the University that the Foundation was created to support.

B. GUIDELINES FOR CONTRACTUAL RELATIONSHIPS WITH THE UNIVERSITY

1. Each Foundation should execute a formal agreement specifying the responsibilities of the Foundation, acknowledging coordination of fund raising activities, and including other provisions of general application as may be specified by the Board of Visitors.

2. This formal agreement will contain the following provisions:

• a. The Foundation will coordinate with the University and its other related organizations all fund raising activities undertaken in the name of the Foundation.
• b. The Foundation will provide the University with an advance copy of any amendments, additions or deletions to its articles of incorporation or bylaws.
• c. The University and the Foundation acknowledge the independent status of the Foundation and agree that the University and the State are not liable, and will not be held out by the Foundation as liable, for any of the Foundation's contracts, torts, or other acts or omissions, or those of the Foundation's trustees, directors, officers, members, staff or activity participants.
• d. All correspondence, solicitations, activities and advertisements concerning the Foundation will be clearly discernible as being from the Foundation and not the University.
• e. The Foundation will not offer a post-secondary course, seminar, workshop or similar instruction, whether or not for credit, using the name of the University or any of its schools or departments. Any publicity concerning such a course must make clear that it is not being offered by the University or any of its academic departments.

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• f. Funds or gifts payable to the Rector and Visitors of the University of Virginia, the University of Virginia, or to any other University component shall be deposited with the University.
• g. Any transfer of endowments or other assets by the University to the Foundation, or by the Foundation to the University, for management or investment will be formalized in a memorandum of agreement to assure, among other things, that any restrictions governing the future disposition of funds are observed.
• h. The University will obtain approval from the board of the Foundation, the University's Board of Visitors and the State in order to borrow funds from the Foundation.
• i. The University is entitled to recover its costs incurred for personnel, use of facilities, or other services provided to the Foundation.
• j. The University is obligated to comply with the Virginia Public Procurement Act. Even though not required to comply with that Act, the Foundation may deem it advisable and appropriate to employ competitive practices in purchasing goods and services. If the University has agreed in writing to reimburse the Foundation for goods or services acquired on behalf of the University, the Foundation must comply with State procurement requirements.

C. FINANCIAL REPORTING GUIDELINES AND AUDIT REQUIREMENTS

1. At the request of the President of the University, the Foundation will forward to him, on an annual basis, a financial report audited by an independent certified public accountant. This report shall include a description of all expenditures by program and an identification of all investments, including real estate.

Foundations recording annual revenues less than $50,000 will not be required to present an audited financial report but only a financial report compiled by a qualified accounting firm, including the items previously mentioned.

2. The following items shall supplement the annual financial report to the President of the University:

• a. Notice of any litigation or threat of litigation brought against the Foundation, its officers or directors.
• b. Notice of any planned major capital expenditure.
• c. A copy of each IRS form 990, and 990T if applicable, as filed.
• d. A detailed list of any compensation, prize or award paid to any University employee or member of the employee's immediate family, whether in the form of money or property or the use of money or property.
• e. A detailed list of all private firms responsible for managing or investing the Foundation's assets and the fee, if any.
• f. Notice of any audit or review by any tax authorities or action taken, or threatened action, that would adversely affect the tax exempt status of the Foundation.