SUBJECT: Foundations
The following policy shall apply to all institutions and area vocational-technical schools governed by the Tennessee Board of Regents.
1. General Statement
This policy is adopted pursuant to T.C.A. §§ 49-7-107 and 49-11-402(a)(4) which authorizes and empowers the Tennessee Board of Regents to take steps necessary for the establishment of foundations for the institutions governed by the Board. The Board recognizes the value of such foundations to the overall development programs of the institutions. Foundations provide a direct means for individuals to participate in the generation and management of contributions for the benefit of institutions and units of institutions.
2. Definition of Foundation
For purposes of this policy, a foundation is defined as a not-for-profit organization which exists solely to support and advance the objectives of an institution. A foundation also shall be operated as a tax-exempt corporation chartered within the State of Tennessee.
3. Foundation/Institution Relationship
A foundation is not an operational function of an institution; it is a separate legal entity. The foundation/institution relationship is derived from a shared interest in the institution's development. Institutional participation in and support of foundation operations are, therefore, appropriate and desirable. It is recognized that to be effective in achieving its purpose, a foundation's identity must be maintained separate from the institution. The accountability of a foundation and the institution as it relates to the foundation, however, are concerns common to the foundation, the institution, and the Board.
4. Purpose of the Policy
The purpose of this policy is to promote and strengthen the operations of foundations which have been and may be established for the benefit of TBR institutions. The following provisions set forth a framework which, from the Board's perspective, enables and enhances a sound and mutually supportive foundation/institution relationship.
5. Provisions
1. To document the foundation's and institution's understanding of their relationship, each institution shall formulate a written agreement with its foundation(s) which describes their respective responsibilities and the services the institution provides the foundation.
2. The governance structure of a foundation should be determined by the organization. To ensure an appropriate level of institutional participation in foundation governance, it is recommended that the institution president and/or the president's designee(s) hold membership on the foundation's executive body.
3. The foundation's executive body shall adopt an annual budget. The institution will develop and present a recommended budget to the foundation to ensure that institutional objectives are reflected in the allocation of foundation funds.
4. The foundation should develop policies and procedures concerning its operations. At a minimum, the policies should address solicitation, acceptance, and management/investment of contributions to the foundation. The policies must incorporate sound business principles and safeguard compliance with donor intent and conditions. It is recognized that investments by the foundation are governed by TCA 35-10-101 et seq.
The policy regarding solicitation and acceptance of contributions shall provide that prior to acceptance of any gift to the foundation which requires institutional support, i.e., staff, financial assistance, storage, etc., approval must be obtained from the president of the institution, and if applicable, by the Chancellor, in accordance with Board policy.
5. No institutional funds, including contributions to the institution, may be transferred directly or indirectly to the foundation. Endowment funds, however, may be transferred from the institution to the foundation with the written approval of the donor. It is understood that instances may occur where a donor inadvertently directs a contribution to the institution which is intended for the foundation. Procedures shall be established to clarify donor intent.
6. Foundations must respect Board and institutional responsibilities for personnel administration, and a process must be established whereby foundation expenditures for compensation and other forms of supplement to institutional personnel, i.e., salary, expense account, automobiles, etc., must be approved in advance by the institution president and Chancellor on an annual basis.
7. Foundation records and accounts may be maintained by the institution; however, they must be maintained separate from institutional records and accounts and be shown as an agency fund of the institution. Records and accounts maintained by the foundation should be available to the institution.
8. The foundation executive body should issue periodic reports on the activities of the foundation, which shall be submitted to the president of the institution. At a minimum, the reports should be issued on an annual basis. At a minimum, a comprehensive annual financial report shall be issued, prepared in accordance with generally accepted accounting principles.
9. A foundation whose records and accounts are maintained as an agency fund of the institution shall be audited on the same cycle as the institutional audit performed by the Comptroller of the Treasury of the State of Tennessee and shall be reported upon as a part of the agency fund of the institution. Records and accounts maintained by the foundation shall be audited annually by the Comptroller of the Treasury or with the prior approval of the Comptroller of the Treasury, an independent public accountant.
The audit contract between the independent public accountant and the foundation shall be approved in advance by the Board and the Comptroller and shall be on contract forms prescribed by the Comptroller.
10. Initial and amended foundation charters and bylaws to be filed with the Secretary of State shall be submitted by the president of the institution to the Chancellor for review.
11. The Chancellor shall have the authority to grant exceptions to this policy when deemed appropriate and necessary.
Source: TBR Meeting, August 17, 1973; TBR Meeting, September 20, 1985; September 21, 1990; June 28, 1991; December 3, 2004.