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University Policies

University Policies

130  Foundations

Approved by Board of Trustees
Effective Date: June 5, 2017
Responsible Division: University Advancement
Responsible Office:  Vice President for University Advancement
Responsible Officer: Vice President for University Advancement

I. Purpose

This policy assures that the relationship of the MTSU Foundation, Inc., (Foundation) to Middle Tennessee State University (MTSU or University) is clearly defined and is set forth in a formal, written manner that:

  1. defines the legal authority and operating control of the University with respect to the Foundation;
  2. describes the relationship of the Foundation to the University and the extent of any liability arising out of that relationship; and
  3. demonstrates that the fund‐raising activities of the Foundation further the mission of the University.

II. Definition

Foundation. For purposes of this policy, the Foundation is defined as a tax-exempt, not-for-profit corporation chartered within the State of Tennessee for the sole purpose of supporting and advancing the mission of the University’s or its programs. This policy does not apply to any foundations established solely to support the University research activities.

III. The Foundation’s Relationship to the University

  1. The Foundation is not an operational function of the University; it is a separate legal entity. The Foundation’s identity must be maintained separate from the University. 
  2. The Foundation’s relationship to the University is based upon a shared interest in the University’s development and success of the University’s mission. Therefore, University participation in, and support of, Foundation operations and activities are appropriate and desirable.
  3. The accountability of the Foundation, and of the University as it relates to the Foundation, is a concern common to the Foundation, the University, and the Board of Trustees (Board). The University should not promote, encourage, or agree to use the Foundation in ways that are, or appear to be, abusive, inappropriate, or do not follow sound business practices.

IV. General Requirements

  1. The governance structure of the Foundation must be determined by the Foundation. To ensure an appropriate level of University participation in the Foundation governance, the University’s President or designee, the Vice President for Business and Finance, and the Vice President for University Advancement should hold an ex-officio, non-voting membership on the Foundation’s governing body. In order to assure that the Foundation acts as a separate entity, a quorum of its governing body may not consist of a majority of members who are employed by the University.
  2. The University shall enter into a written agreement with the Foundation, which documents their understanding of their relationship and describes their respective responsibilities. 
  3. The Foundation shall adopt an annual budget. In order to assure that the Foundation’s objectives are aligned with those of the University, the University shall advise the Foundation of its needs and priorities for the fiscal year in question.
  4. The Foundation shall develop policies and procedures concerning its operations, including, but not limited to, the following:
    1. Policies that address the solicitation and acceptance of contributions to the Foundation. The policies must incorporate sound business principles and safeguard compliance with donor intent and conditions. Such policies shall provide that, prior to acceptance of any gift to the Foundation that will require substantial University support such as staff, financial assistance, storage, on‐going maintenance, etc., approval must be obtained from the President of the University
    2. Policies and procedures that address the management and investment of contributions to the Foundation, shall be subject to the requirements of the Uniform Prudent Management of Institutional Funds Act, T.C.A. §§ 35-10-201, et seq.
    3. Policies and procedures that address the Foundation’s procurement and contracting activities.
      1. a.  Such policies and procedures shall implement sound business practices and prudent use of Foundation funds, including encouragement of the use of competitive procurement of goods and services, when practicable.
      2. b.  Such policies and procedures must include a process for determining authority for authorizing contracts on behalf of the Foundation and for authorizing expenditure of Foundation funds. Authority for these functions cannot be delegated solely to an employee of the University.
    4. Policies that, in accordance with T.C.A. § 49‐7‐107(c), establish and adopt a code of ethics that apply to, and govern, the conduct of all members of the Foundation’s governing body shall require that members review and acknowledge the code of ethics annually.
    5. Policies must identify who may release the Foundation’s records upon receipt of a request.
  5. No University funds, excluding philanthropic contributions to the University, may be transferred directly or indirectly to the Foundation; provided, however, this shall not prohibit the University from providing in‐kind services to the Foundation, such as office space and the use of support staff. It is understood that instances may occur where a donor inadvertently directs a contribution to the University which is intended for the Foundation. Procedures shall be established to clarify donor intent.
  6. The Foundation must respect Board and University authority over personnel administration. Foundation expenditures for compensation and other payments to,, or for the benefit of, University personnel and reportable as income to the recipient, such as salary, expense accounts, automobiles, club, or other organization memberships and dues, etc., must be approved in advance, annually, by the University President, unless the salaries funded by the Foundation are in accordance with University’s compensation plan and included in the University’s personnel budget. This provision does not apply to reimbursement of business expenses incurred by University employees or to non‐ taxable recognition awards given to University employees.
  7. The Foundation’s governing body shall issue reports, at least annually, on the activities of the Foundation, which shall be submitted to the President of the University. An annual financial report shall be issued, prepared in accordance with generally accepted accounting principles, including all required note disclosures.
  8. In accordance with T.C.A. § 49‐7‐107(b), all annual reports, books of account, and financial records of the Foundation shall be subject to audit by the Comptroller of the Treasury of the State of Tennessee. Records and accounts maintained by the Foundation shall be audited on the same cycle as the University audit performed by the Comptroller, or, with the prior approval of the Comptroller, an independent public accountant may perform such an audit. The contract between the independent public accountant and the Foundation shall be approved in advance by the Board and the Comptroller and shall be on forms prescribed by the Comptroller. All annual reports, books of account, and financial records of a Foundation shall be available for audit by the internal auditors of the University.
  9. Copies of the initial and amended Foundation charters and bylaws filed with the Secretary of State shall be maintained by the President of the University.
  10. The Board shall have the authority to grant exceptions to this policy, when deemed appropriate and necessary. An exception must be requested and granted in writing.

Forms: none.

Revisions: none.

Last Reviewed: June 2017.

References: T.C.A. § 35-10-2; § 49‐7‐107; Uniform Prudent Management of Institutional Funds Act, T.C.A. §§ 35-10-201, et seq.