Since 1966, the University and the Foundation have established a partnership, secured by a Memorandum of Understanding (MOU), which stipulates that the Foundation will manage endowment funds and assist with private fundraising on behalf of the University. The MOU details the two organizations’ mutual goals and objectives, as well as the financial arrangements agreed upon to accomplish such goals.
This is a long-standing common practice at Millersville University and most other major public universities. It is also fully consistent with Pennsylvania statutes governing the proper University-Foundation relationship.
Recent findings by the Council for the Advancement and Support of Education (CASE) have shown that with the stock market decline during the past 18 months, the number of institutionally related foundations now receiving some form of institutional support has climbed above 50 percent.
As separate tax-exempt corporations, institutionally related foundations can perform many functions more effectively than state offices. CASE has articulated reasons why public colleges and universities establish institutionally related foundations:
- Provide a means of clearly separating state and private funds. Many donors prefer to make a gift to a private rather than a state entity. In this way, they can be assured that their gift will be invested profitably, distributed for the intended purposes, and not become confused with state appropriations or other funds.
- 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.
- Are not subject to regulations governing the sale or purchase of real property by the State and can perform these and other business transactions in a competitive and expeditious manner.
- Can develop for-profit subsidiaries such as research parks or real estate foundations that contribute to the mission and resources of the college or university while shielding the primary institution from the risks associated with such investments.
- 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 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.
The Foundation has an independent volunteer Board of Directors. In addition, the Foundation Board comprises 3 ex-officio positions for key University administrators, including the University President and two vice presidents. Ex officio members have a voice in Board deliberations, but no vote. In addition, two student representative and three faculty members serve on the board.
The Foundation Board of Directors executes its fiduciary responsibilities under the strictest of guidelines. They understand the need for transparent and ethical dealings in all matters so as not to jeopardize our status as a 501(c)3 non-profit corporation. Many also happen to be University alumni and major donors to the Foundation. Membership of the board are public.
The vast majority of gifts the Foundation receives are designated for specific purposes at the University. In fiscal year 2010, 98.3 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 Foundation's independent auditors conduct audits of Foundation expenditures to test for compliance with donor intent.
In most cases, contributors donate for a specific purpose. For example, if a donor specifies that their gift is to support a particular 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 what the money was donated for. The Foundation receives very few unrestricted gifts that
The 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 and the President of the Foundation Board of Directors. It is then sent to the Chancellor's office for his approval and that of the Attorney General's Office.
- By law, the Foundation must retain an independent certified public accountant to perform a full audit of the foundation's books and accounts. The Foundation retains Ross Buehler Falk CPA to conduct this audit.
- The 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.
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 or management of endowment gifts to their affiliated foundations - in order to separate their gift assets (private funds) from their public assets (state appropriations).