Policy on Empire State University Foundation Operating Authority

Policy on Empire State University Foundation Operating Authority

Sponsor:

Vice President for Advancement, Office for Advancement

Contact:

Kevin Wilcox, Special Projects Assistant to the Senior Vice President for Administration and Finance

Category:

Advancement

Number:

300.004

Effective Date:

05/08/2024

Implementation History:

Keywords:

Foundation, Agency Account, Operating Agreement, Research Foundation, Service User

Background Information:

SUNY policy document 9600 titled “Foundations Guidelines” establishes the authority and guidelines of the foundation to operate as a separate legal and financial entity through a contract with the university to support fundraising, real property management, and other activities and functions that are not specifically vested with the university. The foundation may also provide fiscal, administrative, and investment services to other university-related entities.

Purpose

To establish the policies and expectations for the operation and use of the Empire State University Foundation and its relationship to Empire State University and related entities. 

Definitions

These definitions apply to terms as they are used in this policy.     

Agency Account is a custodial account managed by the foundation to hold funds belonging to university-related entities and other service users, but not funds of the university, foundation, or SUNY’s research foundation.

Conflict of Interest occurs when an individual would personally benefit in any manner — financially or otherwise — from a decision or transaction in which that individual or interested person has a decision-making role or can influence the decision.  

Foundation is the Empire State University Foundation.

Foundation Account is a fiscal account used to hold foundation funds and assets.

Interested Person is a person living in the same household as the individual with a potential conflict of interest, a spouse of that individual, or any person who is a direct descendant of the individual’s grandparents or the spouse of that descendant.

Operating Agreement is the contract between the foundation and university as required by SUNY Policy Document 9600 that authorizes and outlines foundation activities and functions at the university.

Research Foundation is The Research Foundation for the State University of New York.

Service User is a non-foundation entity, such as a university office or department, university-related entity, or other entity or group associated with the university, whose mission is in support of and consistent with the university mission, which utilizes funding and/or services provided by the foundation. A service user shall not be an individual, group, or entity which exists for the personal benefit of any individual or member of such group or entity. 

State is the State of New York.

SUNY is the State University of New York.

University is Empire State University.

University-Related Entity is an organization or entity, whether incorporated or not, which the university judges to be integral in achieving the university’s mission. University-related entities include but are not limited to the Student Government Association and Student Alumni Association.

Statements

    The operating agreement between the foundation and university establishes and defines the foundation’s operations and functions.

Under the operating agreement, the foundation may provide the following services:

    1. Philanthropic initiatives and activities to support the university’s mission and strategic priorities, including accepting gifts and donations that result from these efforts.
    2. Allocation of restricted and unrestricted funds to the university, university-related entity, or other service user that are the result of philanthropic revenue and earnings generated from stakeholders, donors, and existing assets.
    3. Fiscal oversight of all owned and non-owned foundation assets or university-related entity for which the foundation serves as fiscal agent.
    4. Responsible investment of funds under the foundation’s control.
    5. Fiscal agent, banking, and accounting services to other university-related entities in need of such services.
    6. Holding of funds in separate agency accounts for university-related entities or other service users in a custodial or fiscal agent capacity for the benefit of university students, faculty, staff, or organizations for use in supporting the university’s mission. Agency accounts shall not be used for any function that personally benefits any individual or member of a university-related entity or other service user or to hold funds of the university, state, foundation, or research foundation. 

Under the operating agreement, the foundation is prohibited from engaging in the following activities:

    1. Providing instructional and credit bearing programs
    2. Operating sponsored research programs
    3. Using state property to generate revenue
    4. Activities prohibited by law, regulation, or policy
    5. Any activity or program that is not within the foundation’s stated legal mission, or that would endanger the foundation’s federal or state tax-exempt charitable status

The foundation is an independent legal and financial entity from the university and research foundation.

Service users are required to respect and enforce these legal separations by not intermingling foundation funds with those of the university, research foundation, or university-related entity in foundation accounts, agency accounts, or non-foundation accounts.

    1. Neither foundation accounts nor agency accounts may be used to receive, hold, or disburse university, State of New York, or research foundation funds.

Although many of the foundation financial expenditure policies and procedures may mirror those established for the university and research foundation, foundation finances are segregated and accounted for independently from any other entity.

To meet its mission and provide services outlined in this policy, the foundation will use a series of accounts that generally fall under the following categories. The foundation will provide a definition and direction on additional categories that may be added as appropriate business practices dictate:

  1. Endowed scholarship accounts
  2. Endowed non-scholarship accounts
  3. Restricted current use accounts
  4. Unrestricted accounts
  5. Program accounts
  6. Foundation administrative accounts
  7. Accounts maintained as a fiscal agent, such as agency accounts, student activity accounts, and Student Alumni Association accounts

The foundation has a fiduciary responsibility to donors to use gifts and any resulting earnings in accordance with restrictions or specific purposes identified by the donor at the time of the gift that do not conflict with federal or state law. To facilitate this requirement, the foundation may segregate funds into accounts with specific purposes. In addition, to ensure abidance to donor or other designations and restrictions, service users are required to follow all account restrictions, guidelines, and foundation instructions in the receipt, management, and expenditure or disbursement of funds from foundation accounts.

The foundation has an obligation to provide careful stewardship of the support it has received from generous donors. As such, the foundation shall have in place a series of policies and accompanying service user procedures and foundation standard operating procedures which outline rules, processes, and steps required to ensure proper stewardship and meet requirements outlined in SUNY policy document 9600. All service users are responsible for knowing and adhering to these policies and procedures.

The foundation shall have proper policies and procedures that include internal controls to provide reasonable assurance of achievement of objectives, reliability of financial reporting, safeguarding of assets, effectiveness and efficiency of operations, proper stewardship of all funds and assets, and compliance with external laws and regulations. All service users and accompanying activities shall comply with such policies, procedures, and internal controls.

In providing services to university-related entities and other service users, the foundation and the university-related entity or other service user shall adhere to all applicable legal requirements and foundation, university, and SUNY policies and procedures.

The foundation shall maintain proper accounting procedures and records, prepare periodic financial statements, and undergo an annual independent external financial audit for itself and any service user or university-related entity as required by SUNY guidelines, the operating agreement between the foundation and university, foundation by-laws, foundation board Audit and Compliance Committee charter, or fiscal agent agreement between the foundation and a service user or university-related entity. All service users and university-related entities shall fully cooperate with the foundation in preparing accounting records, financial statements, and independent external financial audits in a timely manner as directed by the foundation.

The foundation shall develop records retention policies and procedures to ensure proper retention and maintenance of records relating to its governance and fiscal and program operations as required by applicable state and federal law and regulations.

The foundation and university-related entities and other service users utilizing foundation services shall take all standard and proper precautions in collecting, handling, storing, and sharing personally identifiable information or other sensitive personal or financial information including:

  1. Minimizing collection or storage of personally identifiable or sensitive information to that absolutely necessary for program or business reasons.
  2. Properly securing all personally identifiable/sensitive information whether in hard copy or electronic formats.
  3. Adhering to all university, foundation, state, federal, and applicable international data security laws, regulations, and policies including but not limited to SUNY policy documents 6608 and 6900, the New York State Information Security Breach and Notification Act, the Federal Educational Rights and Privacy Act of 1974 (FERPA), the federal Gramm-Leach-Bliley Act, the Federal Trade Commission’s Safeguards Rule, and the General Data Protection Regulation (GDPR).

All service users, individuals acting on behalf of service users or university-related entities, and individuals conducting business on behalf of the foundation shall at all times act in an ethical manner in utilizing foundation services, funds, or assets. These entities and individuals shall avoid conflicts of interest or what would appear to be a conflict of interest to a reasonable person in utilizing any foundation services, funds, or assets or transacting any foundation business.

If a conflict of interest cannot be avoided or the appearance of a conflict of Interest exists, it shall be immediately disclosed to the foundation treasurer and executive director before any services have been rendered or transaction undertaken to determine if and how such conflict of interest may be addressed so the service or transaction may proceed. The treasurer and executive director shall determine if a conflict of interest exists and if and how it can be managed. The foundation shall not allow the service or transaction in question to proceed if the conflict of interest cannot be properly addressed or removed.

If the foundation treasurer or executive director are a party to the conflict of interest, they shall remove themselves from addressing the conflict of interest and the other shall make a sole determination on the conflict of interest. In any case of a conflict of interest, real or apparent, the individual with the conflict of interest shall be removed from any decision-making role regarding the service or transaction in question. 

The executive director shall notify the chairperson of the foundation board of directors regarding any conflict of interest that cannot be removed or managed or was not properly disclosed under this policy and that threatens the operations or reputation of the foundation or could result in future litigation.

University employees whose official duties include interacting with the foundation shall also abide by the requirements of the New York State Public Officer’s Law sections 73, 73-a and 74.    

 

Applicable Legislation and Regulations

New York State Public Officer’s Law (sections 73, 73-a, and 74)

SUNY Foundations Guidelines SUNY Document 9600

Related References, Policies, Procedures, Forms and Appendices