Frequently Asked Questions

College and university foundations are separate 501(c)3 charitable organizations that exist solely to support students, research, and learning at a college, university, university system or college unit. Their purpose is to raise and/or manage private support for a single institution or system of institutions while honoring donor intent. They are affiliated with public colleges and universities, including 4-year institutions and community colleges. They are separate, legal entities with their own governing board.

No. College and university foundations are public charities as defined by the Internal Revenue Code. As such, they receive funds from many different donors in the form of charitable contributions. In contrast, private foundations are distinct from public charities in the Internal Revenue Code. Most private foundations:

• are established by a single donor (typically an individuals or corporation),

• do not solicit funds from other donors, and

• are governed by boards controlled by donors, family members, or representatives of donor corporations who make decisions about how to spend and invest foundation funds.

Some donors feel more secure in making major gifts to a foundation governed by individuals with specialized legal, business, and financial management expertise. Unlike public college and university regents or trustees, who are typically politically appointed or elected and have primary responsibility for institutional governance, foundation trustees are recruited for their ability to raise and manage private support for the benefit of those served by the institution. They also have a fiduciary responsibility to ensure that gifts are managed and spent in strict accordance with donors’ wishes.

In many instances, foundations can also protect the privacy of donors who wish to remain anonymous or do not want the details of their personal finances to become a matter of public record.

Like other charitable organizations, college and university foundations are governed by an independent volunteer board. In addition to serving as fiduciaries for the foundation, foundation board members support the college or university in a variety of ways. They typically contribute personally, serving as leaders and examples for other donors. Foundation board members also help staff with prospect identification, solicitation, and stewardship. And they may also serve as representatives and/or advocate on behalf of the foundation with the media and lawmakers.

Typically, the president/chancellor of the college or university and/or other senior institutional staff sit on the foundation board. In most cases, the CEO or executive director of the foundation also holds a senior, cabinet-level position within the educational institution, such as vice president/vice chancellor of advancement. These arrangements help maintain open communication between the foundation and the institution it serves.

As public charities, college and university foundations are accountable to their donors and to the students, faculty, staff, and trustees of the institution they support. They are also legally accountable to the Internal Revenue Service and state agencies that oversee charitable organizations (typically attorneys general). Foundations must file an annual IRS Form 990 information return, which is a public document. Additionally, foundation annual reports, gift and endowment reports, investment performance summaries, audit summaries, and financial statements are routinely made available on foundation websites or are available upon request. Most foundations also honor requests for other information that does not compromise the privacy or financial information of their donors.

College and university foundations are established to support students, research, and learning. They are not a vehicle for shielding information from the public. CASE encourages foundations to be as open with information as possible, especially as it pertains to expenditures and uses of funds, while recognizing that donors often consider and request that their gift information remain confidential.