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The Importance of Institution-Foundation Relationships

The Importance of Institution-Foundation Relationships

College and university foundations have an increasingly important role in supporting their institutions.  A foundation’s raison d’etre is to support their affiliated institutions, but they also have obligations to honor donor intent, ensure that foundation assets are used for charitable purposes, and maintain the trust of donors and the public at large.  As the role of the foundation evolves, the potential for conflicts between institution administrators and the foundation board may also be increasing.

A survey conducted by AGB in 2014 found that foundations have become more active as fundraisers, particularly in real estate development, and as advocates for the institution overall.

For example, campus leaders may want to tap foundation funds for a venture that the foundation board sees as an imprudent or an improper use of funds.  Or, campus and foundation leaders may disagree about the relative importance of current endowment spending versus the preservation of future purchasing power. 

There is no easy solution when institution and foundation leaders, both acting in good faith, reach different conclusions about the fiduciary propriety of an issue.  To effectively leverage the benefits of foundations and mitigate potential tensions, leaders from both sides must cultivate habits of collaboration.  To aid this effort, AGB has convened a task force chaired by William (Brit) Kirwan, former chancellor of the University System of Maryland, to develop a statement on institution-foundation relationships.  The statement will include guiding principles, recommended practices, and questions both institution and foundation boards should ask about how they work together.  

The statement will be informed by many of the discussions at AGB’s Foundation Leadership Forum and will be published in final form this winter.

Looking for guidance about foundation governance in general?  Consider The Governance Committee for Foundation Boards by Jim Lanier and E.B. Wilson.
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