.05 Foundations.

A. A college may participate in the establishment of a foundation or foundations associated with it for the purpose of assisting the college to perform its mission.

B. If one or more foundations associated with a college are established, the provisions in C-----N of this regulation govern the college's activities in relation to the foundation or foundations.

C. A college shall require as a condition of acceptance of funds from an affiliated foundation that an annual audit of the foundation's fiscal affairs is conducted by an independent certified public accountant, with sufficient detail to allow the college and boards of trustees to ascertain the purposes of expenditures, including the assurance that funds are accounted for and used in accordance with donor instructions. In addition, the audit report shall contain a management letter which specifically addresses the operating procedures of the foundation and recommends any corrective actions necessary to ensure fiscal propriety and efficiency.

D. A college shall require as a condition of acceptance of funds from an affiliated foundation that the foundation provide the college with a detailed annual report of expenditures made to or on behalf of the college's employees which has been verified by the foundation's independent audit.

E. A college may not accept funds from an affiliated foundation unless the foundation uses generally accepted accounting principles and practices. These need not be the same as those employed by the college.

F. A college shall require that an annual report stating major activities, officers, and employees of the foundation is on file with the college and is available to the general public and other interested parties upon request.

G. Since the basic purpose of a foundation is the enhancement of the college, a foundation may engage in any activity considered legitimate to a private corporation which does not conflict with law, its articles of incorporation, any applicable donor instructions, or the mission of the college. The board of trustees and the college shall monitor their relationship with an affiliated foundation to ensure compliance with the limitations in this section.

H. The board of trustees shall develop and adopt specific regulations which deal with the relationship between the board, the college, and the foundation. In addition, these regulations shall be further supported by written agreements which are necessary to clearly delineate the structure of the relationship as well as stress the separate identities of college and foundation. These regulations and agreements shall deal with procedures for acceptance of contributions from the foundation, the use and reimbursement by the foundation of the college's facilities, resources and personnel, and the dual or supplemental employment of the college's employees by the foundation.

I. The board of trustees shall ensure that all additional costs incurred by a college as a result of providing a service, resources, or a facility to the foundation are properly reimbursed by the foundation.

J. To avoid possible confusion or misrepresentation to the general public, the board of trustees and the college shall ensure that all correspondence, solicitations, activities, and advertisements concerning the foundation are readily identified as being from the foundation.

K. The board of trustees shall ensure that the college does not use foundation funds for the purpose of circumventing State policies or regulations by engaging in activities or making expenditures which have been denied the college for other than purely financial reasons.

L. In addition to the provisions of C-----K of this regulation, the board of trustees and the college may adopt any other regulations, policies, or guidelines necessary to guarantee the foundation's responsiveness to the college's mission and needs.

M. A copy of the regulations adopted by each board of trustees, any changes to the regulations, and a listing of all associated foundations shall be supplied to the Commission upon request.