The University of ArizonaThe University of Arizona
Financial Policies & ProceduresFinancial Policies & Procedures
 

6.15 University Relations with Affiliated Organizations

Policy Information

Policy Number: 6.15Effective Date: 08/21/2012
Responsible Unit: FSO-Financial ManagementLast Revised Date: 07/24/2017
Email: fin-mgmt@fso.arizona.eduPhone: 520.621.3220

Purpose and Summary

The University of Arizona (the University) recognizes the value of private organizations in helping the University to achieve its goals. The University desires to preserve the independent operation of any affiliated organization associated with the University, and to ensure that affiliated organizations and the University conduct their business in accordance with specified principles that are the basis for their joint activities or agreements.

In order to assure both the Arizona Board of Regents and the public that the University is receiving assistance and services in an appropriate manner and to comply with financial reporting requirements, the University has developed the following policies and procedures to be incorporated in its agreements and contracts with affiliated organizations.

Source

Arizona Board of Regents “Guidelines Governing the Relationships between Component Unit Affiliates and Universities under the Jurisdiction of the Arizona Board of Regents.”

Governmental Accounting Standards Board (GASB) Statements, as amended, including but not limited to Statement No. 14, 39, and 61

Scope

This policy applies University-wide, including Main Campus, the Arizona Health Sciences Campus, the Phoenix Biomedical Campus, and University of Arizona – South. In addition, this policy applies to all extension off-site campus units, both domestic and international.  

Definitions

  1. Affiliated Organization: A legally separate not-for-profit corporation, exempt from federal income tax, with Internal Revenue Code section 501(c)(3) status, which raises funds or carries out other activities primarily in support of the teaching, research and public service missions of the University.
  2. Component Unit: Any organization or entity that is legally separate from the University, but that is related or affiliated to the University in such a way that it is or may at some point in the future be considered a “component unit” for financial reporting purposes. These may include alumni associations, development foundations, other organizations that raise and hold economic resources for the direct benefit of the University, or organizations that have financial interdependence with the University. The intent of this definition is to cover all entities that are or potentially could be covered by applicable financial reporting standards, as determined by the University.

Policy

  1. No University entity shall establish a foundation or other University affiliated organization or initiate any fundraising program or activity without the prior approval of the Director of Development, Vice President for External Relations, and the President of the University.
  2. The University and any affiliated organization shall maintain their independence from each other.
  3. No University employee shall serve as an officer of an affiliated organization without written approval by the President.
  4. The activities of affiliated organizations should enhance the mission of the University and must be compatible with the University's purposes.
  5. All arrangements for services rendered between the University and the affiliated organization shall be memorialized in formal agreements.
  6. Any University payments for services to an affiliated organization must be made in accordance with an existing agreement that complies with all University and Board of Regents' policies.
  7. Arrangements between the University and an affiliated organization concerning the use of the other's office space, storage space, office furniture and equipment, utilities, telephones, photocopying services, computer systems, or similar items shall be specified in a formal document.
  8. All agreements between the University and an affiliated organization shall include a provision that protects both parties against conflicts of interest in the execution of the agreement or contract.
  9. University agreements or contracts with affiliated organizations shall provide assurance that the organization's fiscal and accounting practices in the area involved are sound, prudent, administered, and reported in accordance with law.
  10. The use of the University's name and trademarks by an affiliated organization shall be in accordance with the terms of a separate licensing agreement, which shall specify that the organization is barred from using the University's name if the University's relationship with the organization is terminated.
  11. All such agreements and contracts shall comply with applicable law and with Arizona Board of Regents' and the University's rules and regulations.
  12. Affiliated organizations must use sound fiscal and accounting procedures.
  13. Deficit spending shall not be permitted for affiliated organization accounts wherever they are established, without prior written approval of the University president or his/her designee.
  14. Affiliated organizations must periodically assure the University that appropriate fiscal reviews and/or audits are being conducted. Any organization that solicits gifts for the benefit of the University shall provide the University's Associate Vice President, Financial Services with a copy of its IRS Form 990, Return of Organization Exempt from Income Tax, or equivalent form, annually.
  15. Support received from affiliated organizations is supplemental in nature and not a substitute for appropriated funds.
  16. University employees may not receive or accept supplemental compensation, bonuses, or incentive payments from an affiliated organization, except with the prior approval of the President or his/her designee.
  17. Pursuant to policy 8.12 Gifts, the Development Office, subject to the authority of the President of the University, has responsibility for the relationships the University has with its donors, and ultimate authority for approving fundraising activities undertaken on behalf of the University.
  18. The transfer of real and personal property from an affiliated organization to the University shall be formally documented and shall conform to policy 8.12 Gifts.
  19. The terms and conditions governing joint fundraising on behalf of the University shall be established through a formal agreement.
  20. Before accepting a solicited gift for the benefit of the University, an affiliated organization should take steps to assure that the prospective donor (a) is informed of the distinctions between the University and the affiliated organization, and (b) is given the choice of directing the gift to the University or the affiliated organization (except where the University and the affiliated organization have previously agreed in writing that gifts for that purpose shall be held by one or the other organization).
  21. Funds raised or received by an affiliated organization for the benefit of the University, or through the use of the University's name or trademarks, shall be expended for the benefit of the University (or of affiliated organizations with the written approval of the University President). Affiliated organizations shall formally acknowledge gifts received for the benefit of the University, in compliance with applicable tax and other laws, and shall report such gifts to the University Development Office in substantially the format required for the CASE Survey of Voluntary Support.
  22. Gifts made to the University shall not be transferred to an affiliated organization unless accompanying documents demonstrate that the affiliated organization is the intended recipient.
  23. University employees may not accept gifts in the name of the University from any source except in compliance with policy 8.12 Gifts. All such gifts shall be reported to the President on a semi-annual basis in accordance with policy 8.12 Gifts.
  24. Affiliated organizations shall not receive or hold funds, property, or services which properly belong to the University. Such funds, property or services shall be turned over to the University where they will be handled and expended as University funds in accordance with applicable laws and University and Board of Regents' rules and regulations governing the use thereof.
  25. University funds, other than gifts intended for the affiliated organization as described above, shall be transferred to an affiliated organization only to fulfill the terms of an approved agreement or contract.
  26. University employees who would normally authorize or accept a transfer of funds or donations from an affiliated organization to the University must not act in cases where the transfer could benefit them personally, but shall request that their administrative superior act in their place.
  27. Accounts for the benefit of University departments or faculty members shall not be established with an affiliated organization or other non-University entity without the prior written approval of the appropriate University vice president or dean of the college and the Provost. This applies to affiliated units as well as to University departments, centers, units, and divisions.
  28. An affiliated organization may not establishing any banking relationship using the name or tax identification number of the University. Checks made payable to the University of Arizona may be deposited only in a University authorized account. Checks made out to the University of Arizona that have accompanying documentation indicating that the intent of the donor was to donate to an affiliated organization shall be forwarded to that organization along with the endorsement of the Associate Vice President, Financial Services.
  29. The responsible University administrator involved in transactions with an affiliated organization shall be certain that the University receives fair consideration or is reimbursed for its expenses incurred as a result of organization operations, if those expenses would not otherwise have been incurred by the University.
  30. Requests for expenditures from an account at an affiliated organization may not be considered official requests from the University unless they are accompanied by the written approval of the President, the appropriate vice president, or the dean of the beneficiary college or his/her designee.
  31. All sponsored research projects and testing studies shall be submitted to the Office of the Vice President for Research to ensure compliance with all federal and state laws and regulations, including those governing human subjects and animal care. If circumstances warrant that research funding be deposited with an affiliated organization, the Research Office, with the concurrence of that organization, shall approve the establishment of an account. Terms of reimbursement, including overhead/indirect cost recovery, shall be consistent with established University practices.

Procedures

  1. Upon the creation or identification of an affiliated entity, notify the Financial Services Office (FSO).
  2. FSO will review all affiliated organizations to the applicable GASB statements to determine if the affiliated organization is considered a component unit for financial reporting purposes. 

Related Information

Related Information

Arizona Board of Regents
Policy 8.12 Gifts
Development Office
Component Unit Affiliates Policy (Interim)