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Policy Section 5
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Policy - Section 5 - Agreements, Notes, & Contracts Between MSU Foundation & Murray State University

Policy 5.01
Subject: Ownership of Funds Held by Murray State University Foundation
Date: January 1, 1991

Purpose

The November 17, 1987 operating agreement between Murray State University (University) and Murray State University Foundation, Inc. (Foundation) addressed the ownership of certain funds held by the Foundation and the future management of "University" funds by the Foundation.

As required by the operating agreement, the Foundation has returned University funds, other than gifts and donations, for which documentation existed substantiating that the University should have been the depository of the funds. The Foundation routinely reimburses the University for all funds received, other than gifts and donations, which are obviously intended to be the property of the University.

The Foundation attempts to determine the ownership of gifts and donations received from private and corporate donors according to the 1987 operating agreement, and to identify those funds that are the property of the University in its accounts and records. Absent consultation with the donor, frequently the only source for determination of the donor's intent as to the ownership of the funds is the "payee" on the donor's check.

It is the view of the Foundation that most donors are not aware of the existence of two separate legal entities. When issuing a check to the order of "Murray State University" or "Murray State University Foundation", most donors are not attempting to distinguish between the two entities; their intent is to benefit a particular area or department within the University. The areas receiving these restricted donations rely on them to supplement current operating budgets. Large cash reserves are the exception, rather than the rule.

Because of the difficulty in determining donor intent and the volatile nature of most funds, the Foundation adopts the following policy in determining ownership of funds:

Policy

  1. Funds originally transferred by the University to the Foundation for management purposes under the November 17, 1987 operating agreement will remain segregated as "University" funds in the records of the Foundation.
  2. Funds, other than donations, received by the Foundation which are obviously intended to be the property of the University will be endorsed over or reimbursed to the University. Reimbursement will be made within 30 days, if practicable.
  3. The criteria for ownership in the 1987 operating agreement will be applied to all donations issued to the order of "Murray State University" or "Murray State University Foundation". Separate accounts will be established according to the determination of the ownership of the funds.
  4. The University will be notified of all donations for which a determination of ownership could not be made. Determination of ownership of these funds will be by joint effort of the President of the Foundation and the Treasurer of Murray State University.
Revised September 15, 2014

Policy 5.02
Subject: Determination of Ownership of Donated Assets and Transfer of Assets Donated to the Murray State University Foundation Inc. for a Particular Use by Murray State University.
Date: January 1, 1991

Purpose

The Murray State University Foundation Inc. (Foundation) receives assets that are donated for use by Murray State University (University). In the past there have been problems as to the ownership of the assets in terms of accounting, insurance coverage, restricted uses, etc. The following policy will ensure that the intent and restrictions of the donor are followed and there is proper accountability and insurance coverage for donated assets that are for the benefit of a particular area within the University:

Policy

  1. The Foundation will be notified of all donated assets. After reviewing the intent and purpose of the contribution, the Executive Committee of the Foundation, or its designee, will determine if the assets are to be retained by the Foundation or transferred to the University. If the Executive Committee, or its designee, determines the asset donation is for the benefit of the Foundation, ownership will be maintained by the Foundation. If the asset donation is determined by the Executive Committee of the Foundation, or its designee, to be for the benefit of the University, the asset will be transferred to the Board of Regents for transferal to the designated area in the University.
  2. All donated assets designated as Foundation property, will be properly identified and accounted for. The cost of ownership of the asset such as insurance will be paid for by the Foundation.
  3. All donated assets designated as University property will be transferred to the area in the University for which the contribution was intended. The costs of ownership and accountability will be maintained by the University.
  4. The University manager responsible for the use of the donated asset will be notified along with the Assistant Director of Accounting and Financial Services or the Coordinator of Property Services that the asset is being transferred and should be added to the inventory for which he/she is responsible.
  5. After a donated asset is transferred to the University, any sale or disposition of the asset should follow normal University procedures. If possible, the proceeds from the sale of the donated asset should be placed in the University account to be used by the area of the University for which it was intended.
Revised September 15, 2014

Policy 5.03
Subject: Loans to Murray State University
Date: April 1, 1996

Purpose

In fulfilling its objectives of providing services for the enhancement and improvement of Murray State University (University), the Murray State University Foundation, Inc. (Foundation) is often called upon to make loans to various University units. The following policy will provide guidelines for future loans of this nature:

Policy

  1. The unit requesting a loan should submit a written request to the President of the Foundation. The request should indicate the amount and purpose of the loan, as well as a formal plan for repayment.
  2. The President will compile information on the current financial position of the Foundation and the details of future commitments. The Executive Committee will review the financial information and submit a recommendation to the full Board of Trustees.
  3. The interest rate charged on all loans will be one percent above the average annualized yield computed on Foundation investments for the most recent investment reporting period.
  4. A formal loan agreement and promissory note will be prepared for all loans approved by the Foundation Board of Trustees. The loan agreement shall be signed by a representative of the unit requesting the loan, the President of Murray State University, the University Vice President of Administrative and Financial Services, and the President of the Foundation. 
  5. No loan shall be for a term in excess of one year without the express prior approval of the Board of Trustees. All loans from time to time outstanding shall be reviewed at least annually by the Finance Committee. Loans may be extended for successive one year terms at the discretion of the Board of Trustees.
Revised September 15, 2014

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