UA Foundation FAQ’s
- What is the UA Foundation?
- Why is the Foundation separate from the University?
- Who governs the Foundation?
- How is the Foundation accountable?
- When is the Foundation’s fiscal year?
- Does the Foundation make grants?
- How is the Foundation funded?
- Who manages the Foundation’s investments?
- What is the payout rate on endowed funds, and how is it determined?
- What are the minimum funding requirements for endowments?
Q: What is the UA Foundation? The University of Arkansas Foundation, Inc. is a charitable corporation created under and by the laws of the state of Arkansas. The corporation is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. It is separate from the University of Arkansas System and is not supported by state funds. The primary purpose of the Foundation is to advance higher education by securing private financial support for all units and activities of the University of Arkansas System. To that end, the Foundation is authorized to receive, hold, invest, manage and control property which may be acquired by the Foundation, and to distribute or use such assets for the benefit of the University of Arkansas System in accordance with the purposes stipulated by the donors, grantors, or testators. Back To Top
Q: Why is the Foundation separate from the University? The vast majority of American public colleges and universities have separate foundations, organized as not-for-profit 501(c)(3) corporations, as does the University of Arkansas System, and for good reasons. An independent, nonprofit foundation results in greater efficiencies and benefits for the University by promoting proper stewardship of private gifts, providing flexibility and responsiveness, investing and managing assets strategically, engaging volunteers as informed advocates, and advancing confidentiality of donor records. Back To Top
Q: Who governs the Foundation? The Foundation is governed by a twenty-seven member voluntary board of directors. The University of Arkansas Board of Trustees appoints four of its current or past members. Six members are appointed at large by the Foundation’s board of directors, and the remaining board members are appointed by the participating campuses and divisions of the University of Arkansas system. Back To Top
Q: How is the Foundation accountable? The Foundation recognizes its responsibility to maintain both public confidence and private trust. Information about its policies, activities, financial statements and other information that would provide a further understanding of its mission and operations are available for review. The Foundation honors its obligation to maintain donor confidentiality and to pursue accepted business practices with regard to human resources, legal, real estate, financial and other matters. The Foundation meets all regulatory requirements at federal, state and local levels. As part of the Foundation’s reporting responsibility its financial records are audited annually by an independent accounting firm. Both the audit and the Foundation’s IRS Forms 990 & 990T are reviewed by the Foundation’s audit committee. These documents are made available on our website for donor and public review. Back To Top
Q: When is the Foundation’s fiscal year? The Foundation’s fiscal year begins July 1 and ends June 30. This coincides with the fiscal year for the University of Arkansas System. Back To Top
Q: Does the Foundation make grants? The Foundation’s mission is to support the University of Arkansas System. Therefore, the Foundation does not make grants to other organizations or to individuals. Back To Top
Q: How is the Foundation funded? Operating costs are met primarily through a charge of 10 basis points (0.1%) on the market value of endowed funds and 10% of any dividend and interest income earned on expendable non-endowed funds. Back To Top
Q: Who manages the Foundation’s investments? A ten-member executive committee of the board oversees the investment of Foundation funds and is responsible for developing appropriate investment policies and asset allocation guidelines. The executive committee has retained investment consultant, Cambridge Associates, to implement investment decisions within these guidelines through a dedicated outsourced CIO who is supported by a team of Cambridge and Foundation investment professionals. The Executive committee meets quarterly, or as needed, to review investment functions including but not limited to investment performance, asset allocation and investment policy. Back To Top
Q: What is the payout rate on endowed funds, and how is it determined? The current payout rate is approximately 5%. The components of the payout rate are 4.4-4.5% for academic and programmatic spending, 0.1% for Foundation overhead and 0.4-0.5% for University advancement overhead. The executive committee sets the payout rate based upon multiple factors. The payout rate is designed to create inter-generational equity by balancing the current and future needs of the University. Primary consideration is given to providing stable funding to the University while being mindful of preserving the endowment value. Back To Top
Q:What are the minimum funding requirements for endowments? Although the Foundation welcomes donations of any amount, the Board of Directors of the Foundation, in consultation with the Trustees of the University of Arkansas, has established minimum levels of funding for certain endowment accounts as follows:
- $5,000 Annual prize or award
- $15,000 Scholarship
- $50,000 Lectureship
- $250,000 Named Professorship
- $1,000,000 Named Chair
Some campuses have elected to require higher funding levels than shown above. Prospective donors should consult development officers on the campus involved. If a donor proposes to establish an endowment for one of the above purposes but does not wish to donate the minimum amount immediately, the fund may be established with the understanding that awards will not be made until the proper level is reached. Interest and capital gains will accrue to the principal until the account is fully funded. Back To Top