1. The Minnesota State Colleges and Universities System is an Equal Opportunity employer and educator. Audit Committee March 19, 2008 Meeting Study of Affiliated Foundations Preliminary Report

2. Slide 2 Objectives Study compliance with Board Policies 7.7 and 8.3, and Procedure 8.3.1 Provide useful information regarding the renewal of the MnSCU Foundation contract Facilitate policy analysis of Board Policy 8.3

3. Slide 3 Cost Benefit Analysis Driven by strong economic & rational perspective Accountability requires transparency in –Goals (Expected costs and benefits) –Results (Actual costs and benefits) Methodologies –Public Cost Index (Current Policy perspective) –Fund-Raising Cost Index – More holistic and traditional perspective

4. Slide 4 MnSCU Foundation Public Cost Index Public Costs –Unreimbursed Support Costs Prorated share of direct salaries –Proportion of fringe & accrued comp costs Specific non-salary costs Allocation of indirect costs –Proportion of office support & space –Technology costs Public Benefits –Scholarships –Programs –System Advancement

5. Slide 5 MnSCU Foundation Fund-Raising Cost Index Fund-Raising Costs –Unreimbursed Public Support Costs –Reimbursed Public Support Costs –Foundation Admin Costs Fund-Raising Benefits –New Gifts Earned –New Grants Earned

6. Slide 6 MnSCU Foundation Public Cost Index – FY 2006-07

7. Slide 7 MnSCU Foundation Fund Raising Cost Index – FY 2006-07

8. Slide 8 Cost Benefit Limitations Fails to include Qualitative Benefits Temporal Restrictions Annual Variability of Small Foundations Lack of Historical Tradition

9. Slide 9 Other System Foundations Umbrella Model –University of Minnesota –Maryland System & Institution Foundations –MnSCU, Georgia, Texas, Louisiana, Pennsylvania, California Institution Only –Nevada, Oklahoma

10. Slide 10 Preliminary Policy Considerations Strategic Alignment –Foundation Board Membership –Strategic Planning Support –Gift Refusal Discretion Investment Limitations Disposition of Proceeds upon Dissolution

11. Slide 11 Next Steps Work with Advancement Committee, Chancellor, General Counsel & Executive Director of Development on contract renewal with MnSCU Foundation Extend study to include 41 campus foundations Final report – September 2008