Accountants: “It would be misleading to exclude” UConn Foundation from state finances

    This year, accountants included language emphasizing the close relationship between the University of Connecticut Foundation and state finances.

    The UConn Foundation is currently fighting legislation that would require it to comply with the Freedom of Information Act by eliminating its unique exemption under the law.

    Previously, the state’s Comprehensive Annual Financial Report included the UConn Foundation as a component unit:

    The University of Connecticut Foundation, Incorporated is a nongovernmental nonprofit corporation created exclusively to solicit, receive, and administer gifts and financial resources from private sources for the benefit of all campuses and programs of the University of Connecticut and Health Center, a major Enterprise fund.

    This year the language changed to include:

    The Foundation is reported as a component unit because the nature and significance of its relationship with the State are such that it would be misleading to exclude the Foundation from the Sate’s reporting entity.

    This contrasts with how the foundation describes itself:

    The UConn Foundation is a separate tax-exempt corporation, not a public agency. This separate foundation structure, which is utilized successfully to support public universities nationwide, legally preserves the private nature of gifts received in the same manner that donor privacy is ensured in the case of most charitable institutions.

    An independent UConn Foundation can better serve the University and donors if its separate nature continues to be respected. It accomplishes this in a number of important ways:

    It receives gifts from donors who prefer not to have their contributions placed in state accounts.

    It provides donors with an extra level of assurance that their gifts will be used in accordance with their wishes.

    Gifts made to the Foundation on behalf of the University provide program enhancement, rather than replacement of state support.

    It ensures donor privacy when requested, as well as the confidentiality of donor information.

    Under state law the UConn Foundation is specifically exempted from the Connecticut Freedom of Information Act, which is crucial to safeguarding donor privacy and advancing the Foundation’s mission. In support of this important policy, Connecticut law in fact requires the Foundation to disclose to donors their right to require confidentiality as to their identity. Requiring that broader information concerning potential and actual donors be public information could have a chilling impact on the Foundation’s ability to raise private funds and undermine support for the University of Connecticut.

    In addition, the Foundation’s ability to engage investment managers would be more limited were it subject to the Freedom of Information Act, as many managers require confidentiality. This would have a potentially negative effect on the University’s endowment performance, as well as the daily operations of investment management.