FAQs IN RESPONSE TO THE FEBRUARY 26 OSC AUDIT REPORT ON SUNY OVERSIGHT OF CAMPUS RELATED FOUNDATIONS
What is the Stony Brook Foundation?
On February 24, 1965, the Stony Brook Foundation, Inc. was incorporated "to assist in advancing the welfare and development of the State University of New York at Stony Brook by accepting and encouraging gifts to this corporation and by using such gifts to advance such purposes in a manner consistent with the educational policies of the State University of New York." The Foundation by-laws state that a Board of Trustees shall "manage the property, affairs, business, and concerns of the Foundation."
If Stony Brook is a public university, why does it need private gifts?
The State of New York provides less than 18 percent of the University's annual operating budget. Private gifts allow the University to attract and retain the best and brightest faculty, provide scholarships, build first-class facilities, and continue the quality education and research programs that are the hallmark of Stony Brook.
Is my gift tax deductible?
The Stony Brook Foundation is a registered 501(c)(3) charitable organization. All gifts to the Foundation are tax deductible to the fullest extent of the law. You should consult with your tax attorney/advisor concerning the deductibility of your gift. The Foundation's federal tax identification number is 11-6077945.
How is my gift spent?
The goal of the Stony Brook Foundation is to maximize the value delivered to the University. By reducing administrative expenses wherever possible and optimizing organizational efficiencies, the Foundation is able to make available to the University millions of dollars each year. Many donors make gifts for discretionary (i.e., unrestricted) use, thus enabling the University President and Deans to invest in programs and priorities of strategic importance to the University's future. Other gifts are made to support specific programs, while other gifts are used to establish permanently endowed funds. Each gift received by the Foundation — regardless of the purpose or amount — is carefully processed to ensure that the donor's wishes are honored and that the University receives the maximum benefit.
Who decides the University’s fundraising priorities?
The University's fundraising priorities are established by President Samuel L. Stanley Jr., MD, in consultation with his Cabinet, Deans, and key faculty and staff, as well as in consultation with the Foundation's Board of Trustees. Fundraising priorities are fluid and are adjusted based upon the University's needs and donor opportunities.
What is the difference between a current use gift and an endowed gift?
Gifts (and grants) given to the Stony Brook Foundation for current use are immediately available to support the University according to the donor's wishes. Current use gifts may be placed into an existing fund and commingled with other gifts that were made for the same purpose. Large current use gifts and grants made for specific purposes are typically placed into new (and separate) gift fund accounts. The Stony Brook Foundation charges a one-time 10% gift fee for current use funds. In the case of endowments , the gift is permanently invested, and the investment earnings are used to support the purpose of the gift in perpetuity.
How are scholarships awarded?
Each year, donors step forward to provide undergraduate scholarship and graduate fellowship support that help to transform the lives of our students. Some scholarship and fellowship awards are based upon merit and reward academic performance, while others are based upon demonstrated financial need. Student assistance can be designated for students within a specific college, school, department or major, for incoming freshmen or upper division students, for students who are the first generation from their families to attend college, or for those who grew up in a certain city, town, or state, or graduated from a particular high school. An annual scholarship of at least $2,500 and a fellowship of at least $5,000 can be awarded in honor of the donor. Other scholarship gifts are commingled with existing University scholarship funds and administered accordingly.
Nothing is more important to the Stony Brook Foundation Board than fulfilling its fiduciary responsibility to our donors with integrity and transparency. In fact, the Stony Brook Foundation was deliberately established in 1965 as an independent foundation precisely to assure donors that their philanthropic dollars would be distributed in accordance with their intent and not used, for instance, to close budget gaps for the State.
The State Comptroller’s report paints the picture of a Foundation without proper oversight.
As an independent 501c3 nonprofit, the Stony Brook Foundation is not under the authority of the Office of the State Comptroller, but is regulated by the Charities Bureau of the New York State Attorney and conforms to the New York State Revitalization Act . Every year the Foundation is subject to an independent financial audit and is required by law to complete IRS Form 990. Our audits have been completed without any findings. The Stony Brook Foundation is governed by 23 independent trustees on its Board; highly qualified and capable individuals who work tirelessly for no compensation.
Why was the Foundation audited by the State Comptroller’s office?
It wasn’t. The actual target of the OSC audit was the State University of New York’s (“SUNY”) Oversight of Campus Related Foundations. As one of the largest campus related foundations and in a show of good faith, the Stony Brook Foundation volunteered to participate. The audit ended up lasting 15 months. As expected, the OSC findings were immaterial. So we were surprised to read the many misrepresented items presented in the February 2018 OSC final report.
How does the Foundation explain the questionable transactions in the report?
Out of the 270,217 general ledger detailed transactions and 15,656 cash disbursement transactions made available to OSC during the audit representing more than $59 million in disbursements, just three expenses were flagged.
For example, the OSC chose to publicize this item: While we had the receipt for a $420 donor solicitation dinner, we could not produce the itemized version of the receipt. This dinner, incidentally, resulted in a multi-million dollar gift for Stony Brook Children’s Hospital.
OSC also questioned the validity of $5,154 for two employee retirement parties to recognize outstanding employee service and to support morale at the University. Once again, the OSC misrepresented the facts. These two retirement parties were paid for by funds under the discretion of the account holder in Student Affairs. Incidentally, the two employees served Stony Brook University (not the Foundation) for a combined 65 years; most notably, the former Associate Vice President for Student Affairs and Dean of Students who devoted 38 years of service to the University.
How does SBF Deal with contracting?
As a 501c3 nonprofit, the Foundation is not legally required to obtain competitive bids on its contracts. Still, all contracts are carefully scrutinized for the scope and dollar amount procured. The Foundation engages in price negotiations with all vendors before entering into any contractual relationships. While the Foundation retains vendors only where it believes the cost of services is appropriate, in prudently managing the Foundation’s assets, the Foundation has determined that the costs associated with repeatedly running competitive bidding processes and the “start-up” costs of regularly commencing new vendor relationships are not warranted in all cases.
During the year in question, OSC flagged four contracts for not being competitively bid, all of which were renewals. Two of the contracts in question were with vendors used for the University’s annual fundraiser, the Stars of Stony Brook Gala, which raised more than $4 million during the year in question. These contracts have remained nearly flat for seven consecutive years. Again, as a 501c3 nonprofit, the Foundation is not legally required to obtain competitive bids on its contracts. It is unclear to us why the OSC would question the Foundation’s methodology for awarding contracts.
The report mentions that the Foundation’s contract with SUNY has expired.
Yes, like many other private foundations affiliated with SUNY campuses, SBF has been out of contract with SUNY for three years. It should be noted that the Stony Brook Foundation agreed to participate in the OSC audit of SUNY even though the Foundation was out of contract.
However, during that time the Foundation conducted business in good faith with SUNY and met all of its reporting requirements. Similar to the UUP members on campus who have gone without a state contract for the past two years and still do their jobs and conduct themselves with the highest level of professionalism. During this period the Foundation provided more than $70 million to the University for student scholarships, faculty and academic programs and facilities.
The Stony Brook Foundation continues negotiations with SUNY and expects to reach an agreement soon.
The OSC report questions executive compensation.
In support of the University’s mission, the Foundation takes great pride in its ability, on occasion, to help the University with competitive compensation packages to recruit and retain highly-qualified staff and faculty. The OSC report questioned the use of a housing stipend. This is a common practice in both the public and private sectors to address the high cost of living in places like Long Island. In the case of the VP for Advancement, the position was a revolving door and we needed stability in that position in particular.
The OSC report incorrectly describes “agency accounts” and inappropriately suggests
that SBF can ascribe its own policies to these accounts.
In the early 1990s, SUNY and the State of New York asked the independent foundations to hold certain agency funds on behalf of SUNY. The Foundation follows the state agency policies and procedures that govern each agency account. The Stony Brook Foundation account does not accept or distribute student activity or student club fees. An important omission is that fact that OSC did not find a single concern with the Foundation’s agency account management or expenditures.
The foundation stewards seven such funds, including:
Alumni Association of the State University of New York at Stony Brook
The Alumni Association of the State University of New York at Stony Brook, a 501(c)(3) organization, was formed to establish, encourage and maintain a mutually beneficial relationship between the State University of New York at Stony Brook and its alumni.
University Hospital Auxiliary, Inc.
The University Hospital Auxiliary, Inc. is organized and operated exclusively for charitable and educational purposes to promote and advance the welfare of the State University Hospital by such assistance and services as are approved by the hospital administrator.
Long Island Regional Advisory Council on Higher Education
Long Island Regional Advisory Council on Higher Education promotes improved educational effectiveness by encouraging the cooperation of its consortium of eighteen colleges and universities with the K-12 educational and Long Island business communities.
Stony Brook Foundation Mission
The Stony Brook Foundation, Inc. and Affiliate (the "Foundation"), a not-for-profit, "no member" corporation established in 1965. The purposes of the Foundation are as follows:
a. To assist in developing and increasing the resources of the State University of New York at Stony Brook ("Stony Brook University") in order to provide more extensive educational opportunities and services by making and encouraging gifts, grants, contributions and donations of real and personal property to or for the benefit of Stony Brook University.
b. To receive, hold, administer and dispose of gifts and grants, and to act without profit as trustee of educational or charitable trusts of benefit to and in keeping with the educational purposes and objectives of Stony Brook University.
c. To finance the conduct of studies and research of any and all fields on intellectual inquiry of benefit to and in keeping with the educational purposes and objectives of Stony Brook University and/or its constituent schools, and to enter into contractual relationships appropiate to the purposes of the Foundation.
d. To grant and/or administer scholarships and fellowships and to engage in experimental education activities and research projects.