Institutionally Related Foundations. Compass State University Foundation (CSUF) was incorporated as a not-for-profit organization to support a public university in its fund-raising efforts and the management of its endowment. The foundation has a self-perpetuating board, one-third of whose members are selected by the University’s president. Under a joint operating agreement, the university agrees to provide stall, computers, mail service, and office space to the foundation and to pay the foundation a management fee based on a formula that incorporates a percentage of the endowment balance, cash gifts received, dollars raised, and donor records maintained. In addition, the university transferred its $8 million endowment to the foundation to manage. Since the inception of the foundation, the endowment has grown to $30 million.
Required
a. From an accounting (not legal) point of view is the foundation a separate entity or a component unit of the related public university? What guidance is provided in GASB Codification Sec. 2100, to address this financial reporting issue?
b. Who are the stakeholders in the foundation and what are their accountability concerns?
c. Assume the role of the president of the university and discuss the advantages and disadvantages of transferring $8 million of the university’s endowment hinds to the foundation,