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A review of the process by which public funds are transferred by KSU to its Foundation identified that control weaknesses and poor communication exist between KSU and its Foundation. In two instances, federal funds were transferred to the Foundation to distribute to students, but KSU failed to properly identify the source of these funds to the Foundation resulting in the Foundation recording these funds as private donations. In one instance, public university funds managed by KSU on behalf of the former President for the purpose of Faculty, Staff, and Student Recognition, were used to cover a university Board retreat. In another instance these same recognition funds were used to cover an advertisement and table reservation to an unknown event with no request or approval from the University documented. Despite a mutually signed Memorandum of Understanding (MOU) indicating how the two entities engage in strategic planning for the University, KSU and Foundation representatives described very limited communication and synergy between the two entities. Though separate organizations, the relationship between KSU and its Foundation is critical to ensuring the proper use of funds entrusted to them and providing assurance and confidence to its donors and stakeholders.

As identified in Chapter 1, the KSU Foundation is a separate organization with its own board and personnel. In March 2019, KSU and the Foundation signed an MOU identifying the role of each party and describing how they will engage. Interviews with KSU personnel and Foundation representatives indicate that elements of the MOU do not appear to be a true representation of engagement. For example, the MOU identifies that “[t]he Foundation has the right to assess administrative fees to support its operations not to exceed 35% annually.” However, the Foundation’s Executive Secretary identified the Foundation charges 1% to 2.5% per year, as approved by the Foundation’s Board on October 17, 2003, an amount nowhere near as high as that anticipated by the MOU. KSU personnel and Foundation representatives indicate that elements of the MOU do not appear to be a true representation of engagement.

KSU personnel and Foundation representatives indicate that elements of the MOU do not appear to be a true representation of engagement.

Additionally, the MOU states “[t]he University shall include the Foundation as an active and prominent participant in the strategic planning for the University.” Foundation representatives identified that they have had “zero” participation in strategic planning for the University and that the MOU was created by KSU to fulfill requirements for accreditation. A SACSCOC preliminary report of findings, identified KSU as noncompliant with SACSCOC standard 5.3 as of November 2018.

For any entity organized separately from the institution and formed primarily for the purpose of supporting the institution or its programs: