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ASU Foundation: The basics

April 04, 2017

In February, we ran an overview of the basics of a comprehensive campaign. In continuation of our effort to help the public understand how fundraising works at ASU — and how it enables scholars to have robust educational experiences — our latest Q&A unpacks the ASU Foundation, a private, nonprofit organization that raises and invests private contributions to Arizona State University.

Question: What is a foundation?

Answer: A foundation is a non-governmental entity established to advance charitable purposes for another organization or organizations. There are foundations dedicated to a wide variety of charity work: some issue grants to improve world health or support biomedical research, others encourage creative people to promote peace or fund journalists or teachers working in underprivileged areas.

The ASU Foundation is a private, nonprofit corporation comprised of professional fundraisers and administrators who cultivate resources from private donors for the benefit of Arizona State University. This type of foundation is known as an “institutionally related foundation.”

Q: What is an institutionally related foundation?

A: An institutionally related foundation, or IRF, is a separate 501(c)3, nonprofit organization dedicated to advancing a college, university system, school district or teaching hospital, according to the Council for Advancement and Support of Education (CASE).

Q: What are the benefits of having an IRF?

A: In fiscal year 2016, the ASU Foundation raised more than $215 million in support of ASU’s educational programs, research and services that enhance student success and community engagement.

What’s more, according to CASE, IRFs have greater flexibility to raise and manage private support than state offices or government subdivisions who are often mandated by low-risk, low-return investment strategies. IRFs can also perform business transactions, such as selling property, in a more competitive and expeditious manner than is regulated by public entities.

In many cases, donors prefer the security of making a major gift to an organization governed by individuals with specialized financial management experience and legal and business expertise.

Q: How are IRFs accountable?

A: Also according to CASE, IRFs are accountable to their donors and the students, faculty, staff and trustees of the institutions they serve. They are also legally accountable to the Internal Revenue Service and state agencies that oversee nonprofit organizations.

The ASU Foundation is governed by an independent board of directors that ensures gifts are used according to donors’ wishes and that the foundation acts in a fiduciary responsible way that represents donors’ interests.

The ASU Foundation has consecutively been awarded the highest rating for efficiency, accountability and transparency by Charity Navigator, the largest independent evaluator of nonprofits in America.

Q: How does an evaluator like Charity Navigator assess an organization?

A: Charity Navigator uses an in-depth set of criteria to determine if an organization adheres to sector best practices and executes their mission in a financially efficient way.

One such metric is how much of a gift goes directly to support its cause. According to the Better Business Bureau Wise Giving Alliance, GuideStar and Charity Navigator, most nonprofits aspire to spend no more than 15 percent on overhead; in reality, that figure is closer to 40 percent.

At the ASU Foundation, donations include a 5 perecent unrestricted gift towards administrative expenses, meaning 95 percent of each gift directly supports its cause.

Q: In what activities does the ASU Foundation participate?

A: Specifically, the ASU Foundation:

• facilitates and receives all contributions to ASU, including from individuals, corporations and other foundations
• coordinates and directs major fundraising initiatives on behalf of ASU, including Campaign ASU 2020
• disburses contributions according to the expressed wishes of the donor
• oversees management of investment assets
• actively promotes a culture of philanthropy and generosity at ASU

Q: What are donors’ rights when they make a gift via the ASU Foundation?

A: Philanthropy is based on voluntary action for the common good. To assure that philanthropy merits the respect and trust of the general public and that supporters have full confidence in the nonprofits they support, we believe all donors have a right to be informed of the organization’s mission and those who serve on its governing board, to have access to the organization’s most recent financial statements, to receive appropriate acknowledgement, to be assured their gifts are being used for the purposes for which they were given and to be assured that information about their donations is handled with respect and confidentiality to the extent provided by law. A full explanation is here.