AGB, NACUBO Release Analysis of Responses to the 2008 IRS Survey of Colleges and Universities

Washington, D.C., December 17, 2009 - The Association of Governing Boards of Universities and Colleges (AGB) and the National Association of College and University Business Officers (NACUBO) announce the release of an analysis of responses provided to the Internal Revenue Service's 2008 College and University Compliance Questionnaire (pdf).

The data in this report, which is a voluntary parallel analysis of the survey data submitted to the IRS, demonstrate the high degree of transparency, compliance, and accountability found in today's higher education institutions.

The questionnaire, fielded in late 2008, inquired about institutions' general financial information, governance practices, campus activities that might generate unrelated business income, endowment management, and executive compensation for the 2006 tax year. The voluntary analysis was conducted by independent accounting firm Ernst & Young (E&Y), and was based on 146 of the 400 institutions the IRS surveyed. The IRS is expected to release their preliminary analysis in 2010.

Among E&Y's key findings are:

  • Ninety-eight percent of public institutions and 97 percent of private institutions have a written conflict of interest policy, or a state statute explicitly governing conflicts of interest, for the governing board and top management. Seventy-five percent of public institutions and 78 percent of private institutions have a written or statutory conflict of interest policy for full-time faculty.
  • Ninety-one percent of respondents make their audited financial statement available to the public.
  • Ninety-nine percent of respondents indicate that they have an investment policy for their endowment fund; all of the respondents monitor their endowment distributions to ensure they match the donors' intent.
  • The questionnaire asked about 47 types of unrelated business activities on campus; thirteen of which are undertaken by more than one-third of the respondents.

Among E&Y's overall observations of the survey and its responses include:

  • The questionnaire represents a financial snapshot of the college or university as of tax year 2006. The economic environment has dramatically worsened since then.
  • Responses to certain questions appear to vary due to lack of clarity in survey questions themselves.
  • Questions fielded were largely yes/no, specific numeral, or check-the-box questions. Space for detailed answers was not provided. Many of the respondents provided additional written responses to clarify their IRS-formatted responses. This detail is important in understanding many of the responses.

"This analysis of voluntarily submitted survey responses shows us that largely the findings are consistent with other studies of the same questions, including compensation studies, governance surveys, and endowment management." said Richard Legon, AGB president. "These early results indicate that the unique system of American higher education governance works. Moving forward, the higher education community should - and must - continue to show vigilance around conflict of interest, compensation of key institutional leaders including coaches, and endowment management."

"The survey sought to improve the IRS's understanding of how tax-exempt higher education institutions are managed," said John Walda, President and CEO of NACUBO. "The data that has been collected suggests that, as a sector, we have high levels of financial transparency, employ strong governance systems, and use sound business practices to manage our institutions. We are also confident that colleges and universities can use this information, and the upcoming IRS report, in their continuing efforts to improve how they are managed."

The effort was supported by seven additional higher education associations including: the American Association of Community Colleges (AACC), the American Association of State Colleges and Universities (AASCU), the American Association of Universities (AAU), the American Council on Education (ACE), the Association of Public and Land-Grant Universities (APLU), the National Association of Independent Colleges and Universities (NAICU), and the National Collegiate Athletic Association (NCAA).

AGB will host a press conference call with NACUBO President John Walda and AGB President Rick Legon on Thursday, December 17, 11:30 a.m. EST. To receive information about the call, email amandaa@agb.org or ljordan@nacubo.org.

####

About the Association of Governing Boards of Universities and Colleges:
Founded in 1921, the Association of Governing Boards of Universities and Colleges (AGB) is the only national association that serves the interests and needs of academic governing boards, boards of institutionally related foundations, and campus CEOs and other senior-level campus administrators on issues related to higher education governance and leadership. AGB serves more than 1,200 institutions and 34,000 individuals. Its work advances the practice of citizen trusteeship and helps ensure the quality and success of our nation's colleges and universities. Please visit www.agb.org for more information.

About the National Association of College and University Business Officers:
NACUBO is a membership organization representing more than 2,500 colleges, universities and higher education service providers across the country and around the world. NACUBO specifically represents chief business and financial officers through advocacy efforts, community service and professional development activities. The association's mission is to advance the economic viability and business practices of higher education institutions in fulfillment of their academic missions. Please visit www.nacubo.org for more information.

December 17, 2009