AGB President & CEO Update: Foundation MOUs and You

By Henry Stoever January 6, 2023 February 9th, 2023 Blog Post

You are viewing the Institutionally Related Foundation version of this CEO Update. System, Public Institution, and Private Institution versions are also available.

Happy new year! I trust you enjoyed a peaceful holiday.

It is critical for college and university foundation boards to ensure their foundation’s mission and strategies are closely aligned with their partner institution’s unique mission. For foundations, the memorandum of understanding (MOU) between the institution and foundation is perhaps the most important tool for clarifying how the foundation will fulfill its mission and support the mission of its institution.

Foundation MOUs deserve thoughtful attention, periodic review, and the opportunity to evolve not only to align with strategic plans, but also to ensure priorities and initiatives meet the needs of tomorrow.

The MOU:

  • describes the specific functions the foundation will perform to support the partner institution.
  • affirms the independent corporate status of the affiliated foundation and articulates the ways in which it fulfills its charitable purpose of institutional support.
  • identifies services, staffing, funding, and other resources the institution will provide to the foundation.
  • identifies key policies and practices that support collaboration, transparency, accountability, compliance with donor intent, and fiduciary prudence.

Why it matters: The MOU memorializes a shared vision for the partnership, documenting the consensus among institution and foundation leaders about the ways the foundation will provide support to the institution, and it outlines reciprocal responsibilities and obligations.

The board advantage: The MOU process, thoughtfully undertaken, is an invaluable means of fostering collaboration and shared commitment.

  • The conversation to evolve the MOU may be more important than the resulting contract. Any effective foundation-institution partnership must be based on mutual understanding and trust.

The MOU is meant to be shared: The MOU should be shared with new members of foundation boards and staff as part of their orientations as well as in the onboarding process of institutional board members and senior administrators who will work with the foundation.

  • A joint retreat including the foundation and institution boards and staff provides a valuable opportunity to assess the existing relationship and explore ways to enhance and strengthen the partnership prior to review and revision of the MOU.

Consider these recommendations:

Include key stakeholders in the process. MOUs should reflect a consensus about the partnership, reflecting the perspectives of the boards and senior administrators of both the institution and foundation.

  • The process should include board leaders and/or select representatives of the foundation and campus boards.
  • Senior leaders including the institution president or chancellor, the foundation chief executive, and chief advancement officer (if different than the foundation CEO) should be involved.

Start at a high level. Rather than start with a discussion of specific language and provisions, bring together key leaders for a high-level discussion about the partnership, opportunities to strengthen it, and points of friction or concern.

  • The process of developing or updating an MOU presents a valuable opportunity to educate key stakeholders about the role of the foundation, how the partnership operates, and how risk is managed.
  • The MOU can reference other more detailed policies and agreements that can be reviewed and updated on a more regular basis.

Don’t let it be a purely legal document. While legal counsel should be consulted throughout and engaged in finalizing the MOU, an MOU written exclusively by attorneys may prove too legalistic, focused on safeguarding institution or foundation “rights” rather than fostering effective collaboration.

Review and update as necessary. The MOU is intended to provide stability and continuity, but signatories should review it on some regular basis stipulated in the agreement.

  • Periodic review is important, and the MOU may also need to evolve to reflect new circumstances.
  • Planning for a comprehensive campaign, the development of a new strategic plan, restructuring of advancement programs, staffing shifts, and other changes may substantiate the need to review and revise the MOU.

 Go Deeper:

Review the AGB Board of Directors’ Statement on Institution Foundation Partnership for guidance to enhance alignment between the foundation and partner institution.

Find an example of an MOU in the AGB Illustrative Memorandum of Understanding Between a Public Institution or System and an Affiliated Foundation.

Foundation leaders and chief executives should consider discussing the MOU at the AGB Institute for Foundation Boards Leaders and Chief Executives 2023, June 11–13, 2023, in Minneapolis, Minnesota.

AGB’s foundation board member orientation includes a section on MOUs with more information and suggestions.

Looking ahead: Come to AGB’s Foundation Leadership Forum session, “When Was the Last Time You Read Your MOU,” and share your feedback and suggestions as AGB updates its Illustrative Memorandum for 2023.

Questions for Board and Committee Chairs 

  • Do members of the foundation board, institution board, and administration understand the role of the foundation and work collaboratively on agreed upon objectives?
  • How is the MOU used in board orientation?

Questions for Board Members 

  • Does the foundation have a strategic plan that is informed by and aligned with the institution’s mission, vision, and strategy?
  • Does the MOU accurately reflect a shared understanding of the institution-foundation partnership and the ways that the foundation supports the institution?

Questions for Chief Executives and Leadership Teams 

  • Does the current MOU accurately describe the policies and practices that support the partnership?
  • How does the foundation work with the institution to ensure candid communication, transparency, and accountability in the institution-foundation partnership?

As always, thank you for your time, attention, and commitment to higher education.

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