1.ÌýÌý Quasi-endowments (also known as Funds Functioning as Endowments)
1.1ÌýÌý University System authority:
1.1.1ÌýÌý The Board of Trustees policy (BOT IV.G.3.2.1) delegates to its Financial Affairs Committee responsibility and authority for final approval of all interfund transfers, including transfers of current, loan and plant funds to establish or add to quasi-endowment funds.
1.1.2ÌýÌý The Financial Affairs Committee delegates to the Chancellor responsibility and authority for approval of transfers to quasi-endowments in amounts of $100,000 or less. It is the intent of this policy to aggregate like transactions when determining the applicable approval procedure.
1.2ÌýÌý Procedure to Establish or add to Quasi-endowment Funds
1.2.1ÌýÌý The President of the institution will request in writing from the Chancellor approval to establish or add to a quasi-endowment. The request should include the original source of funds, any externally imposed restrictions, the amount, and a brief description of the reason for the request.
1.2.2ÌýÌý If the amount if over $100,000, the Chancellor may consider the request for inclusion on the next agenda of the Financial Affairs Committee. If the request is $100,000 or less, the Chancellor may authorize the transfer of funds immediately. The Â̾ÞÈËÊÓƵ Controller's Office is responsible for properly recording the transfer in the official books and records of Â̾ÞÈËÊÓƵ. The Â̾ÞÈËÊÓƵ Treasurer's Office is responsible for moving the investments to the CIP.
1.2.3ÌýÌý Ordinarily the Chancellor will not authorize the establishment of a quasi-endowment of less than $25,000 unless there is a plan to build the fund to at least $25,000 through future transfers or a commitment to reinvest the annual earnings in the fund until it reaches a $25,000 balance. The Chancellor may also establish a quasi-endowment for amounts less than $25,000 if there is a significant institutional purpose; for example, to honor a recently deceased faculty or staff member.
1.2.4ÌýÌý The Chancellor may approve the reinvestment of quasi-endowment earnings even if the balance in the fund exceeds $25,000 and delegates the authority for this decision to the Â̾ÞÈËÊÓƵ Treasurer.
1.3ÌýÌý Revocation of Quasi-endowment Funds
1.3.1ÌýÌý Because a quasi-endowment results from an internal designation as opposed to a legallyÌýbinding external requirement, a quasi-endowment may be revoked in the future. AÌý
revocation of a quasi-endowment of any amount requires the vote of the Financial Affairs Committee.
2.ÌýÌý Acquisition, Management and Sale of Equity in Start-up Companies
2.1ÌýÌý The Board of Trustees has authorized Â̾ÞÈËÊÓƵ and the component institutions to acquire equity in start-up companies in exchange for the transfer of technology and other intellectual property (BOT IV.G.2.1). At the same time, the board directed the Chancellor to establish such System-wide policies as may be necessary to ensure the prudent exercise of such authority (BOT IV.G.2.2). The Board also directed the Presidents to establish such institutional policies as may be necessary to ensure the prudent exercise of such authority (BOT IV.G.2.3).
2.2ÌýÌý This policy establishes the conditions, under which a Â̾ÞÈËÊÓƵ institution is authorized to acquire, manage and sell such equity interests.
2.3ÌýÌý Before acquiring an equity interest under the circumstances stated above, the institution shall have adopted an institutional level policy which, at a minimum, addresses the following issues:
- By whom the decision to acquire an equity interest is made
- Conflicts of interest
- By whom the decision to divest is made
- On what basis the decision to divest is made
- Distribution of the proceeds of divestiture
- Who is authorized to sign related documents, provided, however, the authorized signatory shall be the president or a vice president of the institution (see also USY IV.G.2.5)
2.4ÌýÌý In addition, the institutions shall observe the following limitations:
- Equity shall be taken only in licensing transactions where sufficient cash compensation is not available
- The institution's equity position shall reasonably reflect the relationship between the value of the licensed intellectual property and the total value of the company provided that in no case shall the institution's equity position be greater than 80% of the outstanding shares
- In deciding whether to hold one or more memberships on the company's Board of Directors an institution shall consider, among other factors, the reasonableness of holding such memberships in light of the extent of the institution's equity position
- Other than by the acceptance of an equity position under the terms of this policy, an institution shall not invest in the formation or any later round of private financing of the company, provided, however, that nothing herein shall be construed to prevent an institution from paying the reasonable costs of incorporation
- Equity acquired pursuant to this policy shall be held by the Â̾ÞÈËÊÓƵ Treasurer
- Equity acquired pursuant to this policy shall be sold in an orderly fashion as soon as it is possible to sell it in the public market, in most cases after an initial public offering and the expiration of any "lockout" period, provided, however, that nothing herein shall be construed to prevent an institution from agreeing to a reasonable call option that may be exercised before the equity shares are publicly traded
2.5ÌýÌý The Â̾ÞÈËÊÓƵ Treasurer hereby delegates to the institutional officer designated in institutional policy the authority to sign all documents related to the acquisition, management, and sale of equity acquired under this policy, with the exception of those documents requiring the signature of the holder of the equity (which shall be the Â̾ÞÈËÊÓƵ Treasurer).
2.6ÌýÌý On or before September 1 of each year, the President of any institution holding an equity interest in a start-up company at any time during the previous fiscal year shall report those holdings to the Â̾ÞÈËÊÓƵ Treasurer, including, at a minimum, the date acquired, number of shares, book value, and name of the company.
2.7ÌýÌý On or before November 1 of each year, the Â̾ÞÈËÊÓƵ Treasurer shall report to the Finance committee on Investments the information collected pursuant to the previous section.
