Affiliated Corporation Policy

Effective Date:

June 8, 2018

Supersedes:

Affiliated Corporation Policy effective December 20, 2014

Policy Review Date:

July 1, 2019

Issuing Authority:

Research Foundation President

Responsible Party:

Heather Hage, Vice President, Industry & External Affairs

Contact Information:

518.434.7156

Heather.Hage@rfsuny.org

Reason for Policy

Partnering with external entities to create research and discovery opportunities for SUNY’s faculty, staff, and students is an essential component of The Research Foundation’s ("RF") mission to serve SUNY. These partnerships take various forms, and some must be structured carefully to avoid adverse business, legal, tax and other implications.

The creation of new, university-connected legal entities is one mechanism that can be used to facilitate interaction between SUNY campuses and strategic partners. The RF has employed this mechanism of the "Affiliated Corporation" since 1983; working in partnership with campus-based foundations and other New York community-based organizations to create experiential learning and applied research opportunities for SUNY faculty, staff and students. However, Affiliated Corporations are created only to achieve a specific business objective that cannot be accomplished in an effective and efficient manner through existing SUNY or RF infrastructure. This policy establishes the parameters and process for the establishment, governance and monitoring of RF Affiliated Corporations; to manage enterprise risk while empowering campuses to achieve academic research and innovation objectives.

Statement of Policy

The following requirements for Oversight and Accountability, Formation of Affiliated Corporations, and Board Governance, are effective June 1, 2018.

Oversight and Accountability

The respective campus RF Operations Manager is responsible to ensure its campus-related Affiliate(s) operate in compliance with this policy and shall annually certify the Affiliate’s compliance with these provisions.

RF leadership will consult with SUNY leadership, as appropriate, to conduct a periodic strategic review of each Affiliate’s business records, financial condition, and operating results and activities at least once every five (5) years. Affiliate bylaws must include provisions for member organizations or designee(s) to access all books and records. Affiliate leadership must provide all information requested by the RF to facilitate this review in a timely manner. The Office of Industry and External Affairs will coordinate with the Affiliate to address areas of noncompliance with these provisions and the Affiliate must develop an appropriate corrective action plan within 30 days after the issues have been identified. Failure to address non-compliance will result in an escalation process as defined below:

  1. If the corrective action plan is not developed or the agreed upon plan is not met to the satisfaction of the RF, the Operations Manager must provide justification for absence of and/or deviations from the plan. Any revisions to previous approved plans will be performed in consultation with the RF, as appropriate;
  2. If the Affiliate then deviates from the agreed corrective action plan, the RF President (or designee) will consult with the SUNY Chancellor (or designee) on a course of action to address the Affiliate’s noncompliance;
  3. If noncompliance with the corrective action plan continues, the RF President will report it to the RF Board of Directors; and
  4. Following consultation with the RF Board of Directors, the final remedial actions will be taken:
    1. Changes to the OM delegation of authority;
    2. Restructuring or dissolution of Affiliate;
    3. RF’s withdrawal from membership in the Affiliate; or
    4. Other action by the RF President, consistent with recommendations.

    The Research Foundation reserves the right to make exceptions or changes to this policy at any time or as warranted by unique circumstances. In the event of any conflict between requirements of this policy and SUNY policy or guidelines, the more restrictive shall apply. In the event of any conflict between requirements of this policy and an Affiliate’s bylaws or operating agreement, the bylaws or operating agreement shall control, provided the RF has provided express consent to their adoption. Deviations or exceptions to this policy must be approved by the RF President or designee. Nothing in this policy shall supersede or prevent the acceptance or performance of grants or contracts with or from agencies of the United States upon terms and conditions, or applicable provisions of Federal law or regulations, requiring different policies or procedures.

Formation of New Affiliated Corporations

Establishment of an RF Affiliated Corporation requires:

  1. The submission of a Research Initiative Plan to the RF President by the respective campus president;
  2. Notice to and consent of the SUNY Chancellor or designee;
  3. Recommendation by the RF President to the RF Board of Directors; and
  4. Formal resolution by the RF Board of Directors.

    Approval by the RF Board is contingent upon the Board’s determination that the following conditions are satisfied:

    1. There exists a clear and identifiable connection between the proposed Affiliate and the research mission of the campus or SUNY;
    2. Sufficient independent resources exist, and expertise has been identified to support the maintenance of the proposed Affiliate consistent with the Financial Risk Accountability and At Risk Policies;
    3. The business plan and financial model of the new corporation supports the mission of the Affiliate and demonstrates a clear financial path to achieve the objectives of the proposed Affiliate consistent with the Financial Risk Accountability and At Risk Policies;
    4. No less burdensome vehicle exists to fulfill SUNY’s objectives in achieving the business objective; and
    5. The creation of the proposed Affiliate will not create or transfer any risk of loss to the Operating Location beyond that location’s ability to cover the loss, pursuant to the RF Responsibility for Losses Policy.

    If, or when, the RF Board approves the formation of an Affiliate, from the point of formation, to the earlier of RF’s withdrawal from the corporation or issuance of the certificate of dissolution, every RF Affiliate must maintain satisfaction of these conditions.

Board Governance

The RF President shall make appointments to RF Affiliate boards consistent with the bylaws of each Affiliate. The RF President may delegate this authority in accordance with the Signature Authority Policy. No RF-appointed representative may simultaneously serve as an officer and director of an Affiliate.

Consistent with the RF’s policy on Conflicts of Interest, individuals appointed by the RF to serve as a director or of an Affiliate must disclose and manage all actual, apparent, and potential conflicts of interest and must update their Conflict of Interest Disclosure annually, as new reportable interests are obtained, and as new reportable situations arise.

Every appointment requires the prior submission of a Conflict of Interest Disclosure and conflict management plan to the RF’s Office of Compliance Services, consistent with the RF’s Managing Conflict of Interest Procedure. RF Appointees may also be subject to conflict of interest policies of the Affiliate.

Once appointed, the Affiliate board is responsible for providing oversight and accountability for the operation of the Affiliate, consistent with New York law. The board is responsible for approving the annual budget and the audited financial statements. Each Affiliate must provide to the RF notice of all meetings of its governing board and any committees thereof, and the RF may designate a representative to attend any board meeting. Notices and materials for Affiliate board meetings should be sent to affiiliates@rfsuny.org.

The following Staffing, Compliance and Reporting Requirements are effective August 1, 2018.

RF Staffing Support of Affiliates

With supervisor approval, RF employees who attend meetings of Affiliates during work hours are not required to charge leave time, and all reasonable mileage and travel expenses incurred as a result of support provided to Affiliates may be reimbursed through RF processes unless otherwise reimbursed by the Affiliate.

Observers, Directors, and Officers

RF employees are authorized to support Affiliates as part of their RF duties, with supervisor approval, as an observer, director or an officer of an Affiliate. RF employees are not authorized to support day-to-day operations of Affiliates unless the RF employee is dedicated solely to serving the affiliate, and not the RF, pursuant to a staffing services agreement between RF and the Affiliate, consistent with the section on Staffing Services, below.

If an RF employee serves as an officer for an Affiliate, that position is and must be separate and distinct from the RF employee’s RF role. RF employees may receive separate compensation from the Affiliate if and only if the Affiliate board determines that it is necessary and appropriate, and such compensation is consistent with the Affiliate’s bylaws. RF employees appointed as officers of an Affiliate must disclose actual, apparent, or potential conflicts of interest as required by the RF’s Conflict of Interest Policy or Management of Conflicts of Interest Procedure and may also be subject to the policies of the Affiliate.

Staffing Services

Consistent with RF’s At Risk Policy and Procedure on Agency Agreements, RF employees may only fulfill day-to-day operational duties to an Affiliate, where the Affiliate and RF have established, at arms’ length, a Staffing Services agreement, to provide for the advancement of costs to cover the employee’s salary and fringe benefit charges, as well as an administrative fee to the RF, which varies by campus and by Affiliate. A campus Operations Manager is not authorized to sign a Staffing Services agreement between the RF and the Affiliate without the express approval of the RF President or designee.

Legal Counsel

RF employees are prohibited from serving as legal counsel for any RF Affiliate including, but not limited to, providing ad hoc legal advice or serving as General Counsel or Secretary to the Board of any RF Affiliate, unless the attorney is dedicated solely to serving the Affiliate and not the RF, pursuant to a staffing services agreement between RF and the Affiliate, consistent with the section on Staffing Services, above. No person may simultaneously provide legal representation to both the RF and any Affiliate under any circumstances.

Compliance and Reporting Requirements

All Affiliates are required to conduct business in compliance with applicable laws and regulations and in accordance with the highest ethical principles. Upon incorporating, the Affiliate must begin the process for appropriate filings with the IRS and NYS Department of Taxation and Finance to determine the Affiliates tax exempt status. At a minimum Affiliated Corporations must maintain the following written governing and financial policies and procedures or adopt those of the Research Foundation:

Governing Policies and Procedures

Responsibilities

The following table outlines the responsibilities for compliance with this Policy:

Responsible Party

Responsibility

RF Board of Directors

Review and approval of any and all RF Affiliated Corporations.

RF President or Delegate

RF Affiliate board appointments.

RF Office of Industry and External Affairs

Proposal review and recommendations, monitoring, reporting; ensure that each Affiliate complies with annual reporting requirements.

RF Operations Manager

Proposal review, submission, monitoring, reporting, and compliance.

RF Finance Office

Ensure that audited financial statements, annual management letter, and IRS Form 990 are received from each Affiliate pursuant to the requirements of this policy.

RF Office of Compliance Services

Provide oversight of conflict review for RF Affiliate board appointments.

Affiliate Board of Directors

Oversight, governance, compliance, reporting.

Definitions

"Affiliated Corporation or "Affiliate" – An Affiliated Corporation is a separate private corporation or business organization, which has been created by the Research Foundation at the request of SUNY to address a specific SUNY campus-related need or objective which benefits from being supported by an entity separate and apart from the Research Foundation and SUNY.

Related Information

Joint Venture Policy

Joint Venture Guidelines

Conflict of Interest Policy

Management of Conflicts of Interest Procedure

Code of Conduct

Signature Authority Policy

Forms

Research Initiative Plan

Change History

Date

Summary of Change

June 8, 2018

Revised to enhance controls and align with SUNY’s Foundations and Other Related Entities Guidelines and the RF’s policy on Conflicts of Interest.

December 30, 2014

New policy.

 

 

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