Approved on August 20, 2014
ND Higher Education Challenge Fund Meeting
July 14, 2014 –9:30am
Governor’s Conference Room
Conference Call in Number: 888-346-3559, Passcode: 58503
Present: Kathy Neset, Rep. Bob Martinson, Lt. Governor Wrigley, Terry Hjelmstad, Connie Nicholas, Karen Krebsbach, Rick Burgum.
The Lt. Governor called the meeting to order at 9:30am.
Meeting Minutes Review
Neset moved for approval of the May 9, 2014 meeting minutes, Nicholas seconded. Motion carried.
Krebsbach moved for approval of the June 16, 2014 meeting minutes, Nicholas seconded. Motion carried.
Committee Business
The Lt. Governor welcomed Terry Hjelmstad to the board.
The summary of funds distributed was discussed and Neset stated that the private funds raised is notable and a premier part of the program itself.
Administrative Fees
Deanna Carlson Zinc from the University of North Dakota Foundation thanked the committee for allowing the topic to be reviewed again. The white paper and worksheet distributed at previous meetings has been updated andagain distributed to the committee in the meeting materials. The question that was posed was how to move forward if the challenge fund program will match the entire donation, given a varying parentage is being dedicated to the operations of the foundation.
Carlson Zinc stated that all foundations have agreed to not take any state grant fundsto apply to the operations of the foundations with exception of the management fees. This is for the stewardship of the gift.
Lt. Governor asked if it would be fair to call these fees stewardship fees. Carlson Zinc said it would be more of an accounting fee. They would like to maintain this fee so it is consistent with the donors. The challenge grant dollars will be charged only the standard investment fee for an endowmentthis fee for the endowment. There will however be no one-time fees collected from the state grant dollars.
Rick Burgum said that he’s been on the board of directors of alumni foundations and understands that they need money in order to manage money. Lt. Governor said the question arises because when we match funding are we matching the net fees?
Carlson Zinc explained the fees report.
Rep. Martinson said that he did not recall any legislative discussion regarding matching fees.
Neset said that it is her opinion that foundations should be allowed to use part of the funding to manage the money as there are such significant dollars at stake.
Lt. Governor stated upon consensus of the challenge fund committee that the total amount that the donor gives or pledges will continue to be matched in its entirety and no board action is required.
Transfer of Funds to Foundations
Murray Sagsveen, Chief of Staff for the North Dakota University System, said the statute that directs the Challenge Fund language says that all funds go to the institutions but does not clearly define “institution. The statute also references the funds being directed to endowments and endowment funds are clearly housed in the foundations. There will be a Memo of Understanding established between the institution and the foundation directors for the transfer and management of the funds. Sagsveen said that they are hoping this will work for the next 6 months until the legislation can be clarified. Sagsveen will provide recommended language to the Challenge Fund Committee for consideration.
The Lt. Governor asked for Sagsveen to forward the memo he wrote to the Auditor’s Office going forward he would be happy to sit down with the Auditor’s Office to ensure all processes are followed.
Sagsveen also stated that the NDUS would be able to host future Challenge Fund Committee meetings using the IVN network.President Dean Bresciani said that an option for committee members is to use the network at the research and extension centers which are scattered across the state.
Competitive Funding Round Guidelines
The Lt. Governor explained the guidelines for the remaining funds after December 31, 2014. At the end of the meeting scheduled for December 17th there will be a solid estimate of the funds remaining.
Neset asked if there were ways to assist the campuses in fundraising. Neset said that Williston State College is overwhelmed with surviving and would certainly need assistance.
Terry Olson, Foundation Director for WSC, stated that he appreciated Neset’s comments. The biggest challenge is turnover and there is no consistency in positions. Neset agreed and said Williston and Dickinson need these funds. Lt. Governor said that he will make a note to visit with all foundations to see what resources are needed and will report back to the committee.
It was recommended for the January 5th meeting to separate the agenda to include 2 rounds of requests. The first item on the agenda would be requests for funds prior to the 31st followed by a separate agenda item for requests for funds for the competitive round.
Draft Committee Ranking Worksheet
The form explains the weights, but the scoring is only for discussion purposes.
Neset asked for the term limits. Krebsbach said that the terms retire when the legislation expires.
Semrau asked if there was a priority for capital projects.Lt. Governor said no.
Meeting times were discussed for the next year.
Legislative Recommendations
Lt. Governor appreciated the opportunity to meet with the foundations. He stated there was discussion about changing the formula from two private dollars matched to one challenge fund dollar. He stated that he didn’t believe there was an appetite to change that formula. The other proposal was to increase the funding amount. He stated that he thought that the current amount was significant. He invited the foundations to write the suggested language and submit to him in two weeks.
Updated Guidelines & Forms
Effertz explained the change highlighted was to include Terry Hjelmstad in the program guidelines. Next meeting will include language that directs all funds to the institutions and the memo of understanding permitting the campus will be provided to the committee as well.
Qualifying Planned Gifts
John Klocke and Gordy Binek from BSC presented a handout explaining qualifying planned gifts. A sample document was prepared to explain the nature of the gift type. This is a standard document for a charitable remainder trust. The last page explains the calculation of the trust for further detail.
Klocke said that this is irrevocable and they do not receive it until the death of the donor. This explains both the charitable remainder and the death gift annuity.
For example, a donor that Klocke has worked with had in his lifetime donated just under a $100,000, but because of this match program, he is looking to pledge $100,000 through a charitable gift annuity.
Lt. Governor stated that this does not augment the requirement that the foundations are liable for the donation.
The insurance department requires the foundation to hold in reserves 100% of the deductible amount.
Nicholas moved to approve planned gifts as explained, Neset seconded it. This would be a qualifying types of gifts. Motion carried.
Lt. Governor thanked them Binek and Klocke for the presentation.
Scope Approval
Dickinson State University
D.C. presented the scope approvals for the Centennial Endowment Campaign and the Endowed Chair for Theodore Roosevelt Studies via phone.
The intent of the Centennial Endowment campaign is to grow endowed scholarships funding for the students. They are looking to raise $1.5 million, qualifying for $750,000. Neset moved for approval. Krebsbach seconded. Motion carried.
Endowed Chair for Theodore Roosevelt Studies. This would be the first endowed chair at Dickinson State University.
Neset asked about what the federal portion would be. Lt. Governor said that only private dollars would be considered to match. $2 million exists in the endowment. Neset moved for approval. Martinson seconded.
Application for Funding
BSC
Dave Clarck, BSC Interim President, presented the information for the BSC Communications & Creative Arts Center application. They did receive an Otto Bremer Foundation donation and a copy of the check is attached for documentation.The Otto Bremer Foundation is a foundation of which the profits from the Bremer Banks are deposited. Motion carried. Martinson moved approval. Krebsbach seconded.
Mayville State University
President Hagen from Mayville State University said that they are 78% over their annual giving.
125th Anniversary Academic Scholarship Campaign & 125th Anniversary Foundation for Educational Excellence Campaign.
Martinson moved for approval, Krebsbach seconded. Motion carried.
Minot State University
President Steve Shirley provided a summary for the eight applications submitted, Energy Economics and Finance Program, Jeanne M. Sandberg Music Endowment, Roger Looyenga Leadership College of Business Endowment Fund, Sertoma Club of Minot Scholarship Endowment/Voice Lab Equipment, Integrity Viking Funds Business Scholarship Endowment/Integrity Viking Funds Computer science Scholarship Endowment, ND Texas Hold’em Poker Championship Endowment in Memory of Curtis Langford, Grace Fisher Nursing Scholarship Endowment, Nell E. Boozenny Sander Scholarship Endowment.
President Shirley explained that the Texas Hold ‘Em title is an existing endowment. The Alumni Foundation and the Vegas Hotel hold a Texas Hold ‘Em poker tournament for scholarships for marketing students. This was started at the wish of a donor several years ago. Krebsbach stated that this is a very large event for the city of Minot that provides a significant donation for the foundation. Semrau understands the sensitivity of the name, however the endowment was established in 2012.
Kresbach moved for approval on all 8, Nicholas seconded. Motion carried.
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