Chapter 2: Organization

2.1 Purpose

To provide information and policy guidance relating to Rochester University organizational structure, governance and management responsibilities.

2.2 Background

Rochester University was chartered in 1955 and opened its doors in September of 1959 as a two-year, Liberal Arts College. Over the years, the College has expanded its offerings from programs leading to the Associate degree to those resulting in the Bachelor’s Degree and Master’s Degree. Rochester University is accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools.

2.3 Mission Statement

The mission statement of Rochester University as defined by the Board of Trustees reads:

“Rochester University cultivates academic excellence, principled character, servant leadership, and global awareness through a rigorous educational experience that integrates liberal arts and professional studies within an inclusive Christian heritage.”

2.4 College Entity

Rochester University operates as an independent legal entity through incorporation. The College functions under control and oversight of the Board of Trustees – a self-perpetuating body comprising of a maximum of 50 members. The Board employs the President, who serves as Chief Executive Officer of the College. The President serves at the pleasure of the Board of Trustees. The Board meets three to four times per year with October typically being the annual meeting.

2.5 Institutional Organization

Rochester University is organized in a structure designed by the President and approved by the Board. Its organization remains dynamic and responsive to ever changing external and internal environments. Rochester University bases its organization on a streamlined management concept to limit excessive management layering and reflects a pragmatic combination of vertical and horizontal reporting.

2.6 Fiscal Policy

Participatory zero-based budgeting accompanied by strong financial and budgetary policies, closely monitored to assure resources are continually applied to the highest institutional priority.

2.7 Open Door Policy

The President and administrators maintain an open door policy at all times for candid discussion and dialog. This policy encourages each employee to personally meet with their supervisor should they have recommendations, concerns, questions or problems. Personnel are encouraged to follow the appropriate chain of command, meeting with their immediate supervisor first.

2.8 Conflict of Interest

Purpose

To protect Rochester University’s (the Organization) interest when it is contemplating entering into a transaction or arrangement that may benefit the private interest of an officer or director of the Organization or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations. (The complete Rochester University Conflict of Interest Policy can be found on the Faculty & Staff Portal under Policies and Procedures within the Human Resources tab.)

Policy

Definitions

Interested Person - Any director, principal officer, or member of a committee with governing board delegated powers, who has a direct or indirect financial interest, as defined below, is an interested person.

Financial Interest - A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:

• An ownership or investment interest in any entity with which the Organization has a transaction or arrangement
• A compensation arrangement with the Organization or with any entity or individual with which the Organization has a transaction or arrangement, or
• A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Organization is negotiating a transaction or arrangement

Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.

A financial interest is not necessarily a conflict of interest. Under the heading below Determining Whether a Conflict of Interest Exists, a person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.

Procedures

Duty to Disclose

In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors and members of committees with governing board delegated powers considering the proposed transaction or arrangement.

Determining Whether a Conflict of Interest Exists

After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists.

Procedures for Addressing the Conflict of Interest

• An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
• The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
• After exercising due diligence, the governing board or committee shall determine whether the Organization can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.
• If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the Organization’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.

Violations of the Conflicts of Interest Policy

• If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
• If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

Records of Procedures

The minutes of the governing board and all committees with board delegated powers shall contain:

• The names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the governing boards or committee’s decision as to whether a conflict of interest in fact existed.
• The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.

Compensation

• A voting member of the governing board who receives compensation, directly or indirectly, from the Organization for services is precluded from voting on matters pertaining to that member’s compensation.
• A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Organization for services is precluded from voting on matters pertaining to that member’s compensation.
• No voting member of the governing board or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Organization, either individually or collectively, is prohibited from providing information to any committee regarding compensation.

Annual Statements

Each director, principal officer and member of a committee with governing board delegated powers shall annually sign a statement which affirms such person:

• Has received a copy of the conflict of interest policy,
• Has read and understands the policy,
• Has agreed to comply with the policy, and
• Understands the Organization is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes.

Periodic Reviews

To ensure the Organization operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:

• Whether compensation arrangements and benefits are reasonable, based on competent survey information and the result of arm’s length bargaining.
• Whether partnerships, joint ventures, and arrangements with management organizations conform to the Organization’s written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes and do not result in inurnment, impermissible private benefit or in an excess benefit transaction.

Use of Outside Experts

When conducting the periodic reviews as provided for in Article VII, the Organization may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are conducted.

2.9 Joint Venture

Purpose

Requires the College to evaluate its participation in joint venture arrangements under Federal tax law and take steps to safeguard the College’s exempt status with respect to such arrangements. It applies to any joint ownership or contractual arrangement through which there is an agreement to jointly undertake a specific business enterprise, investment, or exempt-purpose activity as further defined in this policy.

1. Joint ventures or similar arrangements with taxable entities. For purposes of this policy, a joint venture or similar arrangement means any joint ownership or contractual arrangement through which there is an agreement to jointly undertake a specific business enterprise, investment, or exempt-purpose activity without regard to: (A) whether the College controls the venture or arrangement; (B) the legal structure of the venture or arrangement; or (C) whether the venture or arrangement is taxed as a partnership or as an association or corporation for federal income tax purposes. A venture or arrangement is disregarded if it meets both of the following conditions: (a) 95% or more of the venture’s or arrangement’s income for its tax year ending within the College’s tax year is excluded from unrelated business income taxation including but not limited to: (i) dividends, interest, and annuities; (ii) royalties; (iii) rent from real property and incidental related personal property except to the extent of debt-financing; and (iv) gains or losses from the sale of property; and (b) the primary purpose of the College’s contribution to, or investment or participation in, the venture or arrangement is the production of income or appreciation of property.
2. Safeguards to ensure exempt status protection. The College will (A) negotiate in its transactions and arrangements with other members of the venture or arrangement such terms and safeguards adequate to ensure that the College’s exempt status is protected; and (B) take steps to safeguard the College’s exempt status with respect to the venture or arrangement. Some examples of safeguards include:
   1. control over the venture or arrangement sufficient to ensure that it furthers the exempt purpose of the College;
   2. requirements that the venture or arrangement gives priority to exempt purposes over maximizing profits for the other participants;
   3. that the venture or arrangement not engage in activities that would jeopardize the College’s exemption; and
   4. that all contracts entered into with the College be on terms that are arm’s length or more favorable to the College.

2.10 Activities of Affiliates (Branches, Chapters, Etc.)

Policy

The following operating units shall be responsible for ensuring that the activities of branches, affiliates, chapters, etc., are guided by formal written policies and procedures so as to be governed and operated in ways that are consistent with the mission of Rochester University and within Rochester University’s IRS-approved tax exempt purpose:

• Alumni and Development – Alumni Association
• Athletic Office – Booster Clubs
• College of Graduate and Continuing Studies – Branch Campuses
• Student Services – Student Organizations

In fulfilling the indicated responsibility, the overseeing operating unit shall maintain a file of current policies and procedures of the affiliates, branches, chapters and shall intermittently review the policy files for appropriateness.

2.11 Meeting Documentation with Minutes

In the form of Minutes, the Rochester University Board of Trustees shall document all formal meetings of the full Board, the Executive Committee of the Board, and all Board Committees. Minutes will be approved by the members of the meetings and will be retained permanently in College files.

2.12 Safeguarding Exempt Status

All decisions, policies and operational practices shall be made and/or developed to ensure safeguarding of the 501(c)(3) exempt status of the College.