Management of Related Entities, Internal Organizations, and Licensed Operations

I.                 General Policy Statement

This policy governs the creation, oversight, and dissolution of legal subsidiaries, affiliated entities, and other entities separate, but legally related to, Syracuse University (collectively, “Related Entities”). In general, and as set forth in this policy, creation and dissolution of Related Entities requires approval from the Office of University Counsel, the Chief Financial Officer, the Chancellor, and in some cases the Board of Trustees. Oversight of the operations of each Related Entity is the responsibility of the school, college, or administrative unit having the primary connection to the mission or purpose of the Related Entity.

This policy also governs creation and dissolution of academic centers, clinics, institutes, advisory boards, and other internal organizations that engage in external-facing activities (collectively, “Internal Organizations”). It also governs the University’s childcare centers, and FCC-licensed radio stations (collectively, “Licensed Operations”).

II.             Reason for Policy/Purpose

The purpose of the policy is to standardize requirements for creating and maintaining Related Entities, Internal Organizations, and Licensed Operations, and to clarify the role and responsibilities of University personnel, alumni, and supporters of the University involved with such entities or organizations. The controls set forth in this policy are needed to ensure there is appropriate oversight of the University’s tangible and intangible assets, and that operations are conducted consistently with applicable laws, rules, regulations, and University policies.

III.         Policy

A. Creation and Dissolution of Legal Subsidiaries and Affiliated Entities

New subsidiaries and affiliates will only be approved pursuant to this policy when justified by compelling legal, financial, academic, or operational reasons.

  1. Legal Subsidiaries

Legal Subsidiaries are separate legal entities that are wholly owned or controlled by the University (e.g., Drumlins, Inc; Orange Insurance Company, LLC). Legal Subsidiaries may only be created or dissolved with approval from the Chancellor, the General Counsel, and the Chief Financial Officer, with the concurrence of the Executive Committee of the Board of Trustees.

  1. Affiliated Entities

Affiliated Entities are separate legal entities, such as corporations or limited liability companies that (i) are owned in part by the University; (ii) controlled or strongly influenced by the University; (iii) receive significant financial support from the University; or (iv) use University resources, name, and/or marks.

Affiliated Entities do not include entities that have only an ordinary course contractual or donative relationship with the University. Examples of such arrangements include (i) using University property or space through a lease or license agreement (tenants); (ii) receiving non-recurring support or services from the University; (iii) receiving only de minimis support or services from the University; (iv) engaging in academic collaborations or sponsored research with the University (typically other academic institutions); or (v) contracting to supply or receive goods or services.

Creating or ending a relationship with an external entity that qualifies as an Affiliated Entity requires approval from the Chancellor, the General Counsel, and either the Vice Chancellor and Provost (where the Affiliated Entity is academic or tied to a school/college) or the Chief Financial Officer (where the Affiliated Entity is not academic or tied to a school/college).

B. Creation and Dissolution of Internal Organizations and Licensed Operations

Internal Organizations and Licensed Operations can only be created or dissolved with the appropriate approvals described below.

  1. Volunteer Boards and Councils, including Advisory Boards

Volunteer Boards and Councils are committees comprised of University personnel and outside volunteers, such as alumni, that provide schools, colleges, and administrative units with philanthropic support and strategic management advice (e.g., College of Law Board of Advisors; Hendrick’s Chapel Advisory Board; Falk College Advisory Board). Member nominations to Volunteer Boards and Councils will be made by the applicable dean or unit leader. The Chancellor must approve the appointments.

Creation or dissolution of school, college, or other academic Volunteer Boards and Councils requires approval from the Chancellor, Vice Chancellor and Provost, and the dean for the school or college wishing to establish or dissolve such a group. Creation or dissolution of non-academic, administrative Volunteer Boards and Councils requires approval from the Chancellor, the Chief Advancement Officer, and the unit leader for the unit wishing to establish or dissolve such a group. Volunteer Boards and Councils may not form separate corporate entities, including, without limitation, limited liability companies, charitable 501(c)(3) organizations, or other corporations.

  1. Academic Centers or Institutes

Academic Centers and Institutes are formally-structured associations among faculty, staff, and students formed to further specific research, advocacy, or other academic endeavors (e.g., Burton Blatt Institute; Falcone Center for Entrepreneurship). Creation or dissolution of Academic Centers or Institutes requires approval from the Vice Chancellor and Provost and the deans for the schools or colleges with which the center or institute is associated. Academic Centers or Institutes may not form separate corporate entities, including, without limitation, limited liability companies, charitable 501(c)(3) organizations, or other corporations.

  1. Associations and Clubs, including Alumni Clubs

Associations and Clubs are formally organized groups established to support fundraising and other charitable efforts of schools, colleges, or specific programs at the University (e.g., SU Law Alumni Association; Maxwell D.C. Alumni Club). Creation or dissolution of Associations and Clubs requires the approval of the Chancellor and the Chief Advancement Officer. Nothing in this policy is intended to prevent informal associations and gatherings of University alumni or supporters.

  1. Legal Clinics

Legal clinics are programs organized through the College of Law, supervised by faculty attorneys and staffed with law students who provide services in various areas of the law to third-party clients. Creation or dissolution of legal clinics requires the approval of the Chancellor and the Dean of the College of Law.

  1. Radio Stations.

Radio stations are FCC-licensed, University operated radio stations. Creation or dissolution of radio stations requires the approval of the Chancellor and the Chief Financial Officer.

  1. Childcare Centers.

Childcare centers are licensed facilities providing early education and childcare to families affiliated with Syracuse University. Creation or dissolution of childcare centers requires the approval of the Chancellor and the Chief Human Resources Officer.

C. Oversight and Review of Related Entities

Every Related Entity must be overseen by a University officer or senior leader. The University officers and senior leaders responsible for oversight of the University’s Related Entities are responsible for ensuring the entities have appropriate formation, governing, and operating documents in place (e.g., Bylaws; charter; standard operating procedures; MOUs). The responsible officers and leaders must perform periodic reviews, at least every three (3) years, of the Related Entities within their purview. Such reviews should determine whether the entities continue to serve important University interests.

See Related Entities Oversight Guidelines for further direction.

Responsibility for oversight of a particular Related Entity depends on the type of entity as follows:

 

Type of Related Entity University Officer or Leader Responsible for Oversight
Legal Subsidiaries Chief Financial Officer
Affiliated Entities Vice Chancellor and Provost; or Chief Financial Officer
Other To the extent entities are proposed, formed, or exist that do not fall within one of the above categories, the Chancellor will designate a University officer or other senior leader to oversee such entities.

D. Transactions with Related Entities

All business transactions with Related Entities will be at arm’s length. For purposes of this policy, “arm’s length” means the terms of the transaction are consistent with the terms that would apply if unrelated organizations had engaged in the same or similar transaction under the same or similar circumstances. The University and  Related Entity shall not enter into an intercompany business transaction (including but not limited to provision of goods or services, lending of money, rental of property, transfers of assets, cost sharing and expense reimbursement arrangements, licensing arrangements, shared employees, and other transfers of assets, liabilities or funds) unless (a) it is a transaction or type of routine transaction that has been approved by the University’s Chief Financial Officer, or (b) the terms of the transaction are consistent with the terms that would apply if unrelated organizations had engaged in the same or similar transaction under the same or similar circumstances as confirmed by the Chief Financial Officer.

In determining whether a transaction meets the arm’s length standard, the University’s Chief Financial Officer’s review or  their delegate shall include an evaluation of all relevant factors, including but not limited to (a) the form of consideration charged or paid, (b) volume, (c) scope and terms of any warranties provided, (d) duration of the agreement, (e) collateral transactions or ongoing relationships between the parties, (f) extension of credit in payment terms, (g) market risks (including fluctuations in cost, demand, pricing and inventory levels), (h) credit and collection risks, (i) product liability risks, (j) similarity of geographic markets, (k) market level (i.e., wholesale, retail, etc.), (l) location-specific costs associated with production and distribution, (m) the extent of competition in the local market, and (n) alternatives realistically available to the parties.

E. Oversight of Internal Organizations and Licensed Operations

Leaders of Internal Organizations and Licensed Operations are subject to existing University policies and practices related to budgets, purchasing, contracts, risk management, safety, branding, human resources, and more. On at least an annual basis, leaders of Internal Organizations and Licensed Operations must report to the Chief Compliance Officer and their dean or senior unit leader on the activities of their Internal Organization or Licensed Operations.

F. Use of University Name or Marks

Related Entities, Internal Organizations, or Licensed Operations wishing to use the University’s name or marks must adhere to all existing approval processes, branding guidelines and policies established by the Chief Marketing Officer.

G. Exemptions from this Policy

Certain entities or groups are exempt from the requirements of this policy, as they are governed by other University policies, procedures, or contractual agreements. They include:

  • Schools, colleges, academic departments, and administrative units;
  • Boards or committees appointed to evaluate Syracuse University academic or administrative operations for accreditation or compliance purposes, including committees or other subgroups of the Board of Trustees or University Senate, or other ad hoc compliance committees;
  • Registered student organizations, including student sports clubs, student affinity groups, and student religious organizations; and
  • Fraternities and sororities.

Nothing in this policy is intended to prevent separate entities from collaborating with, or otherwise supporting, the University.

H. Violations of Policy

Any entity, organization or operation established after the effective date of this policy outside of the procedures described herein will be dissolved by the University, or upon a directive from the University. The University reserves the right to take appropriate legal action to effectuate a dissolution or cease and desist directive. University employees or students who establish entities in violation of this policy may be subject to disciplinary action.

I. Policy Administration

The Office of University Counsel and the Office of the Chief Financial Officer are responsible for administering this policy.  

IV.          To Whom Does This Policy Apply

Select all that apply:

☒  Students     ☒  Faculty     ☒  Staff      ☒  Visitors/General Public     ☒  Other: Anyone wishing to establish a Related Entity

V.              Appendices (as applicable)

A.   Procedures

  1. Creation and Dissolution Procedures for Related Entities, Internal Organizations, and Licensed Operations.

Any division, school, center, office, unit, or individual seeking to create or dissolve a Related Entity, Internal Organization, or Licensed Operation must prepare a written proposal. Proposals for creation should emphasize the purpose(s) of the entity, organization or operation, its connection to the University and its mission, and should include a 5-year budget and basic business plan. Such proposals must also identify the University officer or senior leader who would have oversight responsibility for the entity, organization or operation, and must be endorsed by that person, as well as by the dean or unit leader for the school, college, or unit involved.

Proposals for dissolution should explain why the entity, organization or operation is no longer serving its intended purpose or otherwise providing a benefit to the University. Proposals for dissolution must be endorsed by the University officer or senior leader with oversight responsibility for the entity, organization or operation.

Legal Subsidiaries. Written proposals for creation or dissolution of Legal Subsidiaries must be submitted simultaneously to the General Counsel, and the Chief Financial Officer. The General Counsel and Chief Financial Officer will consult with appropriate University personnel and units as needed. If the General Counsel and Chief Financial Officer determine that formation or dissolution of an entity is justified, they will so-recommend the appropriate action to the Chancellor. If the Chancellor adopts the recommendations of the General Counsel and Chief Financial Officer, the Chancellor (or a designee) will present the matter to the Executive Committee of the Board of Trustees for a vote.

Affiliated Entities. Written proposals to establish a new University relationship with an external entity that would cause the external entity to come within the definition of an Affiliated Entity, or to end such a relationship, must be submitted simultaneously to the General Counsel and either the Vice Chancellor and Provost (if the entity is academic or tied to a school/college) or the Chief Financial Officer (if the entity is not academic or tied to a school/college). The General Counsel and either the Provost or Chief Financial Officer will consult with appropriate University personnel and units as needed. If the General Counsel and either the Provost or Chief Financial Officer determine that creating or ending a relationship with an Affiliated Entity is justified, they will so-recommend the appropriate action to the Chancellor who may adopt or reject the recommendation.

Volunteer Boards and Councils. Written proposals for creation or dissolution of Volunteer Boards and Councils must be submitted simultaneously to the Vice Chancellor and Provost, and the Chief Advancement Officer. The Provost and Chief Advancement Officer will consult with appropriate University personnel and units as needed. If the Provost and Chief Advancement Officer determine that formation or dissolution of a volunteer board or council is justified, they will so-recommend the appropriate action to the Chancellor who may adopt or reject the recommendation.

Academic Centers or Institutes. Written proposals for creation or dissolution of Academic Centers or Institutes must be submitted to the deans of the schools or colleges at issue. The deans will consult with appropriate University personnel and units as needed. If the deans determine that formation or dissolution of a center or institute is justified, they will so-recommend the appropriate action to the Vice Chancellor and Provost who may adopt or reject the recommendation.

Associations and Clubs. Written proposals for creation or dissolution of Associations and Clubs must be submitted to the Senior Vice President and Chief Advancement Officer. The Chief Advancement Officer will consult with appropriate University personnel and units as needed. If the Chief Advancement Officer determines that formation or dissolution of an association or club is justified, they will so-recommend the appropriate action to the Chancellor who may adopt or reject the recommendations.

Legal Clinics. Written proposals for creation or dissolution of legal clinics must be submitted to the Dean of the College of Law. The Dean will consult with appropriate University personnel and units as needed. If the Dean determines that formation or dissolution of a legal clinic is justified, they will so-recommend the appropriate action to the Chancellor who may adopt or reject the recommendations. To the extent the formation or dissolution procedures described in this section conflict with rules of the American Bar Association or other applicable accreditation standards, those external rules and standards will govern.

Radio Stations. Written proposals for creation or dissolution of licensed radio stations must be submitted to the Chief Financial Officer. The Chief Financial Officer will consult with appropriate University personnel and units as needed. If the Chief Financial Officer determines that formation or dissolution of a radio station is justified, they will so-recommend the appropriate action to the Chancellor who may adopt or reject the recommendations.

Childcare Centers. Written proposals for creation or dissolution of licensed childcare centers must be submitted to the Chief Human Resources Officer. The Chief Human Resources Officer will consult with appropriate University personnel and units as needed. If the Chief Human Resources Officer determines that formation or dissolution of a childcare center is justified, they will so-recommend the appropriate action to the Chancellor who may adopt or reject the recommendations. To the extent the procedures in this section conflict with any procedures required by law or regulations governing childcare centers in New York, the law or regulation controls.

The foregoing procedures may be modified with approval from the Chancellor where, as determined in the Chancellor’s sole discretion, University interests would so require.

  1. Operational Review Procedures for Related Entities.

The Chief Compliance Officer will maintain a list of all known and active Related Entities (meaning, Legal Subsidiaries and Affiliated Entities), including the name of each entity, type of entity, and the University officer or senior leader responsible for the entity.

At least every three years, University officers and senior leaders with responsibility for Related Entities will review their entities to determine whether the entities are still serving their intended purposes. The responsible parties will submit a written report summarizing their findings to the Chief Compliance Officer. The written report must include at least the following elements for each entity covered in the report:

  • A summary of the entity, including its purpose, year established, and activities undertaken in the preceding three years;
  • A description of the benefits provided to the University by the entity;
  • A description of the University resources used by the entity, if any;
  • An explanation of how the entity is funded, and whether it is financially viable;
  • A confirmation that there is an appropriate MOU in place, if applicable;
  • A summary of any risks, liabilities, or operational issues encountered by the entity during the reporting period; and
  • A conclusion as to whether the entity continues to serve its intended purpose.

Within 60 calendar days of receiving an operational report, the Chief Compliance Officer will inform the Chancellor of any operational or compliance concerns involving the Related Entities covered in the report, and will propose a corrective action plan.

The Comptroller’s Office is responsible for financial oversight of Legal Subsidiaries, and the review procedures for those entities may differ from the procedures described in this section. Specifically, the Comptroller’s Office monitors Legal Subsidiaries on an ongoing basis, and prepares annual financial statements for those entities. An outside auditor performs accounting and tax services for the Legal Subsidiaries.

  1. Operational Review Procedures for Internal Organizations and Licensed Operations.

On at least an annual basis, leaders of Internal Organizations and Licensed Operations must report to the Chief Compliance Officer and their dean or senior unit leader on the activities of their Internal Organization or Licensed Entity. The Chief Compliance Officer will maintain a list of all active Internal Organizations and Licensed Operations.

  1. Procedures for Use of University Name or Marks

Written proposals to use the University’s name or marks must adhere to existing University policies, procedures, and guidelines regarding branding and licensing, as determined by the Chief Marketing Officer.

B.    Definitions

The following definitions apply to this policy:

“Academic Centers or Institutes” are formally-structured internal associations among faculty, staff, and students formed to further specific research, advocacy, or other academic endeavors (e.g., Burton Blatt Institute; Falcone Center for Entrepreneurship).

“Affiliated Entities” Affiliated Entities (e.g., Community Folk Art Center, Inc.; Light Work Visual Studies, Inc.) are separate legal entities, such as corporations, or limited liability companies (i) in which the University has an ownership interest that is less than 100%; (ii) that are controlled or strongly influenced by the University; (iii) that receive significant financial support from the University; or (iv) that use University resources, name, and/or marks.

“Associations or Clubs” are formally organized groups that are established to encourage social engagement and support related to schools, colleges, or specific programs at the University (e.g., SU Law Alumni Association). Associations and Clubs do not include: registered student organizations or club sports; fraternities or sororities, student affinity groups, or other informal gatherings of University supporters.

“Internal Organizations” are academic centers, clinics, institutes, advisory boards, and other internal organizations that engage in external-facing activities.

“Legal Subsidiaries” are separate legal entities that are wholly owned or controlled by the University (e.g., Drumlins, Inc; Orange Insurance Company, LLC).

“Licensed Operations” include licensed University childcare centers and radio stations.

“Related Entities” means Legal Subsidiaries and Affiliated Entities.

“University Officer or Senior Leader” means the officers set forth in the University’s Bylaws, or a member of the Chancellor’s Executive Team.

“Volunteer Boards and Councils” are committees comprised of University personnel and outside volunteers such as alumni, that provide schools, colleges, and administrative units with philanthropic support and strategic management advice (e.g., College of Law Board of Advisors; Hendrick’s Chapel Advisory Board; Falk College Advisory Board).

C.   Forms

To be developed.

D.   Other Related Policies and Documents

E.    Frequently Asked Questions

To be developed.