This is a continuation of Thursday's story on the UNM Foundation
The administration and staff of the UNM Foundation are still being paid by the University, even though the fundraising entity became independent of University authority this summer.
John Stropp, foundation president, said the foundation is partially funded by the University because it is a nonprofit institution.
Various events and programs at the foundation, as well as employee and most administrative salaries, are paid jointly by the foundation and UNM, he said.
"A certain percentage of our overall cost will continue to be covered by the University until we grow enough to be able to absorb those costs somewhere over a three- to five-year period," he said. "That way, the University will hopefully be bearing no cost of the development effort. We have absorbed a large portion of it already, but it will be a long process."
Stropp is confident that in the next few years, as the foundation becomes fully independent, it will be funded entirely by administrative fees placed on endowment funds.
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He said this is a common practice in nonprofit organizations.
An administrative fee of 1.15 percent of the interest earned by each endowment is charged annually and withdrawn for use by the foundation, Stropp said.
The revenue generated by these fees will increase every year as the endowments grow, he said.
Stropp's salary is paid by the foundation through the administrative fees on the investment funds, he said.
As of now, the funds from administrative fees on endowments are not enough to support the foundation as a separate entity, he said.
Stropp said the administrative fee percentage could be increased but only with a unanimous decision from the foundation's board of trustees and the Board of Regents.
Stropp said the foundation is careful to ensure the funds used to finance the organization come from administrative fees, not from donors.
"None of the original gift dollars are used to fund the foundation, and this will stay the same as the foundation goes independent," he said.
The foundation is also funded by short-term investment income, which is interest taken from investments stipulated for one year or less, he said.
These fees pay portions of employee and administrative salaries along with the parts of the foundation not supported by UNM.
As the foundation's reorganization moves on, Stropp said he hopes employees' salaries will increase without University funds.
"It is more likely that salaries will increase as the University and the foundation embark on a comprehensive fundraising campaign and hire additional staff," Stropp said.
Michael Kingan, vice president of institutional advancement, said the foundation will be undergoing major changes but is fundamentally the same organization.
"What we are trying to do is parallel as much as we can the employment benefits and policies of the University," he said.
Stropp said the Foundation will create its own retirement plan and company benefits for employees. These benefits won't come from the University or the state, as they did previously and still do for UNM employees.
"This will maximize the compensation structure and put stability into the structure of the University to maximize fundraising and provide a more conservatively focused effort," Stropp said.
