(0) BACKGROUND:

For USTC Alumni Foundation (AF) to achieve healthy growth and take on new growth opportunities, there is a need to set up guidelines on authority and approval procedure of operation spending, and reimbursement of cost. This resolution will provide a guideline for Alumni Foundation Governing Board (AFGB) to handle all the matters related to operation cost.

(1) THE GOAL

To provide a guideline for AF operation budget allocation, spending approval, and reimbursement of cost procedures.

(2) EFFECTIVE PERIOD OF THE RESOLUTION:

This resolution is only valid within the 5-year period from the date the resolution is passed. It is mandatory to revise this resolution based on the learning in this 5 year period and future AF situation.

(3) MAXIMUM CAP FOR ANNUAL OPERATION COST

The maximum cap of annual operation cost is 5% of the total donation from previous year. If there is any special event that require additional spending over the 5% total donation limit, a resolution is required to approve the spending.

The total spending of each year must not exceed the 15% limit specified in AF by-law.

(4) DEFINITION OF AF OPERATION COST:

AF scholarship awards are not considered as operation cost. The budget on a new AF scholarship must be approved with a formal AF resolution. AF operational costs are categorized into the following four groups.  The approval procedure is to be specified in Section (5).  In principle,

a. GB or AF shall be informed of Category 4-2 expenses so that the cost may be avoided as non-cash donations or volunteers would provide the service.

b. Any expense in Category 4-3 requires a formal GB voting.

c. Any expense in Category 4-4 requires a formal AF resolution.

Category 4-1. Fixed expenses (must do and not avoidable cost)

4-1a. Registration, franchise tax for non-profit organizations.

4-1b. Fund transfer charge and exchange rate when sending fund to USTC

4-1c. Fee in receiving donations, such as United Way overhead charge,

credit card processing fee, etc.

4-1d. Printing AF award certificates associated AF scholarship (close to minimal possible cost, such as the cost for buying certificate paper, but not including the cost of computer, printer,  ink cartridge, etc) and mailing fee (when there is no alum or AF delegation going to USTC to deliver the certificates).

Category 4-2. Variable expenses (must do but may avoid the cost)

4-2a. Professional accountant fee for annual tax filing.

4-2b. Legal expenses for operational or corporate need.

4-2c. Web page hosting and maintenance.

4-2d. Fee for auditing AF accounting.

4-2e. Printing AF booklets for FR or plaques for PR.

4-2f. Investment consultation and account fee.

Category 4-3. Unusual expenses (may not do, and/or may avoid cost)

4-3a. Costs incurred for an AF project, such as, publishing cost for a book of outstanding USTC alumni, mailing books from a book donation drive, etc.

4-3b. T-shirt for donors of $100 or more.

4-3c. Teleconference among AF members and USTC leaders.

4-3d. Teleconference or room rental for GB, or AF activity.

Category 4-4. Exceptional expenses (should not do according to bylaws or tradition.)

4-4a. Food or travel expenses on AF business trip.

4-4b. Compensation for the work time of an AF member.

4-4c. Fundraising costs for a local event, such as rental, gifts, food, tickets.

Any other cost spend on behalf of AF but not specified above, that do not violate AF by-law, need to be approved by 2/3 of AFGB in a resolution.

(5) AUTHORITY AND PROCEDURE OF BUDGET ALLOCATION, OPERATION COST, AND REIMBURSEMENT OF COST:

Any approval requires a 2/3 majority from the authorized entity.

An approval of expense shall be subject to challenges by AF members or AFGB directors, unless the approval is in a formal AF resolution.  At least 3 members are required to initiate a challenge. If the approval is done in a resolution, the resolution may be replaced by another resolution.  However the new resolution would not retrofit to be applied to the cost covered by the original resolution.

(5-a) Category 4-1 and 4-2 Expenses highlighted in session 4:

Authority of approval: either AF fund manager(s), or AFGB executive committee.

Fund managers are AF members that are in charge of managing all AF funds and related assets. They are not subject to the annual AFGB changes. In order to keep AF芒聙聶s book keeping independent, any change of AF Fund managers other than leave for personal reasons need majority approval of all AF members in a special voting.

Procedure of approval: fund managers to submit estimate of annual cost at the beginning of each year after new AFGB is formed.

(5-b) Category 4-3 Expenses highlighted in session 4:

Authority of approval:

(5-b-1) Authority for Cost less than $500 from a single project: AFGB Executive

Committee.

(5-b-2) Authority for Cost less than $500 from a single project: AFGB.

Procedure of approval:

Annual AF project related cost must be submitted by project lead to AFGB Executive Committee at the beginning of each year after new AFGB is formed, with a return of investment analysis attached to the project cost estimate. AF Project leads do not have to be AFGB members. They are appointed by AFGB executive committee. AFGB Executive Committee will follow the approval guideline highlighted above, summarize the annual budget estimate and inform AFGB.

(5-c) Category 4-4 Expenses highlighted in session 4:

A formal AF resolution is required to approve any expense on category 4.

(5-d) Reimbursement of cost related to AF business:

Any operation cost related to AF business, that needs reimbursement from AF             (including spending from special fund in AF), needs to be approved by:

AFGB executive committee if the cost is less than $500, or a resolution with 2/3 AFGB approval if the cost is more than $500.

The person authorized by AFGB executive board to pay for the cost on behalf      of AF will be reimbursement by AF. If the person elect to donate the spending to AF        instead of receiving the reimbursement, AF will not issue a check to the person, but          will record the amount as cash donation and record it in the AF operation spending.

Any cost that is not approved by AFGB executive board will not be reimbursed, nor counted as cash donation to AF.

Non-cash donation is governed by the AF resolutions on equipment and non-cash donation.

(6) REPORTING AND RECORDING OF AF OPERATION COST:

All approved spending must be communicated by AFGB executive committee to AFGB and documented by AF fund manager.

The fund manager must report GB of the cost or reimbursement of any item over $100 in Category 4-2, 4-3 and 4-4, when it incurs, or monthly, or quarterly.

In the annual financial report, all Category 4-2, 4-3 and 4-4 items must be listed separately

(7) EXEMPTIONS

Any exemption from this guideline must go through the rigorous AF resolution procedure and approved by at least 2/3 of AFGB members.

Authors:

Rongxiang Hu, Yun Wan, Xiangguang Feng