(Approved by the Board of Regents, July 11, 2002)
  I.   Purpose

       This policy provides guidance to institutions and
       the University System of Maryland Office on the use
       of foundation or independently incorporated alumni
       association funds (External Funds) for the benefit
       of University System of Maryland (USM) employees.
       System employees also need to ensure that their
       actions are consistent with the Maryland Public
       Ethics Law.
  II.  General

       External Funds may be used to provide economic
       benefits to USM employees only if consistent with
       this policy.  USM employees are not to receive any
       economic benefit directly from an affiliated
       foundation or alumni association, except as provided
       for herein.  As used herein, "economic benefits"
       includes cash awards or salary supplements and non-
       monetary items, such as personal property.
  III. Use of External Funds for Benefit of USM Employees

       A.   An institution may develop award programs which use
          External Funds for the benefit of USM employees if the
          institution ensures that there is adequate independence of
          the recipients of awards from the funding source (for
          example, an affiliated foundation).  The award program must:

           Be established in writing and formally approved by the
              Vice President for Administration of the institution;
           Identify the funding source (foundation or alumni
              association), the eligibility and selection criteria, the
              award amount and the selection mechanism;
           Utilize External Funds in a manner consistent with the
              understanding of the funding entity (foundation or alumni
              association) and its donors if any restricted gifts are
              being used for the program, and;
           Ensure that none of the award recipients have duties
              relating to the foundation or alumni association (or its
              donor) providing the External Funds, or duties relating to
              the award program itself.  The use of External Funds to
              support the salary of a System employee does not disqualify
              the System employee from participating in an award program.

      B.   Economic benefits to USM employees, which are of
          insignificant or low value that would qualify as De Minimis
          under IRS regulations, may be received directly from an
          affiliated foundation or alumni association.  Benefits
          received from alumni associations by System employees that
          are a result of membership are excluded from this policy.

       C.   USM employees who provide services to affiliated
          foundations for the benefit of the institution, may be
          compensated, or provided honoraria, directly by the
          affiliated foundation.  Institutions are to implement
          policies and procedures to ensure that foundation
          compensated services or honoraria are for activities
          conducted by the affiliated foundation, and NOT by an
          institution of the University System of Maryland.
          Institutional policies and procedures should seek to ensure
          that supervisors of System employees with employment
          relationships with affiliated foundations are aware of the
          relationships.  Dual employment situations should be
          considered carefully in the context of State Ethics Law, as
          well as paragraph 9 of Board of Regents Policy IX - 2.00 -
          POLICY ON AFFILIATED FOUNDATIONS.  All compensation
          arrangements involving the Chancellor and institutional
          presidents using funds of affiliated foundations are to be
          approved by the Board of Regents.

       D.   This policy does not preclude the use by an institution
          President, or the Chancellor of an official residence owned
          by an affiliated foundation or alumni association, provided
          such use has been approved by the Board of Regents.

       E.   External Funds from an affiliated foundation or alumni
          association may be used to support a specific USM position,
          provided that the person in that position does not have the
          ability to influence the foundation or association in
          decisions on the level of funding for the position.
          Notwithstanding the foregoing:

             (1)  Fundraising for an Endowed Chair or Professorship is
                  permitted; and
             (2)  External Funds received by an institution pursuant to a
                  grant (or subcontract) with an affiliated foundation or
                  alumni association may be used (in accordance with the
                  provision thereof and institutional policy) to support a
                  specific position where the person in that position has
                  assisted in securing the underlying funding for the
                  affiliated foundation or alumni association.
       F.   An affiliated foundation or alumni association may
          directly reimburse a System employee for System employment-
          related expenses, provided that the amounts reimbursed are
          reasonable, have a legitimate business purpose in the
          context of the work activity being performed (e.g.
          fundraising), and are approved by the employee's supervisor
          or designee, in advance of submission to the foundation or
          association.  In the case of an institution's president,
          such expense reimbursements must be reported annually to the
          Office of the Chancellor by September 30 for the preceding
          fiscal year, and reviewed by the office of Internal Audit.
       G.   System employees whose spouse or other family members
          receive benefits from affiliated foundations or alumni
          associations must ensure that such arrangements do not
          constitute violations of the State Ethics Law.
  Each Chief Executive Officer shall identify his/her
  designee(s), if appropriate, for this policy; shall
  develop procedures to implement this policy; and shall
  forward a copy of such procedures to the Chancellor.