USAFA Endowment

AOG-USAFA Endowment Memorandum of Understanding

Frequently Asked Questions

On 23 November 2009, the Boards of Directors of the Association of Graduates and the USAFA Endowment announced agreement on a MOU to establish a collaborative effort of mutual benefit to both organizations and the Academy. This MOU culminates months of intensive negotiations by representatives from both organizations. The negotiating teams have received inquiries and questions about the MOU and have prepared the following answers to Frequently Asked Questions (FAQs).

What is the purpose of this MOU?
The MOU establishes a two-year collaborative, comprehensive effort that will improve fundraising for Air Force Academy and AOG programs, better serve the needs of the graduates, and put an end to discord and confusion among graduates and other supporters that has been counter productive for the Academy and both organizations.

Why do we need this MOU now?
Consistent feedback from donors and members tells us that there are too many fundraising organizations competing for a fixed pool of gifts to support the Academy. The result has been confusion that has negatively impacted fundraising for the Academy by both organizations. This MOU establishes a consolidated approach that will greatly improve fundraising results immediately and in the future.

How will this MOU work?
The concept for this MOU is simple: the AOG is responsible for friendraising and the Endowment is responsible for fundraising. This MOU, modeled after successful university development efforts, assigns responsibilities based on each organization's strengths, while keeping each organization's efforts closely linked and guided by the shared objectives of supporting the Academy, its graduates and parents.

How will this MOU work?
The concept for this MOU is simple: the AOG is responsible for friendraising and the Endowment is responsible for fundraising. This MOU, modeled after successful university development efforts, assigns responsibilities based on each organization's strengths, while keeping each organization's efforts closely linked and guided by the shared objectives of supporting the Academy, its graduates and parents.

Does this MOU allow one organization to control the other?
No. Both organizations will remain separate and independent. Both continue to have independent boards that are responsible to their respective missions and constituencies.

Does this MOU conflict with the bylaws of either organization?
The negotiating teams were very cognizant of their responsibility to the bylaws and prepared the MOU within the confines of the existing bylaws of both organizations. The MOU does not conflict with either the letter or the intent of the bylaws of either organization.

Are there incentives within the MOU for both organizations to work closely together?
Yes. As outlined in the MOU, both organizations share in the results of fundraising success.

Going forward, what are the fundraising priorities?
Currently, the top priorities are unrestricted funding, the Indoor Practice Facility, and the Center for Character and Leadership Development. In the future, Academy leadership will continue to advise both organizations, under the provisions of the MOU, regarding adjustments to the Academy's strategic needs. Ultimately, donors will decide how to direct their gifts, though they will be strongly encouraged to support established fundraising priorities.

What happens with the Air Force Academy Fund and the Sabre Society?
The Air Force Academy Fund and the Sabre Society programs will be conducted by the Endowment and will remain unchanged for the period of the MOU. Unrestricted donations raised through both programs provide the AOG, the Endowment, and the Academy the most flexible support for strategic needs.

What happens to all the gift funds currently held by the AOG and the Endowment prior to the MOU?

The MOU agreement between the AOG and the Endowment does not call for any gift funds of either organization to be transferred.

Why did the AOG Board not take the MOU to a membership vote?
First and foremost, the provisions of the MOU do not conflict with the bylaws and do not change the purpose of the AOG. Second, achieving an AOG/Endowment solution was the single most important issue in the recent Board elections where members voted to change the makeup of this Board. Third, the Class Advisory Senate, which advises the Board, has been collecting member input on this topic for three years. The Senate, in its Moving Forward 2009-2011 document, formally recommended that the AOG Board seek a cooperative agreement with the Endowment. Moreover, when presented with the resulting MOU, the Senate voted overwhelmingly (29-1) in favor of adopting the agreement. As a result, we strongly believe that a large volume of input from members has guided this decision, even without a costly and time-intensive membership vote.

Was the motivation for the MOU due to financial pressures on either organization?
No. This MOU was ratified because it is in the best interest of the Academy, the graduate community and both organizations. While the AOG and The Endowment are both financially healthy, neither organization has been able to provide the level of financial support to the Academy that West Point and the Naval Academy receive from their alumni.

Is the Endowment support the only source of AOG revenue?
No. The AOG has multiple streams of income including: membership dues, merchandising and event revenues, sponsorships and investment income. The subsidy provided by the Endowment will enable the AOG to pursue additional graduate service programs in support of its 'friendraising' efforts. Of note, the successful "friendraising/fundraising" model is subsidized by the fundraising arm at most universities, including at our major sister service academies.

Does the MOU weaken the financial position of the AOG?
No. There will be substantially more net cash income flowing to the AOG under the agreement than without the agreement.

Will this MOU take away from graduate and heritage programs?
One goal of the MOU is to "better serve the needs of the graduate community", and there are provisions which enhance the AOG's ability to do so. Heritage programs should also benefit as classes and individual donors will now direct their heritage gifts through a single channel.

How does the MOU affect the Endowment's founding principle of 'no fees or deductions' on donor gifts?
It does not. The Endowment will not charge fees or take deductions on restricted gifts to support the Academy. Additionally, all investment gains will accrue to the benefit of the charitable intent of the gift. Donors have the choice to support the ongoing missions of the Endowment and the AOG by making an unrestricted gift or by designating their support for operations of one or both organizations.

Does the Endowment have the resources to meet their financial obligations to the AOG under the MOU?
Yes. The Endowment is in a strong financial position with millions of dollars in operating assets. Moreover, the Board of Directors of the Endowment has set aside $600,000 in a special "guarantee fund" to assure payment to the AOG under the terms of the MOU. Additionally, the Endowment will focus a substantial portion of its attention on sustaining and growing a robust, comprehensive unrestricted annual fund and by asking every donor to consider making an unrestricted gift. We believe that this concerted effort to build on the existing unrestricted giving, combined with the improved fundraising climate provided by this MOU, will yield more than enough unrestricted resources to meet the funding obligation to the AOG.

Who's in charge of ensuring the MOU is followed and is responsible for resolving any issues that may arise?
The MOU provides for a Joint Coordinating Committee (the "JCC") which is responsible for both oversight and planning. Most issues will be resolved at the staff level, and the JCC will not need to be involved. If, however, the Presidents of both organizations cannot resolve an issue, it will be referred to the JCC for resolution. If the JCC is not able to resolve the issue, it will be elevated to both Boards for resolution.

Was a legal review conducted prior to the Boards of Directors vote?
A legal review was conducted by the AOG's legal counsel on specific questions raised by the AOG Board. Two members of the AOG Board and the AOG CEO are also attorneys and provided the Board with their opinions regarding the MOU. Additional expounding language will be incorporated in the follow-on contract, as provided for in the MOU.

Why is the MOU effective for only two years?
The AOG and Endowment recognize that this is a significant initial step. Both organizations want this enterprise to succeed in the long term but recognize the likelihood of 'lessons learned'; thus the need for a follow-on agreement. This MOU includes a process for constructing the follow-on agreement.

What if the MOU doesn't work, or if conditions change?
The MOU provides that either party can terminate the agreement after one year with 60 days notice.