BEWARE of Donations to MCPS "Foundation". Foundation has $7.7M in assets. State Audit Finding shows MCPS did not have a memorandum of agreement with its affiliated foundation to address each entity’s roles and responsibilities.

Maryland Office of Legislative Audits finding related to the MCPS Educational Foundation that is currently requesting donations for student school supplies. What do they really do with your donations? 

Finding 13 

MCPS did not have a memorandum of agreement with its affiliated 

foundation to address each entity’s roles and responsibilities. 

Analysis 

MCPS did not have a memorandum of agreement (MOA) with its affiliated 

foundation (Montgomery County Public Schools Educational Foundation) to 

address each entity’s roles and responsibilities. The Foundation is a tax exempt 

charitable organization under Section 501(c)(3) of the Internal Revenue Service 

(IRS) code that was created in 1988. According to filings with the IRS and its 

website, the Foundation’s purpose is to support and enhance the educational goals 

established by the Board of Education of Montgomery County, which it 

accomplishes through fundraising and providing grants to teachers and 

scholarships to students. 

According to the Foundation's fiscal year 2020 audited financial statements, 

revenues and expenditures totaled $1.8 million and $1.2 million, respectively. 

Additionally, as of June 30, 2020, the Foundation’s assets totaled $7.7 million, 

which primarily consisted of cash of $1.2 million and investments of $6.5 million. 

The Foundation’s unrestricted funds totaled approximately $2.3 million. 

Under the circumstances, given the Foundation’s public purpose and its 

relationship to MCPS, it would be appropriate to enter into a formal MOA that 

specifies the roles and responsibilities of each entity, which could include the 

following: 

 The Foundation’s solicitation, collection, and administration of funds. 

Although the Foundation had an investment policy, the policy did not address 

controls over collected funds including proper collateralization of funds, the 

use of interest bearing accounts, and procedures for the accounting and 

reporting of fund balances. The policy also did not address the need for a 

long-term plan that maximizes the use of unrestricted funds. 

 The Foundation’s conflict of interest policy for board members and 

Foundation employees. Although the Foundation had an ethics policy, the 

policy was not as comprehensive as those provided for under the State Ethics 

law, which addresses standards of conduct, ethics training, and completing 

annual financial disclosures by board members and officers. Such a policy 

would provide additional assurance regarding the integrity of the Foundation’s 

board and its processes, and should include a requirement to advise MCPS of 

conflict of interest issues. 

 The Foundation’s procurement policies for purchases donated to MCPS. 

 The Foundation’s submission of an annual audit report to MCPS’ Board of 

Education. 

 MCPS’ sharing of priorities, projects and resource requirements; including the 

sharing of any non-private data to assist the Foundation’s effort. 

 MCPS’ providing of any in-kind support functions and the use of its facilities 

to the Foundation. 

Recommendation 13 

We recommend that MCPS enter into an MOA with its affiliated Foundation 

detailing the roles and responsibilities for each entity in critical areas such as 

conflicts of interest, collection and safeguarding funds, and procurement 

policies.

MCPS22 MD Office of Legisla... by Parents' Coalition of Montg...