Compass State University Foundation: Managerial Accounting Issues in a Nonprofit Entity.

A nonprofit, nongovernmental entity is created to support a public university in its fund-raising efforts and endowment management. Some controversy exists as to whether the benefits of establishing a new legal entity exceed the costs, how stakeholders can get the information they need to assess the foundation, whether alternative strategies could have accomplished the same goals at less cost, and whether it was wise to transfer the university's entire endowment fund to the foundation. This case addresses issues of accoumability, cost/benefit analysis, and performance evaluation. Students are challenged to apply tools learned from examination of for-profit entities to an institutionally related foundation. This case is most appropriate for an undergraduate advanced or graduate managerial accounting course. Other suitable courses include governmental and nonprofit accounting and an integrative capstone accounting course.