Issued: 06/18/09
Last Revised: 04/07/2022
Last Reviewed: 04/07/2022
1. Policy Purpose
Consistent with its tax-exempt purposes, USC may, from time to time, establish affiliates that operate as separate organizations. The objective of this policy is to ensure that the activities of USC’s Affiliated Organizations are consistent with those of USC. USC seeks to provide oversight for the efforts and activities of each affiliated entity, while still preserving their separateness.
2. Scope and Application
To facilitate compliance with the purpose discussed above, this policy sets forth requirements for the creation, acquisition, disposition, and termination of legal entities affiliated with USC. USC’s individual schools and other operating units cannot take independent action with respect to legal entities. USC employees contemplating the creation, acquisition, disposition, or termination of an affiliated legal entity should contact the Office of the General Counsel (“OGC”), which will advise on the approach best suited to support USC’s objectives.
3. Definitions
| Term | Definition |
| Affiliated Organization | For purposes of this policy, an affiliated organization is an organization (whether or not a separate legal entity under state, federal, or international laws) over USC has legal or other authority to exercise supervision and control. |
| USC | USC includes the University of Southern California, the USC Health System and their respective subsidiaries and affiliates. |
4. Policy Details
USC will undertake to ensure that all Affiliated Organizations are operated in a manner that enables USC to further its tax-exempt purposes and that is consistent with the tax status of each affiliate. Any policies and practices adopted by USC shall extend to the USC’s Affiliated Organizations to the extent necessary to ensure that the Affiliated Organizations’ activities are consistent with those of USC.
5. Procedures
A USC department or unit considering establishing an Affiliated Organization must consult with OGC and University Finance, Office of the Comptroller (“Comptroller”) at the earliest stage of the planning process to ensure that all legal, financial, and policy requirements are fulfilled.
Please consult the Procedure for Affiliated Organizations for additional details.
6. Forms
N/A
7. Responsibilities
| POSITION or OFFICE | RESPONSIBILITIES |
| The Affiliated Organization | 1. Use sound fiscal and accounting procedures (e.g., annual audit or university-approved financial review). 2. Adhere to USC standards of ethics and integrity. 3. Enter into a memorandum of agreement or other formal agreement with USC. |
| USC Department or Unit sponsoring the potential Affiliated Organization | 1. Consult with the OGC if considering establishing an Affiliated Organization (new or existing entity). 2. Develop a detailed written proposal for the Affiliated Organization as outlined in the procedure. 3. Collaborate with the senior USC oversight official and OGC to examine relationships with the Affiliated Organization at least every five years to determine whether to maintain or to terminate the Affiliated Organization’s status. |
| Office of General Counsel | 1. Consult with sponsoring USC department or unit to determine if Affiliated Organization status should be sought. 2. Review and approve proposals for Affiliated Entities in collaboration with the Comptroller. 3. Collaborate with the senior oversight official, sponsoring USC department or unit to examine relationships with the Affiliated Organization at least every five years to determine whether to maintain or terminate the Affiliated Organization’s status. 4. Implement sunsetting processes when Affiliated Organization status is terminated, including providing USC administration with notice of the termination. 5. Prepare and file corporate organizational documents, including annual state filings. |
| University Finance, Office of the Comptroller | 1. Review and approve proposals for Affiliated Entities in collaboration with OGC. 2. Review and approve the Affiliated Organization’s finances annually, if applicable. |
| The President; the Provost and Senior Vice President, Academic Affairs or the Senior Vice President, Health Affairs, as appropriate; or the Senior Vice President, Finance and Chief Financial Officer | 1. The establishment of all Affiliated Organizations, as well as their continued status as an Affiliated Organization, is subject to final review and approval by the President; the Provost and Senior Vice President, Academic Affairs or the Senior Vice President, Health Affairs, as appropriate; or the Senior Vice President, Finance and Chief Financial Officer. |
8. Related Information
N/A
9. Contacts
Please direct any questions regarding this policy to:
| OFFICE | PHONE | |
| Office of the General Counsel | (213) 740-7922 | ogc.usc.edu |