A handbook on how to establish a university foundation is presented. It presupposes that a foundation will be used as the umbrella organization for receiving all private gifts, restricted and unrestricted, for the benefit of a public college or university; and hence it chiefly addresses readers from public colleges and universities. Information is based on personal experiences at five universities. An introduction discusses reasons to have a foundation (establishing credibility, marshaling volunteers, fostering life income agreements, increasing investment potential, and curtailing political intrusion). Eight steps for creating a foundation are as follows: develop guidelines (sample fund-raising and policy guidelines); state the case for development (sample case statement); incorporate (sample articles of incorporation and bylaws); choose directors; halfway home or getting the exemption; find startup money (sample guidelines for establishing foundation funds, trust fund withdrawal request); establish accounts; and disburse funds (sample disbursement guidelines). It is suggested that those establishing a foundation remember to make it as easy as possible for someone to make a gift to the institution; allow at least a year to get a foundation organized; and be assured that with good professional staff leadership, the institution will reap rewards. Contains 17 references. (SM)