Not sure what your fiance read but grass doesn't protect a foundation! How could it? And why would a concrete foundation need protecting in the first place? Hopefully it was installed according to code, waterproofed and the exterior soil graded to slope away from the structure. That's all the "protection" a new foundation needs!!

IMO as a landscape designer, houses need more than just a lawn to achor them to their setting and have them blend in with the bigger landscape. Generally, this is accomplished with planting beds surrounding it....the ubiquitous "foundation plantings" :-) And these beds need to be wide enough to accomodate whatever plants are intended to grow to full size without encroaching on the house. Not so much for moisture control (more a factor with wood siding) but more for maintenance concerns - both the the plants and the residence. Plus, most houses have roof eaves that extend out and and prevent rainfall reaching anything directly underneath.

Use your sod for a better purpose in the back garden! It doesn't keep well so lay ASAP. And just apply a layer of mulch bordering the foundation to a distance suitable for planting later once you've figure out what you'd like to plant. Most will recommend a bed width (edge to foundation) of at least 6'.

I don't think grass or mulch will help the foundation at all, but it will help the heavy rain from washing the dirt away from the foundation and the mud from splashing up against the house.