A Donor Intent Question at Florida State College Foundation

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Lisa F. Young / Shutterstock.com

July 21, 2012; Source: Florida Times-Union

The Florida State College Foundation (FSCF) is one of those 501(c)(3) foundation arms of a public university meant to provide an avenue for private fundraising, often outside the aegis of the state legislature, which is tasked with oversight of state college budgets. Donors to the FSCF are offered a few reasonably clear options for what their contributions might support—scholarships to help students attend the college, program funds to help programs that rely on donors, facility campaigns, memorial gifts, endowment gifts, and “unrestricted donations…used where funds are needed most.”

Donors may not have expected that they would read this in the Florida Times-Union: “The Times-Union reported that [College President Steve] Wallace expensed about $187,000 over two years on meals, travel, technology and other costs, including the charitable donations. About $114,800 of the total was paid by college funds, while about $72,300 was paid by the private money from the foundation.”

Now the Times-Union reports that the foundation itself made $16,200 in charitable donations during 2010 and 2011 at Wallace’s request. The foundation’s 990s, available on Guidestar, don’t show the information, but the Times-Union reports that the donations included $5,000 to the Edward Waters College, where Wallace serves on the finance committee, and several donations to the Rotary Club, where Wallace is club president. We checked another site and found donations of $1,000 to the United Way of Northeast Florida, $200 to Community Health Charities, $100 toward a retirement gift for someone at the Association of Florida Colleges, and $500 identified as a “personal commitment” to the Jacksonville Symphony (where Wallace is an ex-officio board member), in addition to at least $3,000 to the Rotary.

Not only would donors probably not anticipate this kind of use of their donations, but the foundation actually had a standing policy prohibiting donations of this sort, but neither the foundation’s executive director, Robert Stamp, nor Wallace said they were aware of it. It’s not clear that Wallace gets the impropriety, as he referred to the donations guidelines as part of “some ‘very old foundation policies’ that Stamp hasn’t had the opportunity to work through yet.”  According to Stamp, who said the policy would be reexamined to see if it needs to be changed, the donations are part of the foundation trying “to be a good community partner.” The foundation’s stated mission is “to secure financial resources that will help Florida State College at Jacksonville provide access to an extraordinary educational experience and to respond effectively to the most important needs of the community.”

We would question whether all donors would imagine that the community to be served by foundation grants would consist of organizations outside of Florida State tied to Wallace. At a minimum, the foundation’s grants at the request of Wallace violated its own internal policies.  Moreover, it would be worth asking donors if this is what they thought they were donating to.  Even if it is legitimate to make community relations grants of this sort, the university and its private foundation arm ought to have a policy that is a little more than making grants at Wallace’s behest to organizations Wallace is linked to. A little due diligence would have gone a long way.—Rick Cohen

  • mdrobbins

    Why should anyone be surprised at this outcome from a supposedly “independent” foundation. Having run two university-related foundations, I can assure you, most nonprofits of this kind are a long way away from using best practices. Legal, yes, but ethically questionable.

    In the organizations I headed, we set clear policies that the foundation itself only made expenditures that were directly related to the organization’s operations or, upon the request of the university board, followed by action by the foundation board.

    The aim was to have university related expenditures made by the university. The foundation would transfer the necessary funds to the university after the two-board vote. The result was an open vote by the university requesting funding from the foundation, followed by an approval vote by the foundation board.

    Of course there are exceptions, such as expenditures that are not allowed under some state regulations, such as the purchase of alcoholic beverages. BUt these are exceptions and should be treated as exceptions.

    In a public institution, transparency is essential. Unfortunately, too many university related foundations are used as a way of hiding expenditures that could not stand the light of day.

    All too often, development costs are hidden from the public (including faculty and legislatures) by employing the development staff. If development staff is raising funds in the name of the university, then the staff should be accountable to the university, not to the foundation. But that’s not the way it words.

    As important as “donor intent” is, there is much more that goes on in university related foundations that would never stand up to pubic scrutiny. It all gets hidden under the rubric of “private nonprofit.”

    Somewhere, someplace, sometime, a day of reckoning is coming for many of these foundations. In these increasingly tight budget times, some state legislatures will catch on to what is happening and will start to question the “private” nature of the foundation. For example, all such foundations in Colorado are subject to state audit if they have interlocking staff (such as a foundation director also serving as a university vice president) or interlocking boards.

    My advice for most university related foundations is to clean up their act, and fast. There is more to come ahead.

  • Tracy Pierce

    Mr. Cohen,
    The information in the Florida Times Union failed to include significant explanatory information with regard to these charitable contributions. Most important, charitable contributions are not made with donor dollars.

    The college operates a highly successful community arts and theater program — The Florida State College Artist Series. Net proceeds from Artist Series events also go into the accounts of our Foundation. The vast majority of these funds support scholarships. A small proportion of these Artist Series revenues is used to support hospitality fundraising expenses and charitable contributions to other community partners under certain provisions. These charitable expenditures from unrestricted Artist Series revenues are fully allowable under the procedures of the Foundation. Subsequent coverage in the Florida Times-Union has clarified these important points. We would appreciate a revision to or retraction of your article above given these facts.

    Tracy A. Pierce
    Vice President
    Florida State College at Jacksonville

  • GB

    “We would appreciate a revision to or retraction of your article above given these facts”

    I bet you would. The truth about the college while Wallace has been president is not pretty. A full investigation is needed at the college, perhaps done by a federal source to reduce the state politics that has some interest in protecting some of the people at the top level of the college.

    You would hear from many faculty and staff except from fear of retribution, something Wallace does so well and only second to not taking any responsibility.