In the past year there were five bills pending in the Connecticut legislature aimed at opening the curtain behind which the University of Connecticut foundation operates. I wrote about this early in 2015. This was not the first time that the legislature wanted more information and the university has always pushed back. It appears now that in order to put this issue to rest the university and the legislature have agreed upon a bill, but it does very little to promote transparency. It appears to be merely an effort at removing this issue from the limelight.
Of course, this is not the only foray into college and university endowments by the Connecticut legislature this year. They are also keenly interested in the Yale endowment. But let’s concentrate on the situation at UConn.
In my opinion, the bill that passed on Monday May 2, 2016 does very little to advance the transparency of the UConn foundation. Much is made of its provision to require disclosure of donor names—unless the donor requests that their identity not be made public. I am sure that the university will have no trouble convincing donors to check-the-box for non-disclosure so that the donors “are not bothered by other solicitations”.
As the foundation grows in size, another provision reduces the amount that the university can spend supporting it. Currently the university contributes $7 million to the foundation’s operating budget. The foundation annually provides about $40 million back to the university. But when the foundation’s endowment reaches $1.25 billion (it is currently $400 million) the university support will have to end. Come on; I am sure the foundation would have agreed to immediately stop receiving the university’s financial support while at the same time reducing its payments to the university to $33 million. Does the legislature really think they accomplished anything here?
The bill also makes it unlawful for the foundation "to engage in any financial transaction unrelated to accomplishing its charitable purpose." That provision has been a federal law only since Section 501(c)(3) was written into the Internal Revenue Code back in 1952! It makes good reading and good press for the CT legislature however.
The bill also falls short because it still exempts the foundation from Connecticut’s public disclosure laws and the Freedom of Information Act. This was the primary purpose of every bill filed in the past years, but it is compromised out for this piece of legislation.
The university can now say it is no longer opposed to legislation and the legislature is now out from under the charge of being unable to pass any legislation aimed at the university foundation. In reality, not much has changed.