By Kyeland Jackson —
The meeting planned to smooth tensions between university board of trustees and the U of L Foundation won’t happen this week.
First reported by the Courier-Journal, board Chair Larry Benz confirmed the meeting was canceled. The meeting was planned after a tensions escalated in a board of trustees meeting Friday. Trustees threatened to sue the foundation if they did not choose a forensic examiner and hand over financial records, beginning an audit on the university’s endowment manager. Foundation Chair Bob Hughes suggested an internal audit of the foundation, led by university and foundation trustees.
That suggestion was struck down.
Hughes said the joint meeting can take place once Benz drops the litigation threat against the foundation.
“It (the meeting) will occur with the permission of the University of Louisville Foundation board once Chairman Benz drops his perpetual threats to sue the university’s foundation,” Hughes said in email.
“Friday’s meeting or any other joint meeting under advice of legal counsel cannot occur till then.”
Donors demanded an audit on the University of Louisville Foundation, U of L’s $680 million endowment manager, threatening to pull funding otherwise. The donors – the James Graham Brown Foundation and the C.E. & S Foundation – account for more than $76 million in foundation assets. That money funds expenditures by the university, including grants and projects. The Brown Foundation’s penned a letter to ULF, citing worries for the foundations’ expenditures and leadership.
“On behalf of the James Graham Brown Foundation, we want to express our concern that expenditures may have been made that were not exclusively for the charitable and educational purposes of the university,” the letter said.
“We also believe that the governance of ULF and its relationship with the university do not represent current best practices for the governance of colleges and universities.”
Former U of L President James Ramsey is currently president of the foundation. Ramsey’s contract as the University of Louisville’s president was bought out for $690,000 this summer. Foundation donor funding skyrocketed under Ramsey, jumping up by $115 million between 2002 and 2015, a 290 percent increase, according to foundation records.
However, a recent article by the Courier-Journal shows the foundation’s performance stalled 10 years ago.
The foundation’s value dropped $131 million, owing some of its losses to bad market investments and university expenditures. Just last year the foundation lost $66.2 million for those same reasons, and received a $38 million loan from U of L without trustees’ knowledge. Benz requested records of the transaction, but has not received them.
While state appropriation to higher education has dwindled in the last nine years, other endowment mangers have continued to excel. The University of Kentucky purportedly rose its endowment by 46 percent in the same time span. Spalding University’s endowment rose 141 percent.
While the foundation has license to let Ramsey go, offices are purportedly being built for him and his Chief of Staff, Kathleen Smith. Benz has publicly denounced Ramsey’s leadership on the board, calling his position “inappropriate.” In a letter to foundation trustees last week, Benz cited a need for transparency, and branded Ramsey’s position as an expenditure not benefiting U of L.
“As a fiduciary that is obligated to act for the primary benefit of the University, the continued payment by the foundation of any money, which is money that is held by the foundation for the benefit of the university, to Ramsey or Smith, is not proper as it is not a use of money that benefits the university,” the letter said.
While the foundation has an ultimatum to hand over financial documents and agree to an external auditor, a deal could be brokered.
“I am hopeful we can get reconsideration as we desire a unified and reconciled approach as do our students, faculty, staff, and President,” Benz said in email.
The foundation will meet for a regularly-scheduled session Friday.
