By Keith Sherman, U of L Foundation Director–
That’s the number of consecutive days the University of Louisville Foundation was under review from the Kentucky state auditor, a forensic auditing firm and our financial auditor.
But I am happy to report that all reviews and audits of the foundation are complete and our organization – vital to the university’s success – has survived the scrutiny, embraced recommended changes, and emerged a stronger, more reliable partner for the University of Louisville.
We have a clean bill of health and are excited about the future.
How did we do it? Change comes from the top. Our new board of directors, committed volunteers who care deeply about the university, spent countless hours working with our dedicated staff to chart a new course. Change would not have been possible without our board’s hands-on involvement and willingness to roll up their sleeves, question all historical practices, and rebuild the organization.
Systemic change is hard, but changes were necessary in the areas of personnel, governance and management. The public had lost confidence in the foundation and it was in a downward financial spiral, plagued by an unsustainable spending policy and no annual line item budget.
We adopted reforms recommended by the auditors and designed some of our own. We implemented 27 key operational reforms, including crafting new bylaws and articles of incorporation. We now have a full slate of empowered and involved committees with formal charters and a robust conflict of interest policy.
Our changes are built on a commitment to fiscal transparency. Previously, the foundation did not produce an annual line item budget and spending was not sustainable. Now, we operate with transparency and report our financials to the board monthly while holding to a realistic, conservative budget.
To fully implement change, we had to make difficult personnel decisions. I was hired in December 2016 to lead the staff as the interim chief operating officer and executive director; since then, we reorganized how our staff operates, changed job descriptions, and significantly reduced payroll while maintaining a high level of service.
Recently, during a hearing on an unemployment claim, I answered questions about the nonprofit status of the foundation. Let me be clear – despite the sensational headline in the newspaper, the foundation’s tax-exempt status is not at risk. We are in full compliance with our reporting obligations.
One important result of our transformation is the restoration of the relationship between the university and the foundation. While we are independent and separate organizations, the foundation’s sole mission is to support the academic endeavors of the university. The new university trustees made it clear that past practices at the foundation were not acceptable. We have entered into a written agreement with the university that codifies the roles and responsibilities of the foundation, ensuring it will never return to the past practices that led to 884 days of investigation and audit.
Because of this agreement and our reforms, the foundation will be able to provide sustainable support, in perpetuity, to enhance academics. That means supporting endowed faculty and staff positions as well as student scholarships. We spend what we can afford to spend and nothing more, in full adherence with donor intentions. Our actions are calibrated to support the goals of the university’s leadership team.
Today, the foundation’s endowment is worth $730 million. Our total assets (including non-endowed cash and real estate) are worth $1.19 billion. Excessive past spending drove down our net worth, but we are benefitting from a strong stock market and improved fiscal stewardship. Our value is growing, and we are asking the community to support our efforts.
I won’t sugarcoat it – fundraising took a hit during the period of tumult and controversy. But those days are over, and each day is better and brighter than the last. When I have a long day running the foundation – and trust me, there have been many – I think about what truly matters: improving the lives of students.
I think about our Fulbright and McConnell scholars, life-changing health science campus research, and the faculty and staff working hard to provide a great education to 22,000 students. I think about these things and many others because each reminds me why we come to work every day. Inside these programs are lives, all changed for the better because of U of L.
To donors who have made contributions over the last year, thank you for believing in us. For previous donors reluctant to jump back in, we ask you to look at what we have done and believe in the University of Louisville. To anyone thinking of joining us, you won’t regret it. Our campus is a beautiful, vibrant place full of the best and brightest students and the most distinguished faculty in Kentucky’s higher education system.
Truly, there has never been a better time to invest in the University of Louisville.
Editor’s note: Mr. Sherman wrote this op-ed piece on foundation reform and plans for 2018. It is featured in other publications as well.