Higher-education foundations facing new scrutiny

DENVER -- University foundations across the country have become wealthier, more sophisticated, and responsible for a larger chunk of funding for higher education. But in recent months, court rulings and government scrutiny have chipped away at their private status and opened their books to greater scrutiny.

Amid a football-recruiting scandal at the University of Colorado that, in part, led the university president to resign last month, the CU Foundation has agreed to have the state auditor examine its records, said Glenn Porzak, vice chairman of foundation board of directors.

In Kentucky, various court rulings have forced the University of Louisville Foundation to release the names of corporate donors. The same is true for the Iowa State University Foundation. That state's Supreme Court has ruled that foundation records were open to disclosure because the organization was ''performing a government function."

More intense examination of education foundations reflects a trend in society toward greater openness, and a concern over corporate scandals, according to foundation officials and trade groups.

''More information is available on the Internet," said Robert Gunnell, a communications consultant for the University of Louisville Foundation. ''The Enron case that everybody points to, and MCI," said Gunnell. As a result, ''universities [are] being held more accountable."

The foundations work for the benefit of their respective public universities, but they are chartered as private entities. As such, they say they are not subject to the same open-records process as public institutions, arguing that their fund-raising methods are secrets.

While plenty of donors want their names etched on a brick or attached to a new building, some want to remain anonymous. Foundations say honoring such requests is not only a moral imperative, but crucial to raising money.

''There are donors who are not looking for their name in neon lights and buildings named after them," said Dan Saftig, Iowa State University Foundation president. ''One of the basic tenets of American philanthropy is to remain anonymous if so chosen."

In Iowa, the state Supreme Court agreed with two citizens who sued to see foundation records. Questions had been raised about the way that the Iowa State foundation, now endowed at about $304 million, handled the proceeds from the sale of a farm originally bequeathed to the ISU Agricultural Foundation.

Saftig said that while less than 5 percent of Iowa State foundation donors request anonymity, the foundation has not traditionally released all names. Saftig said his organization is prepared to do that, along with the general value of the donation.

But the foundation will also ask donors whether they want their names to remain anonymous, a request Saftig believes it can still honor.

Elizabeth Dale, executive director of the UMass Amherst Foundation, said the business of the foundation is relatively transparent, and no concerns have been raised about its handling of records and information. The foundation publishes a full donor report every year that lists every donation and includes a tally of total dollars given to building projects, the endowment, and other specific categories.

Donors are allowed to give money to the university anonymously, and their names are withheld from the annual report. A relatively small number do so, Dale said.

''Some don't want to be recognized, or receive credit, sometimes for cultural reasons, and others would rather not announce to the world that they have that kind of wealth," she said.

The foundation's budget and expenditures, including salaries and travel costs, are public information, Dale said.

The foundation that raises money for the flagship University of Colorado is fighting Boulder's Daily Camera newspaper over releasing records amid news reports that it failed to comply with a grand jury subpoena.

After some wrangling, the $700 million CU Foundation and state auditor Joanne Hill have come to an agreement that gives Hill full access to the foundation's records, Hill said. ''This is a matter of restoring public confidence in a flagship university," she said.

Outgoing University of Colorado President Elizabeth Hoffman had originally requested the audit as the foundation was caught up in allegations that the university improperly spent money related to its football program.

Globe staff reporter Jenna Russell contributed to this report.