The University of Connecticut Foundation and its supporters appear to have successfully dodged another round of bills to require more financial transparency from the school’s nonprofit fundraising arm that yielded $81.1 million in 2014.
Two similar bills were never brought to vote in the Higher Education and Employment Advancement Committee and the Government Administration and Elections Committee. The measures would have subjected higher education foundations — not just the University of Connecticut Foundation — to the state’s Freedom of Information Act and to financial audits by the Auditors of Public Accounts. Both bills had provisions to maintain donor anonymity.
During Monday’s meeting of the GAE Committee — its last before the deadline to report bills out of committee — state Sen. Michael McLachlan, R-Danbury, made a failed attempt to get the proposal added to the agenda.
“This is a matter of principle. This is an important matter of principle and openness in state government,” McLachlan said. “We love our Huskies. We want ‘em to win. But that doesn’t set aside a number of questions that have arisen.”
The foundation made headlines late last year when it decided to fund a $300,000 boost to UConn President Susan Herbst’s $520,000 university salary. Earlier in 2014, the UConn Foundation paid former Secretary of the State Hillary Clinton $251,250 to speak to 2,300 students. In 2013, it paid $660,000 in cash to buy a house in Hartford’s west end for Herbst to use to entertain big-money donors. Before that, the foundation paid for Gov. Dannel P. Malloy to attend world economic summits in Switzerland and China.
The foundation is required to report on an annual basis to the Internal Revenue Service, but it is not subject to Freedom of Information laws and does not have to disclose information about its donors, expenditures, or fundraising activities.
Derek Slap, the UConn Foundation’s Associate Vice President of External Relations, said Tuesday that donor privacy concerns motivated opposition to the bills.
“We’re concerned on behalf of our donors that their personal financial info will no longer remain confidential and they’ll be treated differently than donors to any other nonprofit 501(c)3 in the state of Connecticut,” Slap said.
He added that treating the organization like a public agency would further deter donations. “It’s very important to donors that the Foundation remain independent, and that donors are confident that their donations and private money is not redirected, not used to fill a budget hole,” he said. “Donors give to supplement state support, not supplant it.”
State Rep. Ed Jutila, a Democrat from East Lyme and chairman of the Government Administration and Elections Committee, was one of the legislators responsible for leaving the bill off the committee’s agenda. He said he rejects the idea that the foundation merits quasi-public status.
“What the legislation that was proposed would do is, in effect, treat it like it’s a state agency. We heard testimony that there would likely be some major donors who might shy away from donating to something that we consider through legislation to be a state agency.”
Jutila said including the bill on the committee’s agenda would have been a waste of time. “When a bill does not have what we perceive to be sufficient support to be voted out of committee, we tend not to spend the committee’s time having a debate.”
McLachlan’s last ditch attempt to bring the issue to vote included a reference to the state’s 2014 Comprehensive Financial Report as a way to illustrate what he called the intimate and intricate relationship between the school and its foundation. The report identified the UConn Foundation as a “component unit,” an accounting designation that describes those organizations that are legally separate from the state, but for which the state is financially accountable.
The report said the UConn Foundation is classified as a component unit because “the nature and significance of its relationship with the State are such that it would be misleading to exclude the Foundation from the Sate’s (sic) reporting entity.”
Other component units include the Connecticut Higher Education Supplemental Loan Authority, the Capital Region Development Authority and the Clean Energy Finance and Investment Authority. Those entities are recognized as quasi-public agencies to which the FOIA applies.
McLachlan’s entreaty for greater transparency from the UConn Foundation ended with a question. “Why are they exempt from FOI?” he asked. “I don’t know how to say any more firmly that it is a major disappointment that this committee would not entertain this bill.”
According to Connecticut Council on Freedom of Information President Jim Smith, the answer lies in the state university’s influence in Hartford and throughout Connecticut. “UConn is the state’s untouchable magic. Don’t mess with UConn. Too many bought the hokum that being subject to FOI would chase donors away, even when the legislation allowed donor privacy, even when it was pointed out that Ohio State, for example, with three times the endowment of the UConn Foundation, has no secret donors — all of them are public,” he said.
Then Smith added his own question: “Since when is a university, steeped in academic freedom, so afraid of public scrutiny?”
The vote to add the bill to Monday’s agenda failed by a voice vote. Jutila said he opposed the motion because there was no opportunity for public notice.
