The McCombs School of Business Foundation has established revenue-generating enterprises to benefit the business school, while also attracting thousands of dollars in private gifts each year.
As an independent nonprofit, the foundation benefits the McCombs School of Business and provides close to $5 million in contributions to the school and more than $600,000 in scholarships each year. The foundation also supplements business school dean Thomas Gilligan’s salary with an extra $100,000 and doubles the salaries of some lecturers and professors through compensation for their work with a training program for professionals.
Joe Holt, CEO of the Austin region of JP Morgan Chase and chairman of the foundation’s board of trustees, said the foundation’s leadership is aware of the weight transparency has on its credibility with donors.
“There is no transfer of funds unless they are approved by trustees,” Holt said. “That level of transparency created credibility with donors and alumni. In all the things that are swirling around right now, the most important thing we can do is make sure that the intent is right and the actions are transparent.”
According to the most recent IRS records available, donors contributed more than $97,000 in 2011. But the foundation’s primary source of revenue is from the Executive Education Program, a training program for professionals.
Five business faculty members provide training at conferences for corporations and state agencies and are compensated by the foundation in amounts ranging from about $300,000 for senior management lecturer Gaylen Paulson to almost $570,000 for John Daly, communication studies and management professor. This compensation is in addition to their University salaries. Other professors occasionally provide training through the program, but their compensations are not listed individually on tax records.
The program brought in about $7.4 million in revenue during the 2011 fiscal year. The foundation uses the money toward regular philanthropic operations, Holt said.
Like other external foundations, the business school foundation has allowed donors to establish enterprises benefitting the University that would face legal constraints if carried out by the University itself.
Dallas attorney Del Williams, former chairman of the foundation’s board, said former business school dean George Kozmetsky initially set up the foundation so that private gifts could be invested in stocks — something state laws prohibited at the time.
Kozmetsky laid the groundwork for the MBA Investment Fund, LLC, which was created in 2001 as the first private investment company managed by students, Williams said.
Business school spokesman David Wenger said the fund operates under a management agreement with the foundation.
“The MBA Investment Fund manager has full discretion to manage the fund while giving quarterly accountability reports to the foundation,” Wenger said. “While every attempt is made to increase the value of the fund, its primary purpose is to serve as a real-world educational experience for the student portfolio managers.”
In addition to establishing the investment fund, the foundation has also helped the business school with property acquisition. In 2011, the foundation purchased the property where Players Restaurant sits on Martin Luther King Jr. Boulevard for $3 million. The University then bought the property from the foundation for $1.5 million as part of a deal to obtain the property below its appraised value of $2.5 million. State law prohibits the University from purchasing property at more than the appraised value.
The University plans to use the property to expand the AT&T Executive Education and Conference Center and construct a graduate business school building. The owners of Players can continue to operate on the property for up to 10 years.
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Printed on Tuesday, April 30, 2013 as: McCombs Foundation profits from enterprises
