Following report from UT System Board of Regents, impact on foundations still unclear

Jacob Kerr

Officials representing two different nonprofit fundraising foundations are unsure as to whether they will have to abide by rules and regulations recently issued by the UT System Board of Regents.

Last week, representatives from both the University of Texas Foundation and the Texas Exes Scholarship Foundation said the System’s recommendations, which call for more transparency between parties through a memorandum of understanding, would not apply to them because their respective organizations are not “university-affiliated.” Each memorandum, which will be negotiated between each institution and affiliated foundation, is expected to include specific agreements between the organizations that the System could then evaluate to assure they follow the new guidelines. 

The regents approved five recommendations on best practices regarding foundations in August. 

Paul Youngdale, UT Foundation executive director, said his organization, which has given millions of dollars to System institutions for scholarships and academic programs, should not be required to negotiate a memorandum, and their practices fall under the goals of the report.

“We are not affiliated with the University of Texas,” Youngdale said. “We are not subject to the Board of Regents. There is no point in us having a memorandum of understanding with them.”

Texas Exes spokesman Tim Taliaferro said the Texas Exes Scholarship Foundation, which provides scholarships for UT students, will not be impacted by the recommendation because the organization does not consider itself affiliated with the University.

The report defines university-affiliated organizations as “nonprofit trusts or corporations” that operate primarily to provide financial support to a System institution. The task force’s final report lists both foundations as university-affiliated, but the report has not been sent out to the institutions or the foundations.

In subsequent interviews, Youngdale and Taliaferro acknowledged their respective foundations may be required to negotiate a memorandum.

UT System spokeswoman Jenny LaCoste-Caputo said every foundation would be expected to have an agreement with the institution it benefits.

“There will be some type of agreement or understanding with each foundation, but this will not be one size fits all,” LaCoste-Caputo said. 

LaCoste-Caputo also said the president of the UT Foundation told the task force there would be an agreement.

Last year, Regent Gene Powell — then the chairman of the board — formed the task force after the regents learned that the former dean of the UT School of Law, Lawrence Sager, received a $500,000 forgivable loan from the UT Law School Foundation with no administrative oversight. Sager later resigned as dean at Powers’ request, but remains a professor at the University. Regent Brenda Pejovich chaired the task force. 

Each memorandum must be completed by May 2014.