Charles Koch

Charles Koch

Several foundations associated with the University of Virginia are standing with the George Mason University Foundation’s effort to keep past donor contracts private.

An amicus brief to the Supreme Court of Virginia — filed in May by UVa’s Alumni Association, the College Foundation, the Jefferson Scholars Foundation, the Darden School Foundation, the Law School Foundation and the University of Virginia Investment Management Company — argues that sharing contracts would chill fundraising efforts necessary to keep the university running.

“The independence of university foundations allows them to be effective fundraisers; expansion of [the Virginia Freedom of Information Act] to encompass their activities would make fundraising cost more and achieve less,” the brief, written by lawyer John O’Herron, states.

The brief is part of a lawsuit filed by Transparent GMU against George Mason University and its foundation in 2017 after the organizations denied students’ requests for access to gift agreements with the Charles Koch Foundation.

Previous reporting had uncovered that the university housed agreements with private donors with its foundation, and that the Koches — billionaires often connected with right-leaning causes who have given more than $50 million to GMU in the past decade, according to The New York Times — were given hiring and evaluation power in the university’s economics department.

The GMU case led UVa to adjust its policy for how it handles its 26 associated organizations. In March, UVa’s Board of Visitors approved a new policy that will further distance the university from legal liability to the foundations and clarify its responsibility in open records requests. In response to an information request in May, the university said no records were responsive to the request for memorandums of understanding between the foundations and the university.

The UVa foundations’ brief argues that because the Virginia legislature has not maintained financial support for public universities, private fundraising and investments have had to pick up the slack. While the organizations solicit and manage donations on behalf of UVa, funds are not controlled by UVa and are often restricted by donors’ wishes, according to the brief. In fact, it states, donors want to make gifts with the assurance that the funds won’t be reappropriated by the state legislature.

“At the outset, and contrary to the arguments of Appellants’ amici, exposure to public records laws like VFOIA would chill fundraising,” the brief states, later adding, “A judicial expansion of VFOIA would result in significant cost to the private foundations supporting public universities, decrease funds available to those institutions, and increase the cost of higher education in Virginia. It is likely that the long-term costs of such an expansion of the statute would number in the hundreds of millions of dollars.”

But Jim Finkelstein, a professor emeritus at George Mason who has studied university governance and finance and who is unconnected to the Transparency GMU suit, pushed back against that statement.

“If you increase transparency and openness, there’s actually evidence that you will do better and not worse,” he said, referring to a 2018 study in the Journal of Accounting, Auditing and Finance that found that more transparent nonprofits received more contributions.

It’s also tough to untangle a foundation’s interests and actions from those of the university itself, Finkelstein said. Foundations must be aware of a university’s broader goals in order to promise to honor a bequest. University administrators are often evaluated by their fundraising prowess. University officials often sit on foundation boards; President Jim Ryan, for example, is an ex officio member of the Alumni Association’s board.

Alex Capeloto, an associate professor of journalism at John Jay College of Criminal Justice who has studied Freedom of Information laws, agreed. While states and universities have wildly different laws and approaches to such legislation, many universities try to make their foundations as separate as possible.

“But their whole goal is to support these [university] entities,” she said. “It’s not a black and white issue and I recognize arguments on both sides. I would advocate for more of an effort to resolve these questions.”

In the end, the brief argues that an expansion of FOIA should be made by the legislature, not the courts.

 “What’s at risk here? The risk is violating the privacy of a donor versus the public’s right to know,” Finkelstein said. “Now that we’re talking about donations of millions and tens of millions and even billions of dollars, money buys influence. Once such large amounts of money are involved, it seems to me that the public has a right to know.”

The Virginia Business Higher Education Council, a nonprofit, nonpartisan organization, wrote in an amicus brief that it also is concerned that extending public records law to include university foundations would hinder fundraising and undermine business growth.

GMU has not waited for the case to be resolved to propose changes.

On May 17, a task force approved new rules that will treat future private gift agreements signed by university officials as public records subject to state open records law. According to the new policy, Mason will now accept a narrower set of gifts and will subject them to a more stringent review process with oversight by university faculty.

George Mason and its foundation both have filed responses to Transparent GMU’s opening brief.

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Ruth Serven Smith is a reporter for The Daily Progress. Contact her at (434) 978-7254, rserven@dailyprogress.com or @RuthServen on Twitter.

Ruth Serven Smith is a reporter for The Daily Progress. Contact her at (434) 978-7254, rserven@dailyprogress.com or @RuthServen on Twitter.

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