UO Foundation still laundering cash for Duck Athletic Fund

Last updated on 05/16/2014

5/15/2014 update:

• 2013 IRS 990 here. It covers the period 7/1/2012 to 6/30/2013.
• 2012 here.
• 2011 here.

More on these later.

5/14/2014 update: The UO Foundation has told me that they will release their IRS 990 form tomorrow. This should have been made public no later than November 15, but the foundation requested and received two 3 month extensions from the IRS. Tomorrow is their final deadline. The form will include information on expenses, salaries for their highest paid employees such as Paul Weinhold and Jay Namyet, and some rudimentary information on what the foundation does with the money it manages for UO. Probably not much clarity on how much goes to the Ducks and how much to UO academics, but I’ll post what there is, when I get it.

11/20/2013 update: Two weeks ago I received a “demand for retraction” from Thomas Herrmann, legal counsel to the University of Oregon Foundation, regarding this post which I first published on 10/25/2013. (Page down to read the original post in its entirety.)

Mr. Herrmann is presumably writing on the UO Foundation’s dime, and on instruction from the Foundation’s Chairman Jon Anderson, a former marathon runner with longtime Nike connections, and the Foundation’s 2013 Chair-elect and committed athletics booster Stephen Holwerda. A bio-piece on Mr Holwerda in the Portland Business Tribune notes:

Greatest passions: Oregon pinot noir, sports, antique mechanical banks.
First choice for a new career: I started out in athletic administration, and if I had to pick a second career it would be to go back to working for the University of Oregon’s athletic department. Go Ducks.

[Above updated to note that Anderson is Chair, Holwerda is Chair Elect. Thanks, commenter.]

The pdf of the letter from the Foundation’s attorney is here. It reads:

On October 25, 2013 you published a post on your UO Matters blog under the headline “UO Foundation still laundering cash for Duck Athletic Fund”. Further, that post has appeared on your blog every day since originally published and has been republished through search engines.

The headline of your blog post, which you repeat in the body of the post, to the effect that the  University of Oregon Foundation is laundering money is defamatory (and in fact is defamatory per se under Oregon law) in that it falsely accuses the University of Oregon Foundation of engaging in criminal activity.

Pursuant to ORS 31.200-31.225, we hereby demand, on behalf of the University of Oregon Foundation, that you promptly publish a retraction of your false and defamatory statements concerning the University of Oregon Foundation in accordance with the provisions of ORS 31.215.

Your October 25, 2013 blog post discussed above is not the first of your posts which has crossed the line into inappropriateness, but it better be the last. The University of Oregon Foundation’s tolerance for your offensive and irresponsible reporting has expired. Any further defamatory posts could expose you to serious legal action. Govern yourself accordingly. [Emphasis added.]

Sincerely,
Thomas P.E. Herrmann

TPEH:hlr
GLEAVES SWEARINGEN.,
cc: University of Oregon Foundation
Attn: Paul Weinhold

I have received a plethora of advice on how to respond to this threat. Several attorneys have looked at it, and my post, and said that they do not think that my language is an accusation of criminal activity, particularly given the full context of the post. They have suggested I call the Foundation’s bluff and then file an anti-SLAPP countersuit against them, if they proceed with a lawsuit against me.

I was also told that that the language in Mr. Herrmann’s blustery last paragraph would be quite helpful in a counter-suit, given that anti-SLAPP laws such as Oregon’s are specifically designed to make it difficult to use defamation lawsuits to limit public discussion, as his threat seemingly proposes to do.

One reader suggested that I offer to replace the phrase that the Foundation claims to interpret as an accusation of criminal activity, i.e. “money laundering cash for the Duck Athletic Fund”, with something like “lovingly laundering sweaty jockstraps for the Duck athletic department”. Thanks for this proposal, really.

In the end, I decided to follow the precedent established by noted barrister John Cleese. Mr. Herrmann, you may take this video as my response, in full, to your threatening letter:

The DVD  is available from Amazon for $14.98, here.

In other news, I received this yesterday from the UO Foundation, in reply to a request for their most recent IRS 990 report. Their report was due on Nov 15. As in past years, it appears they are going to take full advantage of the IRS extensions, and delay public release of the standard non-profit reporting data on executive salaries, revenues, assets, and expenditures:

The Foundation has submitted application for the automatic 3 month extension.

Erika Funk
Chief Operating Officer
Chief Compliance Officer
University of Oregon Foundation
Ph. 541.302.0330T
This information, and any attachment, is PRIVILEGED and CONFIDENTIAL property of the University of Oregon Foundation. Any unauthorized reproduction, dissemination or disclosure is prohibited.

Original post, with supplementary material at bottom:

10/25/13: UO Foundation still laundering cash for Duck Athletic Fund

Today President Gottfredson talks to the UO Foundation at their annual meeting. Every year the Council for Aid to Education collects data from university foundations showing the source of donations (alumni, corporations, etc) and the purpose of the expenditures. Their “Voluntary Support for Education” survey is the authoritative source for data on academic fundraising.

The report by UO foundation for 2012-13 is here. Our foundation has decided leave the part explaining how much endowment money came in for athletics totally blank:

Foundation CEO Paul Weinhold has been hiding these numbers for years. The foundation does report how gifts for current expenditures are spent. Failing to report those numbers would constitute non-response, which would be a black mark for their staff in the world of higher education fundraising.

These data show that the UO Foundation is mostly a money laundering operation for the Duck Athletic Fund – though there is an interesting spike in giving to academic units this year, presumably related to the LISB:

The Foundation’s audited 2013 report is here. They omit much of the data about earnings and expenses that was in their 2012 report, and which is discussed here.

What does VP for Development Mike Andreasen plan to do about the imbalance between giving to athletics and to academics? He can’t do much without President Gottfredson’s support. Here are Andreasen’s comments at the September Provost’s retreat – full dump here:

Capital Campaign, Vice President for Advancement Mike Andreasen

… Q: Should we tax athletic gifts?

Mike: we’re not going to attract any large funds by taxing athletic gifts. Other big state schools (Michigan, Wisconsin, UC) don’t do it. This could also turn off donors.

Comment: At U X, the faculty were frequently involved in donor events, going to dinners and talks and meetings. I don’t know if that helped increase donations. But it helped faculty to feel more involved with Development and more amenable to help. At UO, when Development says we’re supposed to do something, folks get their backs up and ask, “what’s in it for us?” If faculty were more involved, we might have better relations with Development.

Mike: Yes, exactly. totally agree. We are hiring new agents. We are working to build more volunteer activity. In all campaigns on other campuses, the two biggest recipients are athletics or the medical school. We need to move more money to the other parts of campus, and get 2/3 donations to academics.

Q: I’m a huge football plan. But if we succeed in this campaign, get $1.2B and half goes to athletics, what is the next thing you’re going to build? What new building does athletics need?

Q: what’s the downside to taxing the athletic donations? This last year, a 5% tax would have brought $5-6M to academics. What’s the downside? Would it hurt the core mission of teaching/research side to lose some athletic donations?

Mike: People aren’t inspired by this sort of tax or fee. The idea is to get them excited about the UO, then inspire them to give to the academic side. We don’t want to turn off the athletic donor who might become an academic donor.

Comment: Don’t call it a fee or tax, call it an opportunity to help the students.

Mike: we’re building relationships with these people. If a donor doesn’t want to give to something, we don’t want to be in a position to turn down the gift or to aggravate them. We want to get them excited about giving.

Q: What’s your strategy to get academic donations to be a larger percentage?

Mike: [No response]

Q: If we assume that most of the big donors give to athletics, it would require a big shift in culture or donor demographics of donors.

Mike: Most of the big donors are to academics. Most schools have one or two big athletic donors. Most of the athletic donors are small donors – people who donate just so that they can get tickets to the games, and they’re not interested in giving anything else to UO.

Added 11/14/2013, from the posts at https://uomatters.com/2012/09/uo-foundation-cuts-back.html and https://uomatters.com/2012/08/duck-giving-reduces-giving-to-uo.html

Presumably this includes the $5 million Robin Jaqua gift, which Rob Mullens swiped for the Jock Box back in January. Story today from Inside Oregon:

Overall, giving in fiscal 2012 totaled $51,737,551 in support of academics, mainly for current purposes and endowments. Athletics programs received $55,950,231, which included significant support for expansion of the Len Casanova Center. The university received 43,295 gifts and pledges from individuals, companies and foundations.

This is a continuation of a long trend in the increasing crowd-out of academic giving by sports, first documented at UO in 2004, by UO Professor Dennis Howard – holder of a Nike Philip H. Knight Chair in Sports Marketing at UO and former Business School Dean. He has written a paper on exactly this topic, comparing data on donations to UO sports and to UO academics, for exactly the years Frohnmayer is talking about – 1994 to 2002. Howard’s conclusion is a little different from Frohnmayer’s:

Both alumni and non-alumni show an increasing preference toward directing their gifts to the intercollegiate athletics department-at the expense of the donations to academic programs. Sperber’s (2000) assertion that giving to athletics undermines academic giving is strongly supported.

and

For every $100 of new revenue raised from major donors by the University of Oregon,
over 80% is being directed to the athletic department. Even with the large increases in numbers of total donors since 1994, academic giving struggles to remain stable while donations to athletics experience huge growth. In three out of the past five years (1998, 2000, 2001), the total dollars donated to academics by non-alumni has fallen despite annual increases in the number of non-alumni donors. Total dollars donated to academics by alumni fell in only one year (2000), again despite an increase in the total number of donors. This suggests new donors are not making academic gifts, and current donors are shifting dollars from academic giving to donations directed to the athletic program. Additionally, as discussed above, proportional giving by alumni is predominantly directed to the athletic program. If these trends continue, total academic giving will fall for both alumni and non-alumni despite continued increases in the total numbers of both types of donors.

Stefan Verbano of the ODE had a story on Prof Dennis Howard last February:

“It’s called a donation or a contribution … when, in fact, as we have discovered in our research … it’s a transaction,” Howard said. “It has nothing to do with giving back to the University or a philanthropic motive. It is purely and simply a commercial transaction in which the individual in paying for tangible benefits: better seat location, access to the Autzen Club amenities. All of those things are driving those transactions.”

The foundation has a policy that donations must be related to UO’s core academic mission:

but you know how that goes. To her credit, Moffitt seems to have put an end to that practice. after I raised these questions.

I’d ask for a more detailed breakdown on expenditures between athletics and academics, but $338,000 CEO Paul Weinhold doesn’t believe professors should ask questions about how the foundation spends the tax-deductible contributions that are supposedly given to support our academic mission. While OSU completes the part of the standard Council for Aid to Education questionnaire that shows athletic spending, Paul Weinhold flat out refuses to release the data:

	2010-2011	2011-2012

Email trail on the scholarship payments with UO VPFA Jamie Moffitt, who was former the AD’s associate director for FA:

Sent: Friday, July 16, 2010 11:17 AM

I was looking at the amounts the UO Foundation reports disbursing to athletics for scholarships, and comparing that to the amounts that the AD reports spending on scholarships. (From BANNER, via Nathan’s online Financial Transparency Tool.) They are quite different, as you can see from the attached spreadsheet.

Can you tell me the reason for the difference?

Thanks, [UO Matters]

On Jul 16, 2010, at 11:30 , Jamie Moffitt wrote:

I am out of the office today, but would be happy to look into your question when I return on Monday.  At first glance the BANNER scholarship figures look consistent to me with other  figures I have seen.  The Foundation figures look higher than I would have expected – I will need to do some research to figure out why this is the case.  I will let you know what I learn.

Jamie

On Jul 19, 2010, at 19:15 , Jamie Moffitt wrote:

I’ve done a bit of research on your scholarship question and I’ve learned that the difference between the Foundation figures and the BANNER figures is due to a difference in accounting classification.  The student aid figures that you pulled from BANNER represent tuition remissions, as well as student aid for books and room and board.  The Foundation classification for student aid includes a broader range of direct student support including things like medical expenses, insurance, and nutrition support.  As the Foundation and the University are two separate institutions, their accounting classification structures are different.

Jamie

From: “Jamie Moffitt”

Date: July 21, 2010 9:53:26 PM EDT

I was just about to send you a note.  Here it is:

There are a broad range of BANNER account codes that are used for different types of student support.  For example, meals for athletes are recorded under account code 20300, medical support (GTF trainers) are recorded under account code 24999, life skills support (speakers for student trainings) would show up under account code 24599, nutritional support (student staffing) shows up under account code 10501, etc.  These are just a few examples.  I believe that most, if not all, of the difference between the foundation and BANNER numbers that you sent me for FY2009 (BANNER: $7,442,824; Foundation:  $9,462,000) are the result of the difference between BANNER and Foundation’s accounting classification structures.  There can also, however, be timing differences that attribute to differences between the two institution’s figures.  The Foundation records expenses when it transfers funds to the University.  The University records expenses when the funds are spent.  While the majority of the time these two activities occur in the same fiscal year – this is not always the case.

Jamie

1/19/14: Ken White has now posted an excellent piece on the Popehat blog, explaining the history and importance of the decision.

1/17/2014 Update: “Bloggers have same First Amendment protections as legacy journalists”

The “Hollywood Reporter” celebrity gossip site reports on an important new 9th circuit court decision, here. Eugene Volokh, lead attorney for the winning side, gives his analysis here. From the decision:

The protections of the First Amendment do not turn on whether the defendant was a trained journalist, formally affiliated with traditional news entities, engaged in conflict-of-interest disclosure, went beyond just assembling others’ writings, or tried to get both sides of a story. As the Supreme Court has accurately warned, a First Amendment distinction between the institutional press and other speakers is unworkable: “With the advent of the Internet and the decline of print and broadcast media … the line between the media and others who wish to comment on political and social issues becomes far more blurred.” Citizens United, 558 U.S. at 352. In defamation cases, the public-figure status of a plaintiff and the public importance of the statement at issue — not the identity of the speaker — provide the First Amendment touchstones.

2/12/2014: The ODE story referenced below now has a correction:

Update: A previous version of this story incorrectly stated the building’s operating costs were paid entirely by the endowment fund. The athletic department also uses its own general fund in these payments.

So athletics has the money to run a palace, but won’t pay for tutoring their athletes, or help UO with academic scholarships. It also appears they’ve stopped the $100,000 donation they had been making to the library – or at least AAD Eric Roedl won’t answer questions about it.

2/9/2014 update: Reporter Troy Brynelson has the latest in the ODE on the costs of the University of Nike’s Football Palace. The electricity bill alone is ~$200K a year. AAD Craig Pintens reassures the faculty that these costs are paid from a “quasi-endowment” held by the UO Foundation, until the Duck Athletic Fund can divert sufficient donations from President Gottfredson’s $1B academic fund drive by selling naming rights to the 64 outside flat screen TV’s. Don’t get me started on who is paying for legal and policing services. In totally unrelated news, at this Wednesday’s meeting the UO Senate will take up legislation to a) end athletic subsidies and b) reaffirm UO’s sincere commitment to sustainability: