by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Jenna Robinson’s latest Martin Center column explains the role university foundations can play in enabling waste, fraud, and abuse on campus.
By now, most Americans are aware of the widespread waste and decadence at many private and public universities. From lazy rivers to exorbitant chancellors’ salaries, examples abound. But those well-publicized cases, problematic as they are, can be easily addressed by parents and students who pay tuition and by legislators who control the purse strings.
However, there is another university entity that is not so visible and has little accountability. They are university foundations set up to raise and manage money for the benefit of universities and students, which have their own boards and governing principles. Existing apart from the university makes it difficult for outsiders to get information on foundation activities and assets. In most states, including North Carolina, even foundations created to serve public universities are opaque and unaccountable. …
… Lack of transparency is a concern, at least in part because foundations control billions of dollars in assets. Universities use their foundations to manage and control their endowment funds. According to the Chronicle of Higher Education, the median public university endowment held $7,700 per student in 2013-2014. At private, nonprofit institutions, endowments held $32,800 per student. …
… While foundations have their legitimate purposes and motives—historically, they have focused on serving as the fundraising arm for universities—they also act as the source of many examples of waste, fraud, and abuse that should concern any taxpayer or donor.