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The CU Foundation, an organization that controls more than $800 million in assets and potential donations to the university, is reporting that its donations have increased this year despite recent controversy.
The foundation is an independent organization that solicits and distributes donations to the university. A 2005 audit revealed questionable loan practices to former Chancellor Richard Byyny. Regardless, the foundation reports that scandals have not deterred alumni from donating to the university.
“The purpose of the foundation is to cultivate public support and interests and to develop relationships with donors,” said Marketing Communications Director Gigi Reynolds. “We work in very close partnership with CU.”
The organization operates as a non-profit separate from the university. In 2005, it transferred more than $68 million to the CU system for purposes such as scholarships, endowed chairs and construction. The new ATLAS Center and the Wolf Law Building were partially funded by the CU Foundation.
The foundation controlled over $600 million in investments for the university in the fiscal year that ended June 30, 2005, and of that number about $590 million is in endowment funds, a type of donation that the foundation invests and uses the earnings according to the donor’s wishes. According to Reynolds, the foundation exceeded its goal of 9.64 percent for investment returns by almost 5 percent.
The man in charge of the money is Chief Investment Officer Chris Bitman, a former chief executive officer of Jurika & Voyles Investment Management, a firm responsible for investing $5 billion for various clients. Under his leadership last year, the foundation added $73 million to the total amount of endowments and received $60 million in donations.
“As state support declines, private support is critical to maintaining affordable tuition and CU’s tradition of excellence,” said Reynolds.
Despite the organization’s massive budget and recent issues, all of the students surveyed for this article had little idea that the foundation exists.
“Never heard of it,” said Jennifer Fortenberg, a sophomore open-option major.
“What’s that?” asked Evan Urman, a junior film studies major.
As a slew of scandals hit the Boulder campus in the last few years, and the CU Foundation came under fire for loose spending and for a questionable loan to then-chancellor Byyny.
In response to allegations of financial misconduct surrounding former CU football coach Gary Barnett’s summer camps, then-CU President Betsy Hoffman asked a state auditor to examine every transaction between the CU Foundation and the university.
“Can they account for every penny?” she asked at the time. “That’s what we want to find out.”
In late 2005, in a move that preceded the release of the audit by days, the CU Board of Regents approved a new set of guidelines for interactions between the CU Foundation and the university. The minutes of the November 2005 regents meeting say that the new set of guidelines required the foundation to present an audited copy of its tax returns to the university each year and that the foundation “should act in a manner which (sic) enhances the university’s image and its relationship with donors and other supporters.”
When state officials released the audit in October 2005, Hoffman had resigned and Byyny had left his post as chancellor and moved on to a more lucrative job at the University of Colorado Health Sciences Center. The audit, among other allegations, detailed an $875,000 loan the CU Foundation gave in 1997 to Byyny and his wife for a house owned by Fran Raudenbush, who had been employed by the foundation at the time.
The total cost of the house was $865,000.
The Byynys were $100 short of the required loan payments on several occasions and skipped two payments completely, and the audit questioned why the foundation did not exercise the option on the loan that would have allowed the organization to demand immediate repayment in the occasion of any late payments. The Byynys completed payments on the house in 2003.
The president of CU at the time was John Buechner, who hired Raudenbush as a $140,000-a-year consultant and kept her contract secret until the threat of a lawsuit from the Colorado Daily forced the university’s hand. The foundation claimed that Raudenbush’s contract was part of the private organization’s budget and was not subject to the Colorado Open Records Act. Pamela White, the editor for the Daily at the time, wrote in the Investigative Reporters and Editors Journal about CU’s response to the lawsuit.
“CU . settled with us out of court. . The Foundation settled as well, steadfastly maintaining that it was not subject to Colorado’s open records law while turning over Raudenbush’s contract,” White wrote.
The new rules have created more paperwork, but the foundation does not seem to have suffered, judging by this year’s influx of donations.
“We look at the state audit as a positive factor for our operation. . We’ve made many improvements to our operating procedures,” said Reynolds.