There is no question that as we enter an era where state and federal money will be harder to come by, the University of New Mexico Foundation will play an increasingly important role in the university’s fiscal health and ability to flourish.
There also is no question the foundation has hit a rough patch four years after the regents decided to make it far more independent of the university.
A yearlong dispute over how much the regents allowed the foundation to charge for managing an established endowment dedicated to providing scholarships raises questions about its cost-benefit performance and about whether this is the right governance model.
The dispute tentatively has been settled by moving the $36 million Woodward Trust money to what essentially is a separate account where it won’t be charged a 1.85 basis point fee by the foundation. But it is serious when some of the people charged with carrying out the mission of the Woodward Trust say the fees, which are used to support foundation operations, are so high they unduly undermine the scholarship mission.
Jamie Koch, a Santa Fe insurance executive and former regent president, originally supported making the UNM Foundation independently run by a 25-member board. So did fellow regent Gene Gallegos, a Santa Fe attorney. But since Gallegos has spent months negotiating a settlement in the fee dispute, their minds have changed.
Now Koch says regents need to regain more authority over the foundation and “this is a dilution of the regents’ responsibility.” Gallegos says the UNM Foundation is “very independent” of regents and the fee dispute was made up of “pretty ugly facts.”
Gallegos says four years in, “the costs of running the (UNM) Foundation are out of control. We have to continue to subsidize it, but we have no control over it.”
Their view is far from unanimous.
Outgoing University President David Schmidly said, “We are early in the process and we are going to have growing pains.”
Regent Don Chalmers said the regents’ relationship with the foundation may need “tweaking,” but most regents fully support it. Regents President Jack Fortner said there have been unexpected problems, but regents discuss the foundation each year.
And UNM Foundation Chairman Gary L. Gordon says that a recent study shows the foundation is “highly efficient and productive compared to other universities in our budget category.”
There are upsides to the foundation remaining independent, including the ability to compete in the private sector when it comes to hiring and firing.
Both sides are looking to incoming UNM President Bob Frank to clear the air and make a recommendation on how this important mission should be carried out.
That’s a wise decision. First, he is slated to lead the university for the next five years. He understands the important role the foundation will play.
Frank said, “Setting up an independent foundation was a great decision, but a complicated decision. The issue is you have to find an equitable way to fund the foundation so it can continue to raise money.”
He added that “transparency” has to be a general operating principle of any university foundation.
While the foundation technically is exempt from the state’s open government laws — in part according to longtime legislative officials to protect the identities of donors who wish to remain anonymous — its success will be greater if it has sufficient transparency and performance to engender trust in the organization and confidence in its management.
As Frank places his fingerprints on the foundation, it is vital that the rules of operation — including how the foundation is funded — be clear to all involved, including regents and the taxpaying public.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.