ALBUQUERQUE, N.M. — University of New Mexico’s Bob Frank hadn’t even taken over as president before he was facing questions from the media and regents about how the school’s private fund-raising arm should be run.
The UNM Foundation, which was made largely independent from the university in 2008, has been struggling and UNM leaders have for months examined the best model for it.
Now, three months into his presidency, Frank is making his first major change by imposing a new surcharge on all university departments to help fund “a complete re-engineering of the foundation’s budget,” according to an Aug. 3 memo.
That step will be part of a larger overhaul that will tie the foundation more closely to the university, giving the UNM president more authority over it and increasing the amount of money it gets from the university, Frank said in an interview Friday.
The decision to impose a quarter-cent tax on the budgets of nearly all of the university’s 50 departments, schools and colleges this year did not have to go before the regents. Groups and projects funded on a contract basis or by grants are exempt.
The surcharge is a more stable source of funding for the foundation, Frank said.
“You know, to be honest, nobody’s happy to do this,” he said. “This hurts everybody. It’s a hard thing to do in a very difficult budget time. But people realize we need to do this. I’d rather see the part of the glass being half full. People have been pretty good about this, because they know we need to do it,”
The surcharge will raise $2.4 million this fiscal year and will be increased to half a cent next year.
The fee, which will boost the overall amount UNM pays to the foundation this year by $1.8 million, has support among some university leaders, including several deans who said the tax was a necessary sacrifice.
“The deans strongly support ensuring the UNM Foundation is on a solid financial footing,” said Doug Brown, dean of the Anderson School of Management. “With the long-term trend of diminishing state support and our desire to minimize the burden of tuition on New Mexico families, it is essential that UNM commit to an effective fundraising effort.”
The foundation raised a total of $83.9 million for the university in the last fiscal year. That surpassed its goal of $80 million, foundation spokeswoman Wendy Antonio said. None of the money raised is spent on the foundation’s annual expenses of about $9.3 million, which includes salaries and benefits. It instead goes to scholarships, is invested, or is spent on other university matters.
The foundation has nearly $330 million in assets but needs about $750 million to be self-sustaining and to raise the private money the university needs, according to a report on the foundation’s website.
Private fundraising is seen as important as UNM’s state funding has declined by 15 percent, or about $28 million since 2008.
Frank this summer hired two independent auditors from the University of Florida to review the foundation.
“Their findings were that our practices were very strong, that we were an efficient foundation, that it was a lean operation, that we weren’t excessive in any of our spending or operations,” Frank said.
The auditors did, however, say the foundation is underfunded. What’s more, they found the independent model imposed in 2008 “was probably not appropriate for the size of the foundation,” Frank said.
The surcharge, for now, means every department that has its own budget will contribute, from the law school to the administration to enrollment services.
In addition to the surcharge, UNM will continue to fund the foundation from its instruction and general budget and through a “development funding allocation” based on a percentage of the foundation’s assets. That figure is now set at 1.85 percent of the endowment — which brought in $5.9 million last year — but UNM hopes to reduce it to 1.35 percent.
Last year, UNM gave the foundation $2.15 million from its instruction and general budget. With the endowment percentage, the total was about $8 million.
Foundation leaders have praised the move.
“We appreciate President Frank providing leadership on this important issue,” Henry Nemcik, president and CEO of the foundation, said in a statement. “This plan provides a stabilized funding source that will allow the foundation to focus on increasing private philanthropy to benefit the University’s students, faculty and programs, while allowing for a reduction in the development funding allocation.”
The foundation was an internal UNM organization until 2008, when former president David Schmidly, with the support of university regents, made it an independent operation with its own board of directors.
But that was before the recession.
In recent years, the foundation has had to rely on university funding, and some regents say they don’t have enough oversight authority. For those reasons, university leaders and regents started rethinking autonomy of the foundation. The regents’ audit committee has conducted its own review, although it has not been published yet.
The review ordered by Frank also found that university leaders needed to have more say in foundation matters. Frank said the school is now working on a new memorandum of understanding with the foundation that would give the president more authority over the hiring and firing of executive officers while placing two UNM deans on the foundation’s board.
Geraldine Forbes Isais, dean of the School of Architecture & Planning, said she needed more details about how the tax works, but she was generally supportive.
“Well, any time there’s any kind of request to do a pull-back, or a budget cut or whatever, it does obviously have an impact. But on the other hand, fundraising and philanthropy brings money into our schools and programs, so it’s not money that’s disappearing,” she said. “The foundation makes or brings money and supporters to our programs, and that’s important. And we couldn’t survive without it, really. It’s a balancing act.”
For example, the foundation last year raised $1.7 million for the School of Architecture & Planning, which Isais called “transformational” and which funded the launch of the Indigenous Design and Planning Institute.
Mark Peceny, dean of Arts and Sciences, UNM’s largest college, served on a committee that examined the foundation and found that an interdependent model between the university and the foundation is essential.
“No one ever likes a tax, but this is really an investment in the future. And it’s an investment I think will really pay off for our students, for the university and for the state,” he said.
“The foundation’s important to the future of the University of New Mexico. We’re in an environment where there are very few ways to raise money and there are many people who love the university, and there are many ways to reach out to those people,” Frank said.
— This article appeared on page A1 of the Albuquerque Journal