Dangerous Precedent for DSOs: New College Claims Total Control Over Foundation Board
On July 2, 2024, New College of Florida issued a press release announcing that Debra Jenks, the chair of the New College Board of Trustees, had appointed two additional new board members to the New College Foundation, which oversees the $46MM endowment funding scholarships, athletics, college lobbyists, and Richard Corcoran’s salary including a recent $200,000 bonus.
The Foundation governance committee, which was in the middle of vetting potential Foundation board member nominees, was neither told ahead of time nor consulted.
These appointments by Debra Jenks seem to rely on language in Florida Statutes 1004.28 concerning DSOs (direct-support organization): “The chair of the university board of trustees shall appoint at least one representative to the board of directors and the executive committee of any direct-support organization established under this section”.
This language is reflected in the New College Foundation’s bylaws: “The Chair of the New College Board of Trustees shall appoint at least one representative to the Foundation board and Executive Committee (as provided by Florida law)”.
Based on discussions in recent public Foundation committee meetings, Chair Jenks and New College’s legal counsel seem to be arguing that the power to appoint “at least one” board member should be understood to mean “as many as we want”.
This interpretation can be seen as a blatant power grab, meant to allow the New College Board of Trustees to bypass the normal nomination process of the Foundation’s governance committee and appoint members who are not fully vetted by the Foundation yet in a position of decisive power over any votes concerning the $46MM endowment. This is especially important concern given unanswered questions about the use of restricted funds by New College, and new language of control such as Richard Corcoran referring to the Foundation as a “wholly owned subsidiary” at the August 15, 2024 BOT meeting.
When the governance committee at their August 14th meeting began discussing this interpretation of Florida statutes and potential ways to limit the number of BOT Chair appointments, as well as concerns about the proposed bylaws change which would allow Richard Corcoran to remove Foundation board members “with or without cause,” Chair Jenks abruptly alluded to potential consequences:
“If a board of trustees does not believe a DSO is functioning in the best interests or sole interests of the college, then the board actually has an obligation to shut it down. Now, we didn’t do that, OK…”
Other Florida university foundations – including the foundations of FSU, UF, USF, UWF, FAMU, FAU, and UCF – specifically limit the power of the Board of Trustees Chair to a single appointed member, thus fulfilling the statutory requirement of “at least one” but not allowing for unlimited appointments (see details in the table below).
The New College Foundation board should include in the New College Foundation bylaws the kind of clear language seen at other university foundations, specifying that the BOT Chair can appoint a single member to the Foundation board. This will help protect the Foundation board’s ability to fulfill its fiduciary responsibility to carefully steward funds donated to the New College Foundation.
Similarly, the New College Foundation should reject the proposed bylaw change which would allow Richard Corcoran to remove Foundation board members with or without cause. Such a rule, combined with the unlimited board member appointment interpretation, would allow New College to take over the Foundation board at any time and exert complete control over the $46MM entrusted to the Foundation by its donors.
Other Florida university foundations and DSOs (direct support organizations) should also be concerned about any precedent set at New College which might enable a newly appointed BOT and President to collectively replace a university’s foundation with an entirely new board on a whim. Potential donors should have grave concerns about giving to a nonprofit whose board composition could be so heavily dictated by another board.
|
University DSO |
# of BOT Chair appointees |
Regulation language |
Source |
|
FSU Foundation |
1 |
“The board shall also include the following seven (7) ex officio, voting trustees… the chair of the FSU Board of Trustees or designee” ____ “The Chair of the BOT shall appoint a representative to the board of directors and any executive committee of each DSO” |
FSU Foundation bylaw updates, referenced in FSU’s 2023 BOT materials ____ |
|
UF Foundation |
1 |
“The Ex-officio Directors are full voting members of the Executive Board and are: one appointee of the Chair of the Board of Trustees or of his or her designee…” |
|
|
USF Foundation |
1 |
“THE FOLLOWING WILL SERVE AS DESIGNATED MEMBERS OF THE FOUNDATION… A PERSON SELECTED AND APPOINTED TO THE BOARD BY THE CHAIRPERSON OF THE USF BOARD OF TRUSTEES, IN ACCORDANCE WITH SECTION 1004.28 FLORIDA STATUTES” |
|
|
UWF Foundation |
1 |
“Ex Officio Directors include the following: (i) one representative of the University of West Florida Board of Trustees (“BOT”), as designated by the BOT Chair…” |
|
|
FAMU Foundation |
1 |
“Designated Ex-Officio Membership: The President of the University, Chief Financial Officer of the University, President of the National Alumni Association, Director of Alumni Affairs, and the Chair of the Board of Trustees or their designees shall be members of the Board of Directors by virtue of their positions.” |
|
|
FAU Foundation |
1 |
“Ex-officio Directors. Ex-officio Directors shall be… Designee of the Chair of the University Board of Trustees if the Chair elects to appoint a member to the Foundation Board.” |
|
|
UCF Foundation |
1 |
“Designated Directors will consist of… A BOT representative approved by the BOT Chair.” |
