A report issued last month by the South Carolina Inspector General’s Office cites serious issues with a nonprofit tasked with helping raise money for a small state university, which led to almost nonexistent fundraising and questionable real estate spending over the past decade.
The Inspector General’s report analyzed the finances of the Lander University Foundation in response to a complaint. In it, Inspector General Brian Lamkin detailed a nonprofit which often acted as more of a financial liability for its host university than as a source for fundraising and donations.
Part of the problem stemmed confusion about who led the foundation, according to the report. It noted most of the boardmembers incorrectly believed they were supposed to act in an advisory role, while financial decisions were made by the foundation’s then-executive director Ralph Patterson (who also served as Lander’s vice president of advancement). But the foundation’s bylaws stated the board was key to approving the nonproft’s spending.
“The byproduct of this lack of oversight may have been serious misspending or at a minimum, a waste of funds that could have benefitted (Lander),” the report noted.
The report’s existence was first reported by the Greenwood Index-Journal on Wednesday. The Inspector General did credit a new administration under Lander President Richard Cosentino with cleaning up some of the more egregious issues. The school has also halted its current capital campaign until changes could be made.
Lamkin also raised concerns about the relatively small amounts of donations raised or apparently even sought by the foundation. The school’s fund remained at the same level as in 2003 and only $48,000 in unrestricted revenue (money not donated for specific purposes) was raised last fiscal year. The report also noted roughly a quarter of the “contributions” reported by the foundation last year were actually the value of work performed by Lander employees on foundation business for which the college did not charge.
“The cost of the Foundation staff provided by Lander as well as the Foundation’s office facility provided at a considerable cost to Lander, are significant in relation to the benefits (the school) receives,” the report states.
In fact, the college essentially covered 80 percent of the foundation’s operational needs, according to the report. Besides the employee time, a 1.5 percent assessment fee was charged to Lander’s endowment to help fund the foundation. Another $427,000 reported as “contributions” actually included sponsorships, concession revenue and gifts made to the school’s athletics program rather than the foundation.
Lamkin also cited serious issues with a lease the school paid the foundation for its offices. The foundation had used its investments to purchase a former bank for $400,000. According to board meeting minutes, foundation staff told board members the school’s ten-year lease would repay the cost of the building, plus five percent interest. Instead the foundation charged the school the equivalent of 16 percent interest each year and used the “profit” to buy out the contract of a former Lander president in 2014.
The questionable spending occurred even as the university began budget cuts in 2013 due to a $1.2 million shortfall. In response, the school phased out its physical education and excercise science programs and did not fill several vacant jobs open due to resignations or retirements.
Patterson is no longer employed at the school or foundation, having taken a job as athletic director for Newberry College.