At her final State of the University Address in January, outgoing SUNY Chancellor Nancy Zimpher touted an increase in student degree completion during her tenure, a trend she attributed not only to an improved credit transfer policy but to a slew of campus-based initiatives—“almost $500 million worth of ideas”—backed by a system-wide “incentive program.”
“With this kind of enthusiasm and creativity,” Zimpher said, according to a transcript, “what if we could say to our partners in business and philanthropy, ‘Here’s an opportunity for you to help us increase completion, not at one campus, but at all of them.’ Imagine the impact that could have.”
This was more than a thought exercise. The university had just created the SUNY Impact Foundation, Zimpher announced, an unprecedented, “system-level repository that allows us to actively seek private-sector investment in programs proven to expand access, drive completion, and prepare students for success.”
Zimpher pitched potential investors on the spot: “Send your money to the SUNY Impact Foundation and we will allocate it to campuses who we know can move the dial,” she pledged. “We filed the papers, hired the experts, are recruiting our own board, and yes—we are already soliciting investment to move the SUNY completion dial.”
The university formed the foundation in Sept. 2016, days after federal and state corruption charges were brought against then-president of SUNY Polytechnic Institute Alain Kaloyeros, alleging the nanotechnology whiz rigged bidding processes for large economic development projects controlled by two university-affiliated nonprofits. (He has pled not guilty.)
The 64-campus public university system has about 200 affiliated entities, including 30 campus-related foundations and their roughly three-dozen affiliates, which altogether handle vast sums of money. In recent years, SUNY has adopted reforms related to some of these entities, its internal auditor has at least indicated an intent to scrutinize their financial management practices in past annual plans, and its risk-management team has identified foundations as a key area of focus.
But just earlier this month, a former high-ranking University at Buffalo official pled guilty to stealing hundreds of thousands of dollars from the school’s nonprofit Faculty Student Association, and a related state Inspector General investigation into “practices and policies” at the campus is ongoing. Kaloyeros’ federal trial next year, whatever the outcome, is likely to highlight the curious, quasi-governmental nature of Fort Schuyler Management Corporation, the alleged bid-rigging vehicle that, as other defendants in the case have argued, seems to have been “created precisely because it would not be subject to the kinds of State procurement rules that apply to SUNY Poly.”
While it has not expressed any intent to facilitate complex real-estate transactions, the SUNY Impact Foundation, which expects to take in $4.8 million during its first full fiscal year, represents yet another charitable appendage of an already formidable bureaucracy.
In filings with the state Attorney General and the Internal Revenue Service, the nonprofit provided statements of purpose aligned with the chancellor’s vision. On its website, it shows interest in connecting new external sponsors to preexistent initiatives, like an admissions program for economically disadvantaged students and a teacher preparation campaign, both of which appear connected to its mission.
But a brand-new initiative called “SUNY Strong” seems less likely to move the completion dial.
Worthy cause, questionable vehicle?
Earlier this month, SUNY announced that it was hosting a “statewide collection drive…to aid in relief and recovery efforts from Hurricane Harvey,” which devastated swaths of the Texas coast.
“Cash donations,” a press release explained, “will be converted into needed supplies and delivered to Texas aboard SUNY Maritime’s training vessel, the Empire State VI.” The worthy cause had a curious steward—the SUNY Impact Foundation.
About a week later, a second press release touted the drive’s success, announcing that “more than $30,000 has been raised for Hurricane Harvey and future disaster relief.” Half the haul “was used to purchase 24 pallets of needed supplies for Texas – the ship’s capacity,” the release explained, “and half was allocated by some of SUNY’s larger donors to seed an ongoing ‘SUNY Strong’ fund, which the Impact Foundation will use to support future relief efforts in New York and nationally.”
New Chancellor Kristina Johnson marveled at the “outpouring of support we’ve seen for SUNY Strong in a short amount of time…with nearly 300 individual donations made online and in person.”
SUNY officials did not respond to emails asking how the SUNY Strong initiative fits within SUNY Impact Foundation’s charitable mission. At least one attorney involved in the philanthropic sector doubts it does.
“[It] would appear to me that the establishment of a disaster relief fund, while admirable, does not fall within the objectives and stated mission of the Impact [Foundation],” Seth Perlman, an attorney at Perlman & Perlman LLP, told The Alt in an email, after reviewing the organization’s IRS Form 1023. “This is beyond mission creep and appears to be a divergence from the organization’s stated purpose.”
Perlman added that his comment presupposed “that there has not been amendments to the organization’s formation documents.” All documents related to SUNY Impact Foundation accessible via the state Attorney General’s charities database are marked as having been received in late April. (An AG spokesperson did not respond to an inquiry concerning this article.)
After reviewing the foundation’s articles of incorporation, which he characterized as “the key document” for determining its ambit, Marcus Owens, a partner at Loeb & Loeb LLP and former IRS official, noted its rather narrow and granular purpose clause.
“It’s clear that whoever was the moving force behind this organization…had an idea that [it] was going to support the State University of New York,” said Owens, though he allowed that a standard savings clause might afford the charity some wiggle room. “There is no clear answer here.”
Robert Lyons, tax director of exempt organizations at accounting firm Marks Paneth LLP, told The Alt that the SUNY Strong initiative, given its scale, is unlikely to attract scrutiny from the IRS as long as “substantially all” of the foundation’s activities further its exempt purpose.
“$30,000 is gonna be a drop in the bucket [for] this foundation,” said Lyons. “So it would never reach a materiality level.”
For Harvey relief…and beyond?
It is unclear from the second press release and the foundation’s website (“To continue to amplify the power of SUNY,” the latter says, “a donor seeded a SUNY Strong fund to enable SUNY to respond to natural disasters”) when and how the idea of supporting future disaster relief took hold, and whether any fraction of the hundreds of “individual donations” solicited for Harvey relief will go toward future relief efforts.
SUNY’s Sept. 5 release, which announced the collection drive, mentioned only Hurricane Harvey. “SUNY System volunteers will use all monetary donations to purchase, package, and ship needed supplies to Texas aboard the Empire State VI,” it said. On Sept. 7, SUNY referred to the SUNY Strong fund in a tweet as “our #HurricaneHarveyRelief fund.”
A spokesperson for SUNY Empire State College in Saratoga Springs, which recently announced that its community had contributed more than $5,000 to SUNY Strong, did not respond to inquiries on this topic.
On Sunday, in the wake of Hurricane Maria, Gov. Andrew Cuomo announced the creation of the “Puerto Rico Relief & Rebuilding Fund” at New York Community Trust. SUNY officials did not immediately respond to an email asking if SUNY Impact Foundation would spend or raise any funds related to that relief effort. The foundation is not mentioned on Gov. Cuomo’s Puerto Rico relief webpage, though several other charities are. On Monday, Chancellor Johnson on Twitter directed the SUNY community to that webpage.
As of 12:30 PM on Monday, SUNY Impact Foundation had not tweeted since Sept. 20, the day The Alt first inquired about SUNY Strong.
After the Sept. 11, 2001 terrorist attacks, the Red Cross created a separate relief fund that attracted more than half a billion dollars in donations. Controversy arose when it became clear that a portion of those contributions would go toward other purposes, including prospective future attack relief.
“I see the Red Cross, which has raised hundreds of millions of dollars that was intended by the donating public to be used for the victims of September 11—I see those funds being sequestered into long-term plans,” then-state Attorney General Eliot Spitzer told a congressional committee, according to CNN. The charity subsequently devoted the entire fund to those affected by the attacks.