Sometimes boards fail to fulfill their fiduciary duties of care. And sometimes as a result, really bad things can happen like losing total credibility, being replaced, even being closed down.
Such is the case for the University of Louisville Foundation - a body established to raise resources and ensure that what resources are collected are safeguarded, prosper and grow. Well, the board failed and a new board is trying to pick-up the pieces. And, to their credit I believe, it is the board chair who has stepped-up to represent the work and intent of the new board.
Board Chairs do not inherently come with an operating manual about how to be a chair and how to address critical issues and most importantly, when and how to be the "face" of their nonprofit. If any credit is to be given for this new board's effort it should be given to Ms. Medley who likely, more than most chairs, actually did come prepared with the skills, knowledge and expertise to take-on what many others might avoid.
From Insider Louisville, we can learn some of the details.
Diane Medley was selected as the new board chair of the University of Louisville Foundation by its members at Tuesday’s meeting, after which she expressed confidence that the embattled nonprofit managing the school’s nearly $700 million endowment would continue efforts to restore the public’s confidence.
Medley’s selection to lead the foundation’s board fulfilled a request made in a resolution Saturday by the new iteration of the UofL board of trustees, which recently was recreated by the Kentucky General Assembly and filled with appointees of Gov. Matt Bevin. Brucie Moore had served as the foundation’s board chair — by virtue of being a trustee — since last September, but was removed from that position when the previous board of trustees was abolished by that legislation.
Medley is one of four new university trustees who were selected at Saturday’s meeting to serve on the foundation’s board, in addition to Papa John’s founder and CEO John Schnatter, former Omnicare CEO Nitin Sahney and new board of trustees chairman J. David Grissom. She had served as an at-large member of the foundation board since September, chairing a joint committee of both boards that handled the hiring and oversight of an accounting firm conducting a forensic audit of the foundation’s finances.
At Saturday’s meeting of the university trustees, Grissom introduced three other resolutions making requests of the foundation, designed “to send a very strong signal to the foundation that things have to change.” Grissom said the recently completed state audit showed that the foundation had “poor governance” and that trustees needed to keep in mind “that those assets that are over there at the University of Louisville Foundation are our assets.”
Dr. Enid Trucios-Haynes, the faculty representative on the board of trustees, interjected to say that the foundation should be recognized for “how far we’ve moved” since instituting a series of reforms last fall to increase its transparency, including the initiation of the forensic audit. Grissom disagreed with that assessment of the foundation’s progress, saying “I’ll be happy to give you a sense of it. Not very far. And not at a very good speed.”
The trustees ultimately passed a resolution urging the foundation’s board not to enter into any termination agreements or settlements with foundation employees until the forensic audit is complete, which Grissom estimates will be in early May. However, they tabled two resolutions that would have urged the foundation board not to make any investments except for public bonds or to enter into new contracts, employment or otherwise, until that audit is complete. Interim foundation director Keith Sherman said a literal interpretation of the former resolution could have a detrimental impact on the growth of its asset pool.
At Tuesday’s meeting of the foundation board, Grissom asked to take up the resolution prohibiting termination agreements or settlements, but was told that they could not do so because it was not on their original agenda. The foundation board did pass a resolution giving signature authority to the new leadership, which also specified that any foundation officer executing a contract to acquire property in excess of $400,000 must obtain the prior written approval of the board. Schnatter abstained from voting on the resolution, saying he did not fully understand it, while adding that the foundation has strayed from its mission of educating students by focusing too much on real estate investment.
After Tuesday’s meeting, Medley reaffirmed that her goal is to continue the mission of the foundation to support the university, while also restoring the public’s confidence after a turbulent year — adding that the new board members would pick up where the board had left off in recent months.
Asked if she agreed with Grissom’s previous criticism that the foundation’s reform efforts are moving too slowly, she flatly disagreed.
“I believe that we are moving,” said Medley. “I think that I’m probably more involved with what’s been going on, since I’ve been on the foundation board since September. And I’ve spoken with Mr. Grissom and I believe he’s much more comfortable with what’s been going on.”
Medley said Grissom didn’t offer any specifics about how the foundation hasn’t moved far enough or fast enough in recent months, but added “I think we’re on the same page. He and I talk every day and we’re going to continue to do that, to make sure we’re both on the same page.”
According to Medley, the forensic audit continues to progress nicely, as the contracted firm has obtained documents from the foundation and is conducting “detailed reviews” of financial and some specific accounts. She noted that the previous joint audit committee has been disbanded and is now under the full supervision of the board of trustees.
At Saturday’s meeting of the trustees, they also selected Dr. Greg Postel — currently UofL’s interim vice president for health affairs — to take over as interim university president once Dr. Neville Pinto leaves to take over the University of Cincinnati in mid-February. Postel mentioned that his top priority is to lift UofL out of the probation that was recently imposed by its accrediting agency.