By Jim Hopkins
The white-shoe world of philanthropy is usually collegial and rarely combative, which makes the $355 million James Graham Brown Foundation‘s public accusations yesterday against the University of Louisville Foundation so extraordinary.
The Brown foundation, which has given $72 million to the school over the past six decades, sent the broadside in a letter from Chairman and CEO R. Alex Rankin and President Mason Rummel, according to The Courier-Journal.
They expressed concern that “expenditures may have been made that were not exclusively for the charitable and educational purposes of the university,” or were not consistent with UofL rules barring donors, members or trustees from personally profiting from the UofL foundation, according to the CJ’s Andrew Wolfson.
Established in 1943, the Brown is second only to UofL’s among the city’s biggest philanthropic foundations based on asset size; UofL’s has about $820 million. That gives the Brown and Rankin extra clout, and could spur other big donors to also threaten funding cutoffs. Rankin is well-connected in the city’s power structure, sitting on the boards of Churchill Downs and Glenview Trust Co., where fellow directors have very strong UofL connections.
In their letter, Rankin and Rummel also said the Brown foundation is troubled the university hasn’t honored open- records requests from the chairman of the university’s board of trustees, Larry Benz, concerning UofL foundation accounting records, the CJ says.
Underscoring the gravity of their concerns, Rankin and Rummel threatened to cut off funding unless UofL hires a nationally recognized forensic accounting firm to review its finances. The specific request for a forensic accounting is striking because those are sometimes conducted when there are concerns about possible fraud, or when litigation is anticipated.
The letter was sent to Dr. Bob Hughes, chairman of the UofL foundation, and copied to Benz; acting university president Neville Pinto, and James Ramsey, who was forced to resign in July but remains as foundation president, according to the CJ. Hughes is also a trustee of the university itself. (WDRB has posted the letter with its story.)
Hughes said in an email the university and the foundation will address the Brown foundation’s requests quickly. Some of them, including the audit, already were planned, he said.
But he said Benz’s accounting request will be more difficult because it will require an estimated 800,000 pages of documents going back to 2010, and hiring extra employees, according to the CJ. “That is a tremendous waste of ULF resources, but it is what it is,” Hughes said. “We will make every effort to comply and ensure our supporters and alumni that we are doing everything correctly.”
Threat of broader fallout
Despite its name, the Brown foundation is not part of the Brown-Forman founding family’s empire. Rather, it’s named after the late real estate developer James Graham Brown, best known for building the upscale Brown Hotel and Brown Theater downtown. Born in Madison, Ind., Brown attended Indiana’s Hanover College, moving to Louisville in 1903; he died here in 1969, at 88 years old.
His foundation’s high-profile dispute could snowball if other donors follow it under CEO Rankin’s lead.
UofL consistently ranks among the top beneficiaries of the Community Foundation of Louisville, one of the city’s most generous. It gave $5 million to the school in its 2011-2014 tax years, the most recent ending June 30, 2015. That was out of a total $100 million in grants, according to its latest public IRS tax returns. Another big donor, the Humana Foundation, contributed $905,000 in 2014, its most recent tax return shows.
Rankin’s perspective on UofL is noteworthy. He’s a graduate of the University of North Carolina at Chapel Hill, which means he wouldn’t have the same built-in emotional attachment some UofL graduates could feel. At Glenview Trust, two fellow directors have strong ties to the school: Sandra Frazier, one of Gov. Matt Bevin‘s June appointees to the school’s new board of trustees, and David A. Jones Sr., a 1954 UofL graduate who is one of the wealthiest and most influential of the school’s alumni.
A bridge to wealth
One of Rankin’s fellow Brown foundation trustees is Ulysses “Junior” L. Bridgeman, a 1975 UofL graduate who was the school’s interim board chairman immediately after Bevin’s reorganization. And Bridgeman and Rankin also serve together on Churchill Downs’s board, further illustrating the overlap among the city’s tight-knit power players.
Bridgeman, a former pro basketball player, built a portfolio of 240 Wendy’s restaurants and 120 Chili’s locations in 16 states, starting from scratch with just three Wendy’s units. In April, he announced plans to sell all that for a newly established Coca-Cola bottling franchise he’ll run with one of his sons, Justin Bridgeman.
Their deal covers Missouri, Illinois, Kansas and Nebraska, including the cities of St. Louis and Kansas City, and included an existing bottling plant in Lenexa, Kan.
Please read my disclosures.