Sie sind auf Seite 1von 3

September 8, 2016

VIA EMAIL

Board of Directors University of Louisville Foundation, Inc. 103 Grawemeyer Hall Louisville, Kentucky 40292

RE:

Request for Accounting/Open Records Act Request/James Graham Brown Foundation/C.E. and S. Foundation

Fellow Board Members:

As

I think

each of

you know, on August 29, 2016, Dr. Neville Pinto, Ms. Kenyatta

Martin, Mr. David E. Saffer, and I received a letter from Dr. Larry Benz

in his capacity as

Chairman of the University of Louisville Board of Trustees (the “Benz Letter”) regarding the

University of Louisville Foundation, Inc. (the “Foundation”) and certain “Related Entities”. A copy of that letter is attached.

As I also think each of you know, on September 2, 2016, I received a letter from the James Graham Brown Foundation (the “Brown Foundation”) and on September 5, 2016, I received a letter from the C.E. and S. Foundation (the “CES Foundation”). Copies of each of those letters are also attached.

Dr. Benz requested on behalf of the University that the Foundation and its Related Entities provide an accounting of all disbursements of Foundation assets (“Accounting”) for the period commencing the 1st of January, 2010 through and including the date the Accounting is delivered to the Board (the “Accounting Period”).” His letter went on to request (the “Open Records Request”)

(1) copies of any and all of its balance sheets, profit and loss statements and general ledgers prepared with respect to any period encompassed within or ending within the Accounting Period; (2) copies of any and all documentation relating to any loan transactions or receivable agreements, including without limitation the July 1, 2015, $38 million Memorandum of Agreement, entered into between the University and the Foundation or one or more of the Related Entities during the Accounting Period; (3) copies of any and all bank statements reporting Foundation assets or assets of Related Entities for each month or other statement period ending within the Accounting Period; (4) copies of any and all investment account statements reporting Foundation assets or assets of Related Entities for each month or other statement period ending within the Accounting Period; (5) copies of the minutes of meetings of the Foundation’s Board of Directors and the Boards of Directors of Related Entities (including any committees thereof) approving the expenditure of Foundation assets or assets of Related Entities; and

September 8, 2016 Page 2

(6) copies of any and all documents relating to any commitment by the Foundation or Related Entities to expend funds subsequent to the termination of the Accounting Period.

In its letter (the “Brown Foundation Letter”), the Brown Foundation expressed its opinion

that the

University, [the Foundation] and the Louisville community would be well served if ULF immediately (1) hired a nationally recognized forensic accounting

firm identified by the University to conduct an independent review of [the

Foundation” and its related entities, (2) conducted a best practices governance

review with a nationally recognized organization such as the Association of Governing Boards of University and Colleges (3) complied with the recent request for accounting made by [Chairman Benz] and (4) complied with the Open Records Act requests from [Chairman Benz].

The Brown Foundation also stated that [w]ithout evidence of these actions [it would] be unlikely to approve any further grant requests from the University, [the Foundation] or the James Graham

Brown Cancer Center.”

In its letter (the “CES Foundation Letter”), the CES Foundation requested “immediate action on the four recommendations contained in [the Brown Foundation Letter]….”

I believe that it is in the best interest of the Foundation and its express charitable purposes to gather and provide the information requested in the pending Open Records Request, and to hire an independent nationally recognized accounting firm to conduct a review of the

Foundation. This review will be in addition to the annual audit of the Foundation’s financial

statements. Likewise, I believe that the Foundation should honor the request to conduct a best

practices governance review with a nationally recognized governance organization. I will bring recommendations to implement these actions for consideration and action at the Annual Meeting scheduled for September 16, 2016.

Foundation representatives have begun to compile the records responsive to the Open Records Request. Since more than six years of records have been requested, it will take a good deal of effort to identify and provide them (the initial estimate is that more than 1,000,000 records have been requested), but the Foundation is proceeding with all due speed. As you know, the Foundation is presently undergoing its annual audit and an extensive examination by the Auditor of Public Accounts. Because the demands placed on limited Foundation staff exceed their capacity, I personally have authorized the hiring of up to four (4) additional Foundation employees to assist with these matters. My plan is to ask you to ratify that action at our next meeting.

September 8, 2016 Page 3

With respect to the request for an accounting, I plan on presenting to you a request for proposals for an independent nationally-recognized accounting firm to conduct an independent

review of the Foundation and its related entities. I will propose that the firm be selected, and its work directed, by a committee of the Foundation composed equally of members of the

Foundation’s board who also serve as trustees of the University and two members of the board

who are not currently trustees of the University. At the same time, the Foundation intends to reach out to the Brown Foundation, the CES Foundation and other important stakeholders to

listen carefully to their questions and concerns. I also plan to discuss with you whether we proceed to conduct a best practices governance review immediately or upon the receipt of the pending report of the Auditor of Public Accounts.

The Foundation appreciates the need to proceed promptly and thoughtfully in addressing questions that have been raised by the University as well as all donors and supporters and that is precisely what we intend to do. It is my hope that all of us will move forward together to accomplish these steps in a spirit of teamwork and cooperation.

Very truly yours,

Dr. Robert C. Hughes, Chairman of the Board of Directors

cc:

Dr. James R. Ramsey, President; via email Dr. Neville Pinto, President; via email Dr. Larry Benz, Chairman of the Board of Trustees; via email University of Louisville Board of Trustees; via email