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75% of this year’s donations to UO went to athletics. Endowment earnings are below benchmarks

8/19/2013 update: “Around the O” reports UO raised $200M this FY in donations. It’s difficult to tell from the press release, and as explained below UO Foundation CEO Paul Weinhold has refused to release breakdowns, but it appears that about 57% of the donations to the Foundation went to the jocks. If you count the $140M or so Knight spent on the football sweat shop – and it’s hard to ignore – the jocks got about 75%.

It’s well past time for UO to start taking a percentage of the athletics donations for the academic side. But there’s still no substantive response from President Gottfredson to the May 8 Senate motion on this, just a letter saying maybe he’ll appoint a working group. It’s been 9 years since the original athletics task force recommendation.

The story also reports that chronically unlucky Chief Investment Officer Jay Namyet was able to earn only 13.8% on the endowment. Disastrous. The S&P 500 returned 18.6% over the same period, the Dow was up 16.3%, and the NASDAQ 17%. His underperformance is, conservatively, $11M in just one year. For perspective, the faculty union and the administration are currently about $5M apart on salaries.

The UO Foundation’s full annual report is typically released at the end of September. This early press release appears to be an attempt to divert attention from the latest athletic excesses. Good luck with that.

6/2/2013 update: The UO Foundation has been dominated by sports boosters for far too long. See past posts on the Foundation, including their (successful) effort to get an exemption from UO’s public records law, here. Tax deductible donations without transparency is not a recipe for trust, and not a good model for an independent UO Board of Trustees. Speaking of which, I still can’t get a
commitment from UO that SB270 as currently written will require the Board to follow that law – even to the feeble extent that UO currently obeys it.

6/2/2013: No sign of it on their website, but rumor has it the UO Foundation trustees are meeting today. The new board chair is Steven Holwerda:

From an online bio:

First choice for a new career: I started out in athletic administration, and if I had to pick a second career it would be to go back to working for the University of Oregon’s athletic department. Go Ducks.

How convenient. A former Duck athletic department and NCAA employee, whose dream is to work for the Duck athletic department, will now oversee the UO Foundation, which by law is supposed to support the university’s academic mission. Oregon law requires that

The Foundation will accept only gifts that: the University has approved, including all restrictive terms and conditions, has determined to be consistent with the core educational values of the University, and are compatible with the missions of the University and of its individual programs (Oregon Administrative Rules, Chapter 580, Div. 42 and Div. 46);

And those OAR’s prohibit accepting gifts that involve

(c) Creating a commitment for the institution or the state to continue support of a program funded through gifts, grants or contracts, in the event such funds are discontinued;

I suppose a creative lawyer could slip the Jaqua Center and the Knight Arena through. But in practice the foundation is now mostly a money laundering operation for the Duck Athletic Fund. That’s a very rewarding business, for some. Erika Funk filed 2 requests for extensions with the IRS, but finally had to make some salary info public on May 15, in their IRS 990. These numbers are now almost a year old:

Here are the donations they received for UO for current operations, from 2000 up to last year. The numbers are from the Council for Aid to Education:

In his investiture speech President Gottfredson announced a new $1B capital giving campaign. The previous campaign ended in 2006, and raised $850M in donations and pledges. How much of that was for athletics, and how much for academics? The UO Foundation won’t report UO’s breakdown for capital gifts and endowments – something most foundations, including the OSU Foundation, tell the CAE as a matter of course:

I did find this snippet from last summer:

Overall, giving in fiscal 2012 totaled $51,737,551 in support of academics, mainly for current purposes and endowments. Athletics programs received $55,950,231, which included significant support for expansion of the Len Casanova Center. 

What steps will President Gottfredson take to make sure the UO Athletic department doesn’t siphon off potential academic donations for the Ducks? The Athletic department runs its own independent fundraising program, which currently competes with the UO’s development office without check, and with great success – for the jocks:

UO Professor Dennis Howard – holder of a Philip H. Knight Chair in Sports Marketing at UO and former Business School Dean - has written the definitive paper on how the Ducks have done this in the past, comparing data on donations to UO sports and to UO academics, from 1994 to 2002. His conclusion?

Both alumni and non-alumni show an increasing preference toward directing their gifts to the intercollegiate athletics department-at the expense of the donations to academic programs. Sperber’s (2000) assertion that giving to athletics undermines academic giving is strongly supported.

and

For every $100 of new revenue raised from major donors by the University of Oregon, over 80% is being directed to the athletic department. Even with the large increases in numbers of total donors since 1994, academic giving struggles to remain stable while donations to athletics experience huge growth. In three out of the past five years (1998, 2000, 2001), the total dollars donated to academics by non-alumni has fallen despite annual increases in the number of non-alumni donors. Total dollars donated to academics by alumni fell in only one year (2000), again despite an increase in the total number of donors. This suggests new donors are not making academic gifts, and current donors are shifting dollars from academic giving to donations directed to the athletic program. Additionally, as discussed above, proportional giving by alumni is predominantly directed to the athletic program. If these trends continue, total academic giving will fall for both alumni and non-alumni despite continued increases in the total numbers of both types of donors.

To add to the insanity, under the secret Frohnmayer/Kilkenny agreement President Gottfredson’s office has to pay the AD $350K, so that they can then use his Autzen presidential skybox to schmooze with their boosters and get still more donations for the Ducks. I’m not making that up.

One obvious solution is for UO to tax donations to athletics, sending say half to the academic side. Another would be allow donations to the athletic side count for determining season ticket priority. Athletic Director laughed at both these proposals when we brought them up in the IAC. He even refused to consider a ticket surcharge – even just a dollar – to be earmarked for academic scholarships.

Currently the transfers run the other way. President Gottfredson has until July 8th to respond to the Senate resolution calling for

  1. an end to two of the more egregious annual subsidies for athletics – the $2M Jaqua Center operations costs, and the $467K we pay for Knight Arena land, and 
  2. a modest payment from the AD towards need and merit scholarships for regular UO students: just 2% of the AD’s spending on sports.

Meanwhile, up in Corvallis, OSU’s foundation is in the midst of their own capital campaign: See their list of contributions here. Their athletic budget is only about half UO’s, their subsidies are out in the open, and they manage to bring in plenty of giving for academic programs.

Here’s another Duck/Beaver comparison: Research and Athletics spending:

Diane Dietz has the story and data on UO here. I got the OSU data from their very complete Research Office data page, here. Both are “Federal Flow Through” totals, which are the easiest to find directly comparable data. They include spending on outreach and instruction, but it’s mostly research money and the trends look similar no matter how you cut it. That’s the table on the left. The table on the right shows athletic department spending, from USAToday. (Official UO and OSU numbers for 2012.)

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