After inquiries and concern over the transparency of CSU Stanislaus and the non-profit university fundraising entity (CSUS Foundation) during a controversial visit by Sarah Palin at the June 25, 2010 CSUS 50th Anniversary Gala, CSUS students Ashli Briggs and Alicai Lewis found shredded documentsin a campus dumpster including what seemed to be shredded pieces of the Palin contract being inquired about.
In April the students turned over the shredded documents to Attorney General Jerry Brown’s office and resulted in an investigation of the CSUS Foundation.
“Turning over this information to the Attorney General is important so that any wrongdoing can be addressed and prevented from reoccurring in the future,” said Lewis at the time of turning over the shredded documents. “If this helps push for financial transparency on college campuses, then those of us involved know we did the right thing.”
Concluding an investigation into fundraising practices at California State University at Stanislaus, Attorney General Edmund G. Brown Jr. announced on August 6, 2010 that the CSU Stanislaus Foundation has agreed to improve oversight of the money it raises and spends for the school.
The Attorney General’s review stemmed from questions over the CSU Stanislaus 50th Anniversary Fundraising Gala that was hosted by the University’s Foundation and featured Sarah Palin as the keynote speaker. The AG’s review has confirmed that no funds had been diverted to improper uses.
"We examined whether money given to a charitable foundation was handled appropriately, but found no violation of law," Brown said. "However, the foundation board has agreed to make changes to improve oversight of its funds."
Brown’s Charitable Trusts Section found that the foundation exercised inadequate oversight of its $20 million in assets, but found no misuse of its funds and no violations of state law.
Prior to the Attorney General’s findings, the University Foundation had already begun putting steps into place to provide more extensive board training and enhanced accounting practices. The Foundation had also developed fundraising policies and procedures to improve internal controls and increase administrative oversight.
“We appreciate the Attorney General’s review and had already been working to implement many of the recommendations,” said Russ Giambellucca, Vice President for Business & Finance at CSU Stanislaus and Treasurer for the Foundation. “In the past, our Foundation Board was primarily focused on raising money for the University. But over the past year, the Board has been charged with providing more administrative oversight of all Foundation activities and assets. We are pleased that the corrective actions required by the AG are consistent with the direction we’ve been taking already.”
To address the Attorney General’s findings, the CSU Stanislaus Foundation Board will:
1. Continue to provide training to all current and future board members to assure understanding of their fiduciary duties under state law.
2. Implement independent auditor recommendations when received.
3. Routinely and consistently follow established fiscal and governance policies and procedures.
4. Continue to assure that all relationships with professional fundraisers comply with the Government Code.
In April, at the request of state Senator Leland Yee of San Francisco, Brown agreed to investigate the foundation, including whether it was spending its money for the benefit of the campus as it promises its donors, the university and the public. Brown also investigated the refusal of CSU Stanislaus to turn over records of an appearance by Sarah Palin at a university fundraising event.
Subsequently, Californians Aware, a non-profit watchdog group, filed a civil lawsuit against both the university and the foundation to compel disclosure, and Brown suspended his investigation pending resolution of the lawsuit.
Brown’s audit showed that the foundation’s accounting procedures were inadequate, it failed to understand fully its duties and responsibilities under the law – including basic charitable trust concepts – and it failed to implement its own auditor’s recommendation to prepare a budget for all fundraising events. Recently, the foundation has been working with an independent auditor to rectify these lapses.
The Attorney General’s Charitable Trusts Section oversees charities to make sure they comply with the law and their articles of incorporation. The Attorney General is authorized to bring legal actions against charities if they misuse funds under their control or otherwise fail to follow the law.