July 08, 2008

California State University, Fresno successfully closed the books on the examination and reconciliation of its matching gifts program in athletics from 1986-2003.

The university reported today that a total of 207 companies that provided $2.881 million in matching gifts to athletics were contacted and offered a refund. Only five companies chose refunds, which totaled $25,570 – or less than 1 percent of the total.

Thus, the university retained $2.855 million that had been received for matching gifts in Athletics during the 17-year period.

During the reconciliation process, companies were given several options: receive a full refund, approve the matches according to company policy, indicate that they wished to take no further action or redirect their matches to the university’s general scholarship fund, the general fund or to the library.

During the reconciliation process, results also included the following:

• A total of $1.48 million was approved by the donors as a matching gift or no further action was requested by the companies.
   
• A total of $1.36 million was approved by donors and redirected to scholarships, the general fund or the library. “Redirection” means the donors permitted the match but asked that it be used for another purpose. Included in that total is $865,967 previously distributed to appropriate uses for scholarships, programs in arts and humanities or the library.
   
• A total of 17 companies have gone out of business, been acquired or merged. Those that were acquired or merged were contacted with options. Files on companies that went out of business were closed; the value of the closed files is $12,665.

The reconciliation process followed completion in June 2007 of an independent review of Fresno State’s athletics matching gifts program during the period 1986-2003. The review found that a flawed management decision in 1986 led to the university receiving funds over the years that it was not qualified to receive. The review was conducted by Attorney Stephen C. Nill with an outside accounting review and report by Price, Paige & Co.

The reviews confirmed that there were matching gifts received for athletics that were ineligible because the funds supported intercollegiate athletics. University officials mistakenly assumed that even if a company’s policy prohibited contributions to athletics, employee contributions could be made to athletics as long as the company’s matching gift went to an academic counseling program.

It was determined that matching funds were not solicited for academic programs and then redirected to Athletic programs, and the report by Price, Paige & Co. notes that there was no evidence of fraud.

The independent accounting report affirmed that the university successfully eliminated the problem through matching gift safeguards put in place following an internal review in 2003.

Even though these gifts were received over a 17-year period dating back to 1986, university President John Welty directed in June 2007 that this matter be fully disclosed to all affected companies, and that the companies be offered repayments of their donations unless they choose to reconcile in alternative ways.

To complete the process, the university has done the following:

• Made $25,570 in refunds using non-state funds.

• Completed $865,967 repayment (initiated in 2003) using non-state funds from the President’s Circle and the Athletic Corporation.

• Redirected $321,740 to qualified scholarships and General fund activity from the University Improvement Fund. These are non-state funds generated by non-state trust account interest income.

• Redirected $199,856 from the California State University, Fresno Association to scholarships to cover Save Mart Center personal seat licenses. These are non-state funds generated by auxiliary activities.

All non-state funds have been transferred and used for qualified purposes in Marching Band Scholarships, President’s Honors Scholarships and library operating activities.

As of Feb. 5, 2008, the university and its auxiliaries no longer accept matching gifts for athletics or other entities when those gifts are associated with memberships or benefits (i.e. tickets, personal seat licenses, suites, etc.). Applications for matching gifts to athletics for philanthropic or capital purposes will be considered when approved by the corporate donor. Matching gifts to the alumni association scholarship program will be accepted when approved by the corporate donor.

The university has adopted a “best practices” action plan as recommended by Nill.

A complete report of the actions taken by the university has been submitted to the Office of the Attorney General.

Here are links to information regarding matching gifts at Fresno State:

The original independent review of the matching gifts program from 1986-2003:
www.fresnostatenews.com/MatchingGift/1986-2003.pdf

The reconciliation report for all companies as of June 30, 2008:
www.fresnostatenews.com/MatchingGift/Matching-Gifts-Summary(final).pdf
www.fresnostatenews.com/MatchingGift/Reconciliation-Report.pdf
www.fresnostatenews.com/MatchingGift/Reconciliation-Report.xls (Excel version)

University “Best Practice” action plan based on recommendations included in the June 2007 independent review:
www.fresnostatenews.com/MatchingGift/Best-Practices.pdf