The University of Louisville Foundation’s board approved an agreement with the university meant to keep the foundation free from politics and “disproportionate influence.”
The actual terms of the agreement, though, remain secret.
The foundation refused to release a copy of the agreement with the University of Louisville, saying it was a draft because the final language hasn’t been approved by the U of L board of trustees.
“We don’t know if what will be sent back to the trustees is something the trustees will approve,” interim foundation executive director Keith Sherman said. “Until that’s done, which hopefully will be done on the very near term, we just aren’t comfortable sharing too much about a draft that might not come to fruition.”
The agreement could help the two entities prepare for possible lawsuits against former employees or board members, but Sherman said that’s not the purpose.
Instead, the agreement will complement a new memorandum of understanding between the two entities and formalize the governance changes the foundation has made over the course of a tumultuous year, said board chair Diane Medley.
All of the trustees who also serve dual roles on the foundation’s governing board, including Medley, left the room during the closed session where the agreement was discussed.
“We believe this agreement will assure the foundation operates pursuant to industry best practices and remains free from political pressure and the disproportionate influence of any individuals,” said U of L Foundation board member Earl Reed.
The agreement comes in response to the forensic investigation U of L commissioned of its nonprofit arm. That audit found excessive and often secret spending on investments, real estate and lavish pay under former president James Ramsey that left the school’s endowment depleted. The foundation also liquidated $42 million of its dwindling endowment to cover unbudgeted spending, the audit found.
Since the audit, leaders at the university and its foundation have enacted numerous changes to how they do business. They’ve also discussed potential litigation to recoup money from former employees and board members.
Sherman and Medley said the agreement with U of L doesn’t directly relate to possible lawsuits, but it could have an impact on what path they take going forward.
“I think what this agreement does is allows for those discussions now to take place in a different way, where the two entities can discuss what steps we might take, when, and on what basis,” Sherman said.
In other action, the board extended Sherman’s contract for an additional year. Sherman was hired to clean up the foundation in the midst of crisis last December, and Medley said they wanted to keep Sherman on while preparing to hire a permanent leader.
“I think he’s done a fabulous job and that’s exactly why we extended his contract,” Medley said. “We’re still a work in progress.”