In the course of its ongoing financial crisis, Missouri Western State University has tapped its charitable foundation for aid. While the foundation stands ready to provide more money if the need arises, most of its funds are restricted to specific purposes.
“We’ll go back to donors and take the appropriate avenues for discussing what needs to be done with those funds,” said Andrew Molloy, Missouri Western Foundation’s chief financial officer.
In a May 6 summary on the financial crisis sent to the state government, the university stated that it has obtained $750,000 from the foundation, and saved about $2.7 million via budget cuts and restructuring within Fiscal Year 2020. In the next three years, the university will phase out about 20 different academic programs to continue an ongoing process of eliminating positions and reducing expenses, saving about $5 million per year.
The university can invest and withdraw public money from its budget as needed. Accessing university foundation assets, underwritten by private donors, is a more complicated task. Some donor money is given in single amounts, like $100 or $1,000. Other donors seek to leave a lasting impact by allowing the university to invest their money and carefully spend only the proceeds. In either case, the university offers to set up complicated rules it must follow, and those rules arise now.
Molloy said that to individually understand how each fund will be affected by the phase-outs would require a “deep dive.” If an academic program is phased out and donor restrictions require for that program alone to be benefited by the money they gave, the donor must sign off on any changes. If the donor and/or that person’s heirs/trustees cannot be reached, or if the donor doesn’t approve changes, nothing can be done with that money outside of the rules.
“However, fortunately, the it’s looking like the total number of funds we have that will eventually whose purpose will eventually be phased out as minimal,” Molloy said.
Financial statements published for the end of fiscal year 2019 show a total of $36 million in the university’s endowment funds. Of that amount, a little more than $2.3 million is “unrestricted,” entrusted to the foundation — a nonprofit entity that is governed separately from the university — by donors for whatever purpose is deemed most suitable. With all such funds, the university has a fiduciary duty to preserve the original “corpus” of an endowment donation. As of the end of FY 2019, just under 6.5% of endowments were unrestricted.
Each endowment, which is created with a minimum contribution from a third party of at least $10,000, annually contributes about 4% of its value to scholarship funds or other interests that benefit students; Molloy described this percentage as an “industry standard.” At the end of the day, the Foundation does not anticipate it will have much “exposure” in supporting the university in partnership with donors.
“You know, we’re big on donor intent,” Molloy said. “And, you know, we manage the funds and distribute them in accordance with that donor intent.”