As a privately held corporation, the George Mason University Foundation is not obligated to disclose records under the Virginia Freedom of Information Act, the Virginia Supreme Court determined on Dec. 12.
The unanimous opinion written by Supreme Court Justice Cleo E. Powell upholds the Fairfax County Circuit Court’s ruling that private foundations are not public bodies if they operate independently under their own bylaws and articles of incorporation, even if their work is conducted in support of a public institution.
The Supreme Court ruling affirmed the GMU Foundation’s efforts to protect the identities of private donors to Virginia’s largest public university, while dealing a blow to student advocates who sought access to documents detailing the terms attached to gifts accepted by the foundation.
“The George Mason University Foundation is very pleased with the sound ruling issued by the Supreme Court of Virginia,” GMU Foundation board of trustees chair Terri Cofer Bierne said in a statement. “The decision validates the lower court ruling that our Foundation, and others like it at colleges and universities across the Commonwealth, is a private entity and that our donors have certain rights, including privacy, associated with their gifts.”
George Mason University students formed the group Transparent GMU in 2014 due to concerns about the potential for private donors to infringe on their university’s academic freedom and integrity by using their gifts to influence academic content, faculty hiring, and other activities.
Transparent GMU sued George Mason University and the GMU Foundation on Feb. 9, 2017 after their efforts to obtain gift agreements made with the nonprofit Charles Koch Foundation were rebuffed on the basis that the university did not possess any of the requested records and the foundation that did house the records was not a public body and, therefore, not subject to FOIA requirements.
Represented by Appalachian Mountain Advocates staff attorney Evan Johns, Transparent GMU argued in a one-day trial on Apr. 25, 2018 before Fairfax County Circuit Court Judge John M. Tran that the Foundation should be considered a public entity whose records are subject to FOIA, because it conducts business on behalf of a public university.
After dismissing Mason as a defendant prior to the trial by sustaining a plea by the university to bar the counts against it, Tran ruled in favor of the GMU Foundation on July 5, 2018 on the grounds that the private non-stock corporation is not a public body, because it is not principally supported by public funds and was not created as “an entity of a public body…to perform delegated functions of a public body or to advise a public body.”
Transparent GMU appealed the decision to the Virginia Supreme Court, which accepted the case on Mar. 12 and held a hearing on Sept. 11.
In his opinion for the Supreme Court, Powell disputes Transparent GMU’s characterization of the GMU Foundation as an entity or agent of George Mason University, arguing that it exists independently of the university, is not supported by public funds, and its private fundraising does not constitute a public duty.
Powell’s opinion cites Code of Virginia Section 23.1-101, where the Virginia General Assembly encourages public institutions of higher education “to increase their endowment funds and unrestricted gifts from private sources and reduce the hesitation of prospective donors to make contributions and unrestricted gifts.”
Code of Virginia Section 23.1-1010 gives public higher education institutions the authority to “create or continue the existence of one or more nonprofit entities for the purpose of soliciting, accepting, managing, and administering grants and gifts and bequests, including endowment gifts and bequests.”
The Supreme Court also agreed with the Circuit Court that Janet Bingham’s roles as GMU’s vice president for the Office of University Advancement and Alumni Relations and as president for the GMU Foundation were separate, stating that the presence of an official who works for both a public entity and a private third party “does not automatically subject documents held by that third party to VFOIA liability.”
Bingham retired from George Mason and the Foundation in January. Trishana Bowden assumed both positions as vice president for university advancement and alumni relations and president of the GMU Foundation on Mar. 4.
“For the foregoing reasons, we will affirm the judgment of the circuit court finding that the Foundation is not a public body subject to VFOIA,” Powell wrote. “Had the General Assembly intended the unreserved inclusion of non-profit foundations that exist for the primary purpose of supporting public institutions of higher education, as public bodies under VFOIA, it could have so provided, but it has not.”
The GMU Foundation said that the Supreme Court’s interpretation of Virginia law reflects the General Assembly’s intentions to allow higher education institutions to accept private financial support to take some of the cost burden off public taxpayers and student tuition rates.
“While we defended this case and the rights of our donors vigorously, the George Mason University Foundation has consistently supported academic integrity and increased transparency in accepting gifts,” Beirne said.
Despite the unfavorable ruling that left the group with no avenue for further appeal, Transparent GMU expressed gratitude to its attorney for his work and to the GMU Faculty Senate, the Mason chapter of the American Association of University Professors, and other community members, including the activist campaign UnKoch My Campus, for their support.
“While we are disappointed with the ruling of the Virginia Supreme Court, we are optimistic that we can still achieve transparency of donor agreements though [sic] the Virginia General Assembly,” Transparent GMU vice president Sara Deriso said in an emailed statement on behalf of the student group.
According to Deriso, a senior who is graduating from Mason’s Schar School of Policy and Government this month, Del. David Bulova (D-37th) plans to introduce a bill in the upcoming General Assembly session that will make information related to the amount, date, purpose, and terms of a private donation to a public institution of higher education or the identity of the donor accessible under the Virginia Freedom of Information Act.
Based on Virginia’s Legislative Information System, Bulova does not appear to have officially submitted a draft of the legislation yet with pre-filing for the 2020 session scheduled to end on Jan. 8, but the bill has been endorsed by the Virginia FOIA Advisory Council, Deriso says.
State Sen. Chap Petersen (D-34th) introduced a bill in 2017 to expand the definition of a public body under FOIA to include “any foundation that exists for the primary purpose of higher education” and is a tax-exempt nonprofit. The legislation was left in the Senate Committee on General Laws and Technology.
“All though there is still more work to be done, Transparent GMU will continue to shed light on undue influence of GMU donors,” Deriso said. “We will hold our administration accountable for ensuring academic freedom and shared governance are upheld at our university.”
Whether Bulova’s bill gains traction in the General Assembly remains to be seen, but student and faculty efforts to learn more about private donor practices at George Mason have forced some changes at the university.
In his circuit court opinion, Tran noted that his ruling did not exempt George Mason University from disclosing records related to private donations.
In particular, records on the university’s acceptance of any condition or restriction on the use of donated funds produced by its designated gift acceptance committee are public and subject to FOIA, Tran said.
Located in the office of university advancement and alumni relations, Mason’s gift acceptance committee is responsible for implementing the university’s gift acceptance policy and reviewing some non-standard gifts, gifts of real and personal property, and gift plans, as dictated by GMU policy 1123.
Independent of Transparent GMU’s lawsuit, then-GMU President Ángel Cabrera admitted in an email to faculty on Apr. 27, 2018 that some of the university’s past gift agreements with private donors did not meet standards of academic independence.
At that time, Cabrera made public several gift agreements with the Koch Foundation that showed the nonprofit funded faculty positions and appointed two members to a five-person committee charged with choosing a candidate for a created professorship at the Mercatus Center, a research center affiliated with Mason’s economics department.
Cabrera released the agreements, which were accepted by the university between 2003 and 2011, after former Mason student and Transparent GMU founder Samantha Parsons filed a FOIA request seeking documents related to the Mercatus Center, the Institute for Humane Studies, and other GMU affiliates.
Three days after his email to faculty, Cabrera ordered a full review of all active gift agreements.
A gift agreement internal review committee authorized by the GMU Board of Visitors released a report on Oct. 10, 2018 that determined there were no “egregious practices,” but some issues emerged that required further action and policy improvements.
As a result of the report, Mason’s Board of Visitors approved a revised gift acceptance policy in May designed to improve transparency and establish a more thorough vetting process for private donations to the university.
In addition to placing specific conditions on the types of acceptable donations, the new policy requires Mason to provide the GMU Foundation with a written record specifying its acceptance of any gift subject to conditions on how the funds are used. That document is then incorporated in the gift acceptance committee’s minutes, making it a public record subject to the Virginia Freedom of Information Act.
Under the revised policy, private donors may still give anonymous gifts with a requirement that the university agree to the condition of anonymity and the donor’s identity be revealed to GMU’s president, provost, and vice president for university advancement and alumni relations for gifts of $100,000 or more.
The policy also still affords donors privacy protections permitted by FOIA.
Parsons, who now works as the campaigns director for UnKoch My Campus, expressed support for the continuing student activism around transparency and academic independence at Mason.
Transparent GMU launched a campaign in October with UnKoch My Campus calling on Mason to disaffiliate from the Mercatus Center, Institute for Human Studies, Institute for Immigration Research, the Law and Economics Center, and other organizations that receive funding from the Koch Foundation.
“Removing a think-tank’s ability to brand itself alongside an academic institution can effectively remove the public impact of the initial tainted donation,” Parsons said. “Where the Virginia Supreme Court fails in protecting our communities, our students will step up.”