Keeping Tabs

It must have been difficult to watch $1.2 million simply vanish. But David Schmidtz did just that in the spring of 2009, when a benefactor to his UA Freedom Center balked at a professor being hired with the donor's money—and subsequently yanked the cash.

Schmidtz is a longtime member of the UA Philosophy Department, and the Freedom Center's director. The unhappy donor—Schmidtz describes him only as a bishop with the Mormon church—raised a ruckus upon learning that the faculty position he funded was going to an avowed atheist.

When the bishop threatened to walk, Schmidtz called his bluff. Suddenly, all that money—laying the foundation for the center's sixth faculty member—had vanished.

It appears that before the hiring process reached its conclusion, the bishop might have enjoyed a bit of encouragement for his meddling, and that encouragement came from then-UA President Robert Shelton. The donor "worked out a deal with President Shelton, the details of which I don't care to talk about," says Schmidtz.

Later, a search committee narrowed its choices for the position, which is within the Philosophy Department. "And the donor said he was not going to support the candidate that we were going to hire with his money, and that we had to come up with a different candidate," Schmidtz recalls.

"I told the donor, 'You realize that you're not cutting out the candidate; you're cutting out yourself. You will no longer be involved with us if you're going to try to exercise a veto.'

"The donor said, 'Fine,' Schmidtz says. "I guess he called my bluff. But it wasn't a bluff, and we haven't spoken since. Whatever deal this guy had worked out, whether it gave him a veto or not, that would be for President Shelton to say."

The donor "thought he had an understanding," Schmidtz says. "... I told him that was not the case."

Either way, the former UA president—who resigned in June—isn't talking. In August, Shelton took over as executive director of the Fiesta Bowl. Numerous calls to his Fiesta Bowl office in Scottsdale were not returned.

Regardless of who sits in the president's seat, the incident highlights the risk of outside influence, as the UA and other cash-strapped schools increasingly rely on fundraising to balance their ledgers. Competition for those private funds is only growing; the Council for Aid to Education reports that colleges and universities received only $28 billion in donations over fiscal year 2010—a drop to 2006 levels. Adjust for inflation, and that number actually falls 8 percent below what it was five years ago.

At the UA, that translated to donations of just more than $148 million in fiscal year 2009-2010. That philanthropic infusion is vital, say officials, at an institution that's seen its state funding slashed by more than $100 million in the past three years.

This situation certainly raises the stakes—and may embolden donors to broaden their influence. The potential for abuse was illustrated recently at Florida State University, where Charles Koch, of the Koch brothers energy fortune, sparked an uproar by demanding—and receiving—the power to screen faculty hires for a new economics program he bankrolled.

Nor are Koch brothers strangers to the UA. The Charles G. Koch Charitable Foundation, known for funding ultra-conservative causes, has donated at least $1 million to the libertarian-leaning Freedom Center. (See "Freedom's Ring," Currents, Aug. 11.) According to Schmidtz, there has been no quid pro quo with the Kochs, such as demands over the center's curricula or faculty hires.

Reflecting upon the tempest with the Koch brothers, Florida State University System Chancellor Frank Brogan told a business group in June that university-donor agreements must be "pure as the driven snow."

Yet situations such as that involving Schmidtz and the would-be Mormon benefactor suggest that the UA's agreements are hardly so pristine.

A perusal of the school's gift-endowment agreement form, as well as its general guidelines and policies, did not reveal ironclad protocols governing contact between donors, university officials and faculty members such as Schmidtz. Attempts to obtain more information about any such rules from the UA Office of the Provost were unsuccessful at press time.

In an earlier email, however, Provost Jacqueline Lee Mok assured the Weekly that outside meddling in faculty decisions was not tolerated. "Although a donor might designate his or her gift to support a particular program or area of study," Mok wrote, "we would not permit a donor to make a hiring decision for the institution."

Still, given the confidential nature of such arrangements, it's often impossible to even determine who these donors are. Gifts to the school are funneled through the University of Arizona Foundation, a private, nonprofit corporation which receives a percentage of the donations for its work, and is apparently not subject to public-records laws.

According to spokeswoman Stephanie Balzer, the foundation doesn't provide information about donors—including the mysterious Mormon bishop who tried to strong-arm David Schmidtz. But she says her organization does adhere to industry standards, as well as rules set forth by the Internal Revenue Service and the university itself. "Those are the rules of transparency that we follow. We follow the laws and the tax code. We are doing what's asked of us, and we comply with the law in that regard."

Balzer says any decision to publicize a gift—such as funds to erect a new building or endow a faculty position—lies solely with the donor. Some might choose go public, making their gift an example to others.

Other donors prefer flying below the radar. "Some are very humble," Balzer says. "Some are very private." Others are concerned "that the more public they are about their philanthropy, the more requests they're going to get, because there's such a tremendous need."

Then there are those who might wish to have a hidden hand, such as the anonymous Mormon bishop who tried to torpedo the new Freedom Center hiring.

Although David Schmidtz had the integrity to stand firm, others might not.