As a Stony Brook Foundation (SBF) board member and Stony Brook alumnus, I was outraged to read the recent audit report by the Office of the State Comptroller (OSC), which targeted the State University of New York’s (SUNY) oversight of campus-related foundations. Unfortunately, the report’s unbalanced and misleading content has the real possibility of doing great damage to the SBF, in addition to other foundations, whose sole purpose is to support the mission of their respective campuses with donor funds.
The OSC completely and purposefully ignored the responses and comments provided by the SBF, ostensibly because it had to justify the resources and taxpayer funds used during the 15 months it spent conducting this futile exercise. The report also failed to mention a crucial point: as an independent 501(c)(3) nonprofit, the SBF is regulated by the Charities Bureau of the New York State Attorney General’s Office and the Internal Revenue Service, not the OSC. Moreover, every year the SBF is subject to an independent financial audit, conducted by a professional firm — in this case Grant Thornton — and files a comprehensive IRS Form 990. Indeed, these audits have been completed without findings. What’s more, the SBF is governed by 23 independent trustees on its board — highly qualified and capable individuals who work tirelessly for no compensation. It is also critical to note that none of the SBF’s funds include any state money, but instead are all privately raised.
While I will refrain from dealing in a point-by-point rebuttal of the document, a few simple examples clearly demonstrate the overreach and unbalance of the OSC audit. For example, the audit finds that four of the contracts let by SBF, totaling $357,000 for the four-year period of the audit, were not competitively procured, but rather “were based on referrals or longstanding business relationships.” The audit neglects to mention that nothing in the law requires the SBF to do so, although competitive procurement is used when warranted. Those that are not have a basis for doing so and are carefully scrutinized for the scope and dollar amount of the services procured. In this case, two of the four contracts mentioned were for the consultant who assists the SBF in arranging its annual fundraising gala where more than $50 million has been raised for scholarships and other academic programs. Further, the dollar value of the consultant contract has not increased for the past six years.
Instead of pointing out potential legal or regulatory issues, the OSC’s office simply substitutes its judgment for that of the board and staff of the SBF. For example, the audit cites $5,154 for two retirement parties funded with private funds. These retirement parties were for two long-standing and well-respected members of the Stony Brook faculty and staff and the money spent had the complete support of the SBF board.
In addition, the audit describes the SBF’s activities to supplement faculty and staff salaries and other benefits, including housing allowances, with privately raised monies. One of the reasons Stony Brook University occupies its position as one of the preeminent research universities in the country is that it is able to attract the best and brightest to Stony Brook University. Additional private funding that the SBF provides the university makes these critical recruitments possible, and these funds are thoroughly documented and disclosed. In addition, they are reviewed by SUNY administration and signed off on by the chancellor. I am at a loss to understand the problem the OSC has with these private funds being made available to hire top candidates for positions at Stony Brook University.
SBF Board members commit much time and treasure toward making Stony Brook the great university that it is and are exceedingly proud of the work done by the foundation’s executive leadership and administrative staff. The SBF is now in the process of completing a $600 million capital campaign with all funds raised from private sources. These funds are used for scholarship aid, endowed chairs and professorships, academic programs, new buildings and other critical university initiatives. Under the leadership of our board chair, Richard Gelfond, and people like board member Jim Simons, the SBF has played an integral role in the success of Stony Brook University. Agenda-driven “audits” such as this undercut the positive and constructive work done by the SBF, with real potential to negatively impact the university’s ability to provide students from all backgrounds the top flight education and future that they deserve, and that a Stony Brook education provides.
Richard T. Nasti, Esq. serves as a member of the Stony Brook Foundation Board of Trustees and graduated Stony Brook with the class of 1978.