Revised Answers
3/11/04, TTM, Final Format Clean-up
Required.
Questions and Answers
regarding the alumni agreement 12/1/03
Q: #1 Wewe’ve requested in
writing that the Alumni Association be granted an exemption from signing an
agreement with the College. Why was
this refused?
A: Two
reasons: The Chancellor has not granted
any exemptions. Each college in the
SUNY system has either signed or is working on an agreement. Also, I think it is good business practice
for the College, and the Alumni Association that bears its name, to have a
formal contract outlining the duties and expectations of each party. None of your companies do business with
another without a formal contract. We
are no different.
Response
from the Alumni Association:
We
are very confused
by the first part of the response "the Chancellor has not granted any
exemptions". The Alumni did not
ask for an exemption, it asked for "grandfathering" which is
mentioned in the SUNY
Guidelines (“…an Alumni Association may
currently be structured or engaged in activities that would be inconsistent with the
Guidelines. In such cases, this entity may maintain its current structure or
continue providing such services, following a case-by-case review by the campus
president and the Chancellor or designee. …variances…to...be included in the contract executed between the campus and the Alumni
Association.” Here-in-after referred
to as “grandfathering”). numerous times. If it was SUNY's intention not
to grandfather
grant variances
to the University-Wide Guidelines (as stated in Section II under Guidelines for Campus-Related Alumni Associations) to alumni associations, then providing for noting
it in
several places in the Guidelines was disingenuous.
The
Alumni Association was delivered the contract requirementSUNY Guidelines on May 16,
2003. On June 23, 2003 the Alumni
Association presented a letter to Admiral Ryan requesting that the Alumni
Association be granted “gGrandfather”
status as allowed in the Guidelines.,
informed the Admiral that if we were to consider accepting the then forthcoming
contract, as written, we would be required to present this to the membership
for a vote to accept, and that members of the Executive Committee iswere
available to meet to discuss the contract content.
In the same letter
Ted Mason wrote: “Members of our Executive Committee are available to meet with you to discuss this matter at
your earliest convenience.” On July 25, 2003, Admiral Ryan
responded with a letter to Alumni President Ted Mason acknowledging receipt of
our letter of June 20, 2003
and stating that SUNY indicated they willwould soon publish
a Sstandard
Ccontract
to serve as a model for all 64 campuses.
On August 6, 2003, Alumni President Ted Mason acknowledged receipt of
Admiral Ryan’s letter, again requesting that the Alumni Association be “gGrandfathered”.
On October 20, 2003 the Alumni
Association received the proposed Standard cContract from Kenneth Healy, Executive Director of
Development for SUNY
Maritime College
and then only after an exchange
of letters between Michael Luck, VP
Philanthropy and Alumni Affairs, The Research Foundation, SUNY and the Association
indicating we had never received the Contract from the College.. Upon receipt the Association informed
Ken Healy that if we were to consider accepting the Contract, as written, we
would be required to present the Contract and SUNY Guidelines to the membership for an acceptance vote given the
substantial changes called for. The Association also indicated that members of the
Executive Committee were available to discuss the documents. The next communication to thetime
the Alumni Association ever heard anything with respect
to the SUNY
Guidelines and Contract was on October 28, 2003 when Admiral Ryan
presented a “State of the College Presentation” to the Alumni Association Board
members, together with an ultimatum torequiring
the Alumni Association to comply with contract requirements”to just sign the SUNY contract”
with in 30 days or be turned over to the lawyers..
At all
times thate Alumni Association was
available to meet to discuss any possible alternatives to the proposed SUNY
requirements. The college never
accepted the invitations.
Subsequent to this ultimatum the Association
advised the College again that the officers and directors were not empowered
to sign the SUNY Contract without a formal vote by the membership and we
would proceed to seek such a vote. The College had been provided a copy of the
Association Constitution and By-Laws, and should have recognized our constraints.
Our research indicates the larger campuses are
taking considerable exception – Albany and Buffalo for example. Many campuses are just formulating their positions.
Some believe the guidelines do not apply to them. As
reported in SUNY’s own admission on March 2, 2004 no campus has yet signed a Guideline contract. No
other alumni association has been repeatedly threatened. No other association has been given deadlines. No
other association has been expelled from its associated campus, or notified they are no longer recognized,
denied use of their name nor had an alternative organization formed in their
place.
The AssociationWe agrees with Admiral Ryan’s the statement that
“None of your companies do business with another without a formal
contract. We are no different.”
However, Iin the business
world, contracts are always open to negations. Contracts that are offered with no
opportunity to negotiate are rejected.
Our association had no role in formulating the SUNY Guidelines or the Ccontract and was offered no opportunity to re-negotiate any of
the terms. In fact
we do not understand how converting a long-standing voluntary relationship into a control relationship
makes sense at its core.
Our research
indicates the larger campuses are taking considerable exception – Albany and
Buffalo for example. Many campuses are just formulating their positions. Some
believe the guidelines do not apply to them. By SUNY’s own admission no campus
has yet signed a Guideline contract. No other alumni association has been
repeatedly threatened. No other association has been given deadlines. No other
association has been expelled from campus, or notified they are no longer
recognized, denied use of their name nor had an alternative organization formed
in their place.
Contracts in business begin with
recognition of mutual interests and discussions about how to achieve those
interests, followed by signature of a preliminary non binding memorandum
of agreement, which is then further defined in a negotiated term sheet term sheet.
The term sheet is expanded
into a contract, which after going through many drafts becomes a final agreement, which the parties may or may not
choose to sign. The term sheet is then translated into a binding
contract after going through many drafts and revisions to ensure the duties and
benefits for both parties are properly defined and the underlying interests of
the parties are likely to be achieved. The Aassociation
was offered none of these essential contracting procedural
opportunities – only a demand for compliance.
Our alumni association has been doing
business with the campus without a contract for 101 years and we are
the most active and effective
alumni association in the entire SUNY system relative to size.
Finally, our research indicates the larger SUNY campuses are taking
considerable exception – the Albany and Buffalo University Centers, for example. Many campuses are just formulating their
positions. Some believe the Guidelines do not apply to them. As publicly reported by SUNY, on March 2, 2004, no campus has yet signed a SUNY Guideline Contract. No
other alumni association has been repeatedly threatened. No other association has been given
deadlines. No other association has been expelled from its associated campus,
or notified they are no longer recognized, denied use of their name or had an
alternative alumni
organization
formed in their place. It seems to us that the action taken speaks louder than words regarding SUNY’s intentions – make an example of Maritime.
Q: # 2 Why was the Agreement sent
to the Association without prior discussion?
A: I
was told by the leadership of the Association that they would like to meet to
discuss these matters. I instructed the
Director of Development to schedule a meeting as soon as possible. He was told by the president of the
Association that he was unable to meet for several weeks. After being rebuffed and with SUNY’s
deadline already past, I decided to proceed with sending the Agreement to the
Association and hope for the best.
Alumni
Response:
In January 2003, on the occasion of the Alumni
Association’s Annual Meeting during which we asked Admiral Ryan to give a ‘state of the college’ presentation, Ted
Mason, Association President, as requested by the board, specifically requested of Admiral Ryan a meeting to discus
cooperative fund raising in 2003 – the request was denied without
explanation.
At this time the SUNY Guidelines were not on the table or at issue. And, as a matter of
record, Kenneth Healy, the Director of Development, was not employed by the
College until after July 2003.
Later in the year, subsequent to issuance of the
SUNY Guidelines, but prior to issuance (at least to the
Association)
of the Standard Contract, a
A
request was made by Kenneth
Healy, Executive Director of
Development for SUNY Maritime College to meet with the Alumni Association
President Ted Mason and 1st Vice President Frank Gallo and
Foundation President Bob Johnston on September 19, 2003. The meeting proposed was
intended to discus coordination of Association and Foundation activities but had little to do with the
SUNY Guidelines and the adopting Contract, as the Association was not
provided a copy of the Contract until October 20.
The meeting did not take place as Frank Gallo ’64 had prior
business engagements not allowing
him to meet in the next week or two, Bob Johnston responded that he
was traveling and not
available for
several weeks thereafter. Ted Mason did not wantto meet a substantive meeting
without the next Association President, Frank Gallo’64’ present for a
few weeks and Frank Gallo ’64 also had
prior engagements not allowing him to meet for a few weeks.
The next communicationcorrespondence
from Admiral Ryan was on October 28, 2003 when he presented the SUNY uUltimatum, as prepared by SUNY’s General Council,m
to “sign the Ccontract
in 30 days, or be turned over to the
lawyers”.
Subsequent to this, in December 2003, Ted Mason,
then President, submitted a Co-operative Funding Proposal to the College
through both Bob Johnson, President of the Foundation and through The Vandervort Group, the
Association’s
lobbyist, to
both Admiral Ryan and to SUNY for consideration and discussion. The College refused.
Also, the very morning of the Annual Meeting, January 29th, 2004, the Vandervort
Group met with
SUNY in Albany to discuss this proposal and the overall SUNY Guideline/Contract
issue – SUNY, Vice Chancellor Brian
Stenson, made
a commitment to meet the following week. But after learning the Association
membership had voted 96% that night for continued
independence, the
Vice Chancellor and Legal Council, D. Andrew Edwards, Jr., sent, by FAX, the following day, a demand letter essentially carrying out all the
threats previously leveled against the Association. We loaded the trucks that
Saturday morning and left the campus. SUNY cancelled the meeting they had committed to – so much for their
commitments..
As a
matter of record, the Director of Development was not employed by the college
until after July 2003. Requests were
made by the Alumni Association prior to that date with no
response from the College.
Q: #3 By signing the Agreement, the Alumni
Association will no longer be independent.
A: I
disagree. This Agreement does nothing
to threaten the independence of the A.A.
It is an agreement that outlines our ongoing
relationship. The Agreement does not
take away the decision making power of the Board, doesn’t mandate how the Board
is comprised, doesn’t ask you to release or transfer your bank accounts to the
Foundation, the College or SUNY, it does NOT require you to give up your
status as an independent organization and does not require you to donate a
percentage of your income or a specific amount to the College each year. It does require the Alumni Association to
work in conjunction with the College as it carries out its activities, and it
requires the A.A. to recognize that the President and the Chancellor are the
officers who lead the College, and that includes providing leadership for all
campus-related organizations.
The
Agreement also says that the A.A. must register either as a tax- exempt
corporation and is bound by all of those legal requirements OR you must
conduct your activities under the auspices and financial oversight of the
College.
Response
from the Alumni:
The
core of the disagreement on this issue is not the incorporation of the Alumni Association and the
following all
of the related legal requirements. It
is how one defines "independence".
The Association is
currently classified under theThere is a major changedifference
between being tax exempt under IRS Code, aSsection 501(c )(3), as a “tax exempt” organization and further defined503(c)()(1)
underand aSsection
509 (a)()(1) of the IRSC as a having a “charitable
purpose”3). Which means we can conduct any reasonable activities that are charitable in
nature and are
consistent
with the Association’s Constitution & By-Laws. As a 503(c)()(3)/509(a)(1) 1) our
tax-exempt status is not effectedaffected if our interpretation of supporting
the College differs from an the College's
interpretation by
SUNY or the College.
The SUNY Guidelines and Contract require the Association to be classified a 501(c )(3) and
further defined as a 509 (a)(3) a “supporting organization”, the College and/or SUNY
being the named “supported
organization(s)”. Which means that the
Association’s activities remain charitable but they must be exclusively
dedicated to and substantially controlled by the “supported
organization(s)”.
There is a huge difference between the 509 (a)(1) and 509(a)(3)
status. . As an example, four years ago
the Alumni Association undertook
a very significant effort to convince SUNY that the disembowelment ofdismantling the Maritime College by getting rid of the ship, , makingthe license program, preparation a non core effort (would be taken by interested
students via the Continuing Education Department) and the Regiment
would not be acceptable. made optional after one or two
semesters as a "civilian" student) since our interpretation of
supporting the College, this effort was the most important form of
support. We can only guess, that Iif we had been a
509(a)(3), a “supporting
organization”, SUNY would not have considered it supporting the
College President or SUNY and they could have requested of the IRS to disallow
our tax-exempt status because we were not "supporting" the College.permitted usallowed us
to undertake that effort or to retain any of the assistance required –
lawyers, a lobby firm and a public relations firm. And, as you are undoubtedly aware, we still make use
of outside legal and lobby organizations.
.
The
Alumni Association's acceptance of the Agreement SUNY Guidelines and Contractcontract,
as written, would definitely make it extremelyvery
difficult to vigorously support the Alumni's vision of the College if, in the future,
SUNY or some future College President, attempteds to radically change the core programs of the College. without the treat of losing it
tax-exempt status. UIn such eventuality, under the terms of the Guidelines and Contractc,ontract should the Alumni Association disagree with SUNY or the College on
policy, SUNY could declare the Alumni Association in default (not supporting the
College)t, cancel the Contractderecognize, it, and potentially seize Association assets.its assets. Under the
proposed Ccontract, SUNY and the College President, rather than the
membership and the Board of Directors, explicitly define “supporting the College” as the term relates to the Alumni Association. The CMoreover, the contract only permits the Alumni Association to undertake or plan activities
approved by SUNY and the College, and it substantially explicitly limits those activities to fund raising for the
College.
Adopting Tthe SUNY
Guidelines, the associated SUNY Contract and the required change of the Aassociation’s
status from a 509 (a) (1) “charitable purpose” status to a 509 (a) (3)
“supporting organization” status under the IRS Code, imposes considerable
restrictions on Aassociation
flexibility, and
decision making and independence. . (Note
that the association is a tax exempt organization under Section 501 (c) (3) and
the 509 election simply further defines the electing organization’s purpose).
The following review of
By reviewing the Specific
terms appearing in the referenced documents should clarify any
doubts: it becomes
immediately apparent that considerable independence is lost if the documents were to
be adopted:
The SUNY Guidelines for Campus-Related Alumni Associations Requirees:
“…assist in and support the activities of
the campus as directed by the campus”
-we are now directed by our Bboard
of Ddirectors
“solicits and receives selected income
to meet the needs of the Alumni Association.”
-meaning the
cCollege enters into the decision of what income is
needed and retained by the
Aassociation.
“The Alumni Association shall have defined
powers and duties, which may include….”
-who will define, which means limit, our
powers which are now unrestricted?
“Developing programs… ….especially
in campus fund raising, as directed by the college.”
-we are now directed by our Bboard
of Ddirectors; currently we COOPERATE co-operate with the Ccollege’s Foundation in it’sits fund raising efforts in a
voluntary manner; this arrangement has worked satisfactory for decades.
“The use by the Alumni Association of the
campus name and marks for fund raising purposes is permitted pursuant
to the contract with the campus”
-meaning that without a contract we could not use the
name or shield of the college;
as a practical matter, the Alumni Association has its own logo, which no one
will confuse with that of the College or SUNY. As we are the Alumni Association of SUNY Maritime College, we
would want to use that name for all of our activities, in the same manner in which
that we have used for many decades (, and not just forrelated to fund raising) purposes, until and unless the Board and
membership decide otherwise...
“A campus Alumni Association…must…be a
non-profit corporation…State of NY, tax-exempt under 501 ( c ) (3)…and
classified as a “supporting organization” to the campus under 509 (a) (3)….”
-we have been anare now an
Association and have been since 1903, not a Ccorporation. - it
has advantages.
-we are a tax-exempt
association
under 501 ( c ) (3) and have been since 1970.
-we
are classified as a 509 (a) (1) “charitable purposes” organization, supporting meaning
we can support charitable
purposes as generally
determineddetermined by
our Constitution and
Bboard
of Ddirectors.
-if
classified as a 509 (a) (3) “supporting organization” we could only support the
Ccollege/SUNY and as
directed by them.
“A formal contract, terminalted …with 45 day
notice…by SUNY….must be executed between the campus and each alumni
association…authorizing it to operate on campus and enumerating its
activities, and providing for sharing of and access to alumni information”
-we have operated with greatextreme
success without a ny contract
with the SUNY Maritime
College and , or its predecessor institutions ffor 101 years.
-contract
terminal by SUNY – which could result in
loss of assets to the campussShould
SUNY (or the Alumni Association) terminate the Ccontract, then SUNY potentially gets to seize and keep the Alumni Association’s assets under the SUNY Guidelines
-we have
already been thrown off the campus
-we
developed, paid for and maintain the Association data
base at great cost
– it is our
intellectual property. bWut we do and have provided the College agreed upon access to it providing the college pays all
associated costs and is not seeking to undermine our own fund raising needs.
“prepare annual (audited) financial
statements by a CPA…within 90 days after close of fiscal year …to enable
SUNY to include pertinent information in its annual financial statements…”
-we prepare Form 990 and file it with the IRS
every year by May 15th , as the Code which is what the Code requires.
-we do use a
CPA (also a Professor of
Accounting) at an
annual cost of approximately $15,000.
-we do not ask
for “independently audited”
statements
whichstatements,
which could costs an additionalbetween
$15,000 toand $20,000.
“…books and records, financial condition,
operating results and program activities …would be subject to periodic
audit by the office of the University Auditor”
-audit of program activities suggests restriction
and/or control by SUNY
“All audit reports from whatever source,
including the certified financial statements and management letter of the
Alumni Association must be transmitted to the offices of the campus President
and the Vice Chancellor of Finance and Business and University Auditor for review
and acceptance.
-the Association’s 990 is filed with the
IRS each year and is public information
-SUNY
acceptance (or non-acceptance) suggests a level of control.
SUNY Contract Adopting the SUNY Guidelines Require:
2nd whereas – “Association has been established for the
primary purpose of promoting the best interests of the campus and the State
University ….”
-the Alumni Association Constitution & By-laws
provides it was established to “advance the professional interests of its alumni
and faculty
and
students”
and in that order. The College’s premise that fund raising should be
for the “best interests of the campus and the State University…” is
inconsistent with the alumni association’s stated purposes.
-the
College’s current exclusive dedication of all fund raising to first year scholarships is only
partially consistent with Association purposes and,
if other than for Cadets in the Regiment with defined
minimum scholastic achievement requirements,
fully inconsistent with alumni purposes.
3rd whereas – “…the campus and alumni association will share
databases… The campus also agrees to
maintain and periodically upgrade the database”
-it is the
Alumni Association, not the College, who developed, owns and continuously
upgrades the alumni database at great expense of time and effort so the college
is not in the position to offer this asset as their consideration in any
contract.
-the Alumni
Association generally allows the college to use its database on a project-by-project basis, but not
unrestricted access or use. Unauthorized reproduction of the data base,
unauthorized mailings, or general fund raising mailings on behalf of the
College, rather than the Association, are not permitted. The Association seeks
to protect member confidentiality as well as “poaching” by the college or
Foundation upon the alumni membership that is its own principal source of
funding.
-the College
Foundation’s principal source of funding should be corporations, government
bodies, others foundations, wealthy individuals and only those select high net
worth alumni who agree and/or prefer to be solicited by the Foundation in
support of major capital campaigns.
Paragraph 1. Calls for the alumni association to conduct its
activities in accordance with the policies of the campus “decided by
President and SUNY” and fully adopts SUNY Guidelines.
-these conditions are substantially unacceptable.
Paragraph 2. Calls for alumni association to “conduct all of
its activities exclusively for the benefit of the campus”
-the Association now
conducts its activities as decided by its board of directors for its alumni,
faculty and students in accordance with its Constitution and By-laws.
Paragraph 3. Calls for providing a portion of the funds
necessary for conduct of alumni relations for the benefit of the campus,
participating in revenue generating programs “approved by the campus”. Also
calls for the association to present a schedule of activities, goals and “joint
development” of an annual budget.
-the Association is willing to cooperate in planning
such functions and activities but it is not willing to be directed or subordinated to approvals by the campus.
Paragraph 6. Provides for SUNY to grant the Association use of
a database.
-the database is already developed,
owned and maintained by the Association and is hence inconsistent with the
facts on the ground.
Paragraph 9. Alumni shall make available to the campus “any
records” regarding alumni on request.
-such a policy violates
privacy laws of individuals and would be contrary in many cases, to the Association’s own self interest as an
organization.
Paragraph 13. Association shall “indemnify, defend and ….hold
SUNY harmless from and against any and all claims….as a result of neglect or
omission of the association….”
-this provision is one
sided as SUNY has not indemnified the Association and the standard
of care should be gross neglect.
Contract Adopting SUNY Guidelines Analysis – See
Attached Document
Q: # 4 By signing this Agreement we would not be in
a position to lobby for the College should SUNY decide to disband the Regiment
or turn it into “SUNY Bronx”.
A: There
are two safeguards in place in the unlikely chance that this should happen
sometime in the future. The first is
simple; the Agreement states that the College or the Alumni Association can
terminate the Agreement for any reason
with 45 days notice.
The second safeguard exists in the fact that as a
private organization with an independent board, the Association is free to
voice an opinion or support any issue that the Board comes to a consensus
upon.
My own opinion is that there
is virtually no chance that the mission of the College will be
compromised. Several years ago changes
were considered. The College was
millions of dollars in debt, enrollment was at an all time low and the physical
plant was in severe disrepair. Dramatic
changes were discussed but none of the more drastic ones such as disbanding the
Regiment or sharing the ship were seriously considered. I can tell you today that the Chancellor is
committed to the College. We have
received several million dollars to address long-standing physical plant issues. Our enrollment has doubled. We’ve fast-tracked the construction of a new
dormitory and we’re about to get a new diesel-powered ship. This College has never received more support
or been in better shape. SUNY isn’t in
the business of shutting down successful colleges. Again, in a worst caseworst-case scenario, the Association is free
to void the Agreement at any time.
Alumni
Response:
To say “none
of the more drastic ones (changes to mission) …..were seriously considered” is not even close to the mark – we were told directly by SUNY Vice Chancellors, by the Chairman of the
College Council, by RADM Brown, etc. – that the ship, license and regiment
were on the table and the choices were to change the program, shutdown the
campus or become a division of Stony Brook. Those very statements launched the SOS
campaign! We were there and Admiral Ryan would not be there today but for
our success!
There is no
doubt the campus is superior in almost every way to 1999 and this is a credit
to both SUNY and Admiral Ryan. In 1999 SUNY told us that they saw the problem as:
1) no interest in
the merchant marine, military or the regiment and,
2) the
traditional academic programs were “too hard”.
The widely distributed Alumni SOS Position
Paper
stated what was really wrong:
1) grossly inadequate investment in facilities for
years,
2) the absence of an aggressive recruiting program and
3) very poor overall leadership.
SUNY has fixed
all three of these problems and now the campus is
vastly improved. And for those of you who do not know, the Alumni invested more
than $100,000 in the design and subsequent implementation of the college’s
recruiting program in addition to almost $200,000 in scholarships from
the SOS Campaign funding.
The alumni
financial statements as reflected in IRS Form 990 are prepared and filed with
the IRS every year and are an open public record. The Form 990 is filed by all 501( c) (3) organizations on or
before May 15th for calendar year reporting organizations. The Association’s
financial statements have always been prepared by a CPA. The current CPA, since
mid 2002, is Jack Armstrong who is also a Professor of Accounting. Is is absolutely the case that a Certified
Statement costs between $15,000 and $20,000. The alumni have not requested an
audit nor have they ever carried Director and Officer liability insurance – all
for the same reason – excessive cost.
The Alumni's concern is not that Admiral Ryan or
Chancellor King do not currently support the College or it's mission, notwithstanding the
presence of non-Regimental, non-license programs now on campus. They have shown that they do by their
actions. Our What concerns us
is the future. The Alumni do not want
to give up their right to vigorously support the College in the
futurelobby
for maintenance of core programs without the threat of contract termination and
potential loss of assets losing its or charitable tax-exempt status. Once we change our status to a 509(ac)(3),
even
if we agree to
terminate the agreement, any accusation of not
supporting the College such as might result from taking we
still could be accused of not supporting the College if we took a
position not to the liking of the President or SUNY administrators and
lose our tax-exempt status.could result in contract termination leading to
potential loss
of both tax exempt status and
Association assets.
Even if we terminate the Contract,
Furthermore, if we terminate the agreement
the consequences
could be the same.
If these events led to dissolution
of the Association, all of its assets would Alumni
Association absolutely funds revert
to the campus under
the proposed Contract..
The following is stated from the SUNY
Guideline state:
“Provisions in the articles
of incorporation or other organizing documents of the Alumni Association must
provide that the net assets orf the organization shall be distributed to
the campus or other campus-approved entity organized for similar purposes in
the event that it is dissolved.
Dissolutions and dispositions are subject to all applicable laws,
regulations, and restrictions and unless otherwise stated, the net assets
revert to the campus or campus approved organizations.”
Q: # 5 In changing our status to a 501 ( c ) (3)
corporation, we would be subject to all of the corporate laws, including being
required to have an annual audit.
Audits are expensive and we would be spending money otherwise used for
scholarships.
A: It
is my understanding that the A.A. now has several million dollars in
assets. It is a very good business
practice to protect those assets with an annual audit.
Also, I have offered to make
the Alumni Director and some staff, employees of the College at a significant
saving to the A.A. Thus far, that offer
has been declined and thousands of dollars that could go to scholarships are
instead being used for operations.
Again, this is not an issue of control; it is an issue putting resources
to their best use. I think you will
agree that our most important goal is to maximize our private dollars.
Alumni
Response:
Unfortunately the quoted statement in the above
question was improperly expressed. The Alumni Association has for decades had its
financial records reviewed by an independent accountant on quarterly and annual
bases. As the level of assets has grown, the scope
of the accountant reviews has expanded.
As a tax-exempt entity, the AA is required to submit an annual 990 tax
statement to the IRS. It has submitted
these, accountant produced, statements for decades. As a point of information, the AA annual account fees are already approximately $15,000.
The alumni financial statements as
reflected in IRS Form 990 are prepared and filed with the IRS every year and
are an open public record. The Form 990
is filed by all 501 ( c) (3) organizations on or before May 15th for
calendar year reporting organizations. The Association’s financial statements
have always been prepared by a CPA. The current CPA, since mid 2002, is Jack
Armstrong who is also a Professor of Accounting. A separate
Certified Statement could cost an additionals between
$15,000 to and $20,000.
The Association has alumni have not requested an audit nor have they carried Director and
Officer liability insurance – all for the
same reason – excessive cost.
Unfortunately
the quoted statement in the above question was improperly expressed. The Alumni Association has for decades had
its financial records reviewed by an independent accountant on quarterly and
annual bases. As the level of assets
has grown, the scope of the accountant reviews has expanded. As a tax-exempt entity, the AA is required
to submit an annual 990 tax statement to the IRS. It has submitted these, accountant produced, statements for
decades. As a point of information, the
AA annual account fees are approximately $15,000.
WAgain,
we are puzzled about the statement relating to the cost of
operating the Alumni Association. The
Alumni Association has
not only been serving the needs of the alumni for 100 years, but has also
provided free services
to the College for at least half that period.
The implication of the second paragraph is that these same services
could be rendered with out cost.
We question the logic of the implication. To continue to serve the needs of the alumni and to render the
same level of service to the College requires human resources. If the Alumni Association does not pay for
those services from the collected annual dues, the College will have to pay for
them from the College budget. We
believe that the level of service given to the alumni (operating the office,
responding to the
dozens of phone calls and e-mails per day, maintaining data base, assisting
Chapters, working with Classes relative to reunions, organizing the annual golf
outing, running fund raisers, networking, publishing the Fort Schuyler Mariner, etc.) is efficiently
delivered and seriously doubt that the College will be able give the same level
of service for the for less money. We would encourage the College, to use the
funds they have earmarked for running the Alumni Association for hiring more
appropriate faculty and staff to service the Cadets.
SUNY and the College
believe the college would be better served if the association’s staff was on
the SUNY payroll and all staff dollars could then go to scholarships. We have
two concerns with this:
First, “he who pays the piper
calls the tune” – What control will the Alumni
Association have over the Director and staff if their salaries are paid for by the college.
Secondly, this model does
not work - SUNY’s Purchase Campus has this model – the alumni have $1800 in the
bank, a department head is the alumni association president, they conduct no
activities or events, they raise no money, they have no dues and are in effect
a shell. SUNY Troy has a one-person alumni affairs office that puts out a newsletter
and not much else.
The really odd idea is
the notion that because SUNY would pay staff salaries the costs don’t count –
many of us are NY taxpayers and we feel shifting costs from a willing
independent alumni association to the taxpayer does not sound like responsible
economics.
TIt is
true that the Alumni Association has accumulateda significantt
amount of assets. With the
exception of operating funds primarily derived from dues, nearly all of titshe
funds are in dedicated endowed accounts.
The establishment of endowed accounts started in earnest the early 1970's
with the establishment of the College Fund.
In the early '90's under the leadership of Tom Keenan '71, a major effort was undertaken to
raise the level of the endowments mainly through the proceeds of the golf
outing. The Cadet supporting endowment
funds have grown from approximately $235,000 at the end of 1991 to substantially moreapproximately
$3,793,000 byat the end
of 2003. TIt needs to be stated
that this growth in endowed Cadet supporting funds is in addition
to the scholarship money and other forms of annual support that the Alumni has givengave
the College during the 13 years noted.
Q: # 6 The Alumni Association has been giving
scholarships for many years. Under this
Agreement we would no longer be able to raise money for this purpose.
A: This
isn’t the case at all. There is no
higher fundraising priority to me than raising scholarship funds. The more scholarships we raise for cadets,
the more security the Regiment has. I
think we have to do it in a more strategic and productive manner. Going forward, I would ask the A.A. to build
on its Golf Tournament and the other social activities that it sponsors to
promote the scholarships it gives. I
would like to make these activities even more profitable.
I do foresee some changes in
the way we do business. SUNY has been
very generous to the College in the recent past. They have allocated millions of dollars to us for programs,
scholarships and facilities. Now it is
time for the College to do our share. As President I have been charged with
raising $10 million in new money over the next seven years. We won’t be successful if we try to do this
the way it has been done in the past.
The Foundation will serve as the primary fundraiser and all direct
solicitations to alumni, friends and corporations will go through the
Development Office for the Foundation.
We plan to start a high-end Annual Fund program, a major Gift program
and a Planned-giving program during the course of the next year. All these will be targeted to different
segments of our alumni. Of course, we
want your help.
Alumni
Response:
We
welcome a College Development Officer to coordinate College fund raising. We would suggest that the Development
Officer focus on fund raising strategy and planning and undertake working with corporations
and philanthropic foundations for funds and not “poach” on Association membership except
for those limited number of high net-worth people who specifically agree..
Let the Alumni Association use its existing
organization to work with theindividual
alumni membership to
help reach the stated goals.
The
Alumni Association has no objection to working with the college to raise $10
million. The only request that the
Alumni Association would have is for the Alumni Association to be an active partner in and part of the
committee that would decide how the funds should be dispersed.
Q: # 7 The A.A. has given thousands
of dollars to the College for scholarships over the years. We’ve also supported many other
programs. Why should the Association
take a back seat to the Foundation for fundraising?
A: Last
year the A.A. gave the College almost $80,000 for scholarships. This is only a relatively small percentage
of the money the Association raised.
Apparently the balance was spent on the operations of the
Association. I see the Foundation,
which has virtually no expenses, as the best way of providing support directly to the College and our students. Our goal for next year is to raise $1.4
million. We can not
meet this goal if we are competing with the Alumni Association for donations.
The Alumni Association has
been generous in terms of time and talent in the past. We are in a new era now. With dwindling state support and an ever
expanding “needs list”, we have to step up our fundraising efforts to new
levels. We need to raise $10 million
between now and 2010. This has never
been done at the Maritime College. We
need to professionalize our efforts and focus our activity. Most importantly, we need an Alumni
Association that is 100 percent on-board with us.
Alumni
Response:
The
Alumni's policy for supporting the College has historically been a two-prong effort,effort; raise money
for immediate scholarship distribution (Annual Appeals) and endowment building
(Scholarship Fund and College Fund Appeals on the dues notices, Class and
individual named scholarships, and the Annual Golf Classic). Prior to the last year’s $2.7 million
bequestt
(money actually received late in the year) the total Alumni
endowment, was a little above $1 million.
The
two-prong approach was taken as a means of helping Cadets now and
simultaneously building a "nest egg" for the future.
The
policy of thee
Alumni Association is to provide scholarships based on the
interest earned on the investments of the funds raised by the Alumni
Association. For the past 2 years, the
endowment yield has not produced asthe
high return on investments that we had hoped for, but it has not suffered the serious losses
suffered by many others.. In order to meet the request of
the Ccollege
for first year scholarships, the Alumni Association contributed had to utilized
“capital” funds ($35,000) to this purpose alone insupport
scholarships during 2003. Total contributions made in 2003 approximated
$115,00, of which Admirals Scholarships exceeded $40,000.
Most of the AssociationAlumni
assets are in endowments and it is principally the earnings on these assets
that fund college
programsscholarships
from year to year. Theses assets are built by your contributions and legacies
and the yield
on assets
assets
that varies from
year to year. And, only infrequently, are current year
contributions expended to fund current year scholarships directly.
The alumni Alumni did not
pose any of the Admiral’s questions – The
questions were posed by Admiral Ryan and then answered. In this case, we feel the wording of the
question is not correct. The question is not whether or not could
we could raise money and fund scholarships – it is how could we do that in our
own name, subject
to whatever constraints the donors, membership or Board of Directors might impose if, if the Ccollege
controls and makes concurrent use of our database for the same purpose.
The Ccollege has
asked for the alumni dataa base for
purposes of conducting its own fund raising program through the Foundation.
The alumni
Alumni have
not given up their database,e that has been
built and maintained over the years at great cost, for this purposet. We have given the data
base to the College’s printer in the past under a confidentiality agreement and
we have made mailings on behalf of the College to support particular events at
their request, e.g.; The Cadet Scholarship Dinner sponsored by the College, on
campus, last May; the Sailing Regatta last Fall.
Also, weW dide have
offered Admiral Ryan, but he declined, “uUse of” the dData base to the
college for mailings
directly related toregarding
the Independence Issue and vote on the following principal terms:
1) -pay the
postage and handling for the mailing
2) -use the
Alumni mail house to do the mailing (this was to ensure the information from
the database was is
not compromised)
3)-allow
the alumni to insert,
with hisAdmiral Ryan’s message,e
our response (if required).
There are a
number of various reasons for retaining control of not
turning over our data base: –
1) one is that it is Associationalumni
property;,
2)secondly the
database is Cconfidential
to its members;,
3)thirdly the
data base is the life blood of the
association – meaning if itsthe flow of funds from alumnithe membership were diverted, d
ityour Association would not
be able to function;,
and,
4)fourthly,
the Foundation should be seeking major contributions and grants from
corporations, government bodies, foundations, and only those select high net worth alumni who agreeAGREE to be
solicited directly by
the Foundation.
It is fully apparent to the Association that
success in raising a Capital Fund cannot be achieved by assaulting the Alumni
Association and reaching an a working arrangement can only be achieved through
discussion and negotiation – not ultimatums.
Q: # 8 What are the consequences of not signing this Agreement?
A: While
I hope this will not be the case, should the Alumni Association choose not to
sign the Agreement with the College, it will in effect, be choosing to end its
100 year-old agreement with the Maritime College. By choosing to end its relationship with the College, I am
constrained to take the following steps:
·
The
Association will no longer be recognized as the Organization that represents
the College’s graduates. It will lose
any legitimacy in Albany, and be unable to effectively advocate for the College
in the future.
·
The
Alumni Association will be forced to vacate its rent-free offices on the
College grounds.
·
Funds
that would have gone to student scholarships and programs will now be used for
increased overhead.
·
The
Association will not be authorized to use the College name in any of its
activities or claim that its fundraising activities are for the benefit of the
College.
·
The
Association will get no further lists of graduates from the College.
·
The
Association will not be able to host Homecoming or any other events on Campus.
·
The
College will seek out graduates who want to support the College and ask them to
form a new, incorporated Alumni Association.
We will challenge the
501 c 3 status of the current organization with the goal of
having it revoked.
Alumni
Response:
The
most important consequence of the outlinedSUNY’s approach is that most of the very
people that the College and SUNY want to approach for support will be alienated
and will find
other charities tonot donate either their money or theirand timeto.
Tragically, this has already taken place; SUNY’s heavy handedheavy-handed approach to donors at the
Maritime College has turned off a number of high net worth Alumni donors, who
have donated large sums of money to the College (through the Foundation and not
the Alumni Association)
in the past.
Unfortunately, to many of us, thise attempted imposition of the SUNY
Guidelines and
the related Contract
contract without negotiations, has
been a totally n
unnecessary, very costly and an exceedingly unpleasant
experiencexperience. Thise that
is leaving a very bad taste. A
situationn that
could have been avoided, but, and the damage done can
still be mitigated, by simply “grandfathering”g the Alumni
Association or
exempting it entirely from the SUNY Guidelines under a mutually
acceptable
Memorandum of Understanding to be negotiated.
To our knowledge, which is accurate through early
March 2004, no other SUNY campus has signed a SUNY Guidelines Contract and no other
campus has been
repeatedly threatened as we have. The whole approach of
substituting dictated control is totally inconsistent with the commonly understood principles of charitable
giving:
·
voluntary giving for programs you support;
·
based upon co-operation and understanding of the needs;
·
with full donor confidence their intent will be carried out; and
·
donor’s trust of the program administrator..
Q: # 9 Besides the fact that SUNY has
mandated that the Association sign this Agreement, what is the benefit to us?
A: I
hope that building a stronger College is the benefit to the Association. The commitment of the Alumni Association to
the College would help us to reach our ambitious goals. I’ve heard over the past few weeks that the
Association “saved” the College from SUNY.
That battle has been won. Our
new challenge is to raise the funds we need to support a world classworld-class
educational institution. Maritime
College can only do this if it has an Alumni Association that is totally
committed to our goals.
Alumni
Response:
The
Alumni has
asked to askAssociation
does not understand why SUNY and the College would initiate this
rancorous situation. It could have been
prevented simply by “grandfathering” the Alumni
Association. It was so easy to avoid,
and now it is so easy to correct by, the main issue causing
the conflict, simply follow the published guidelines and grandfather granting a variance to the Alumni
Association under
the SUNY Guidelines and working out an acceptable contract.
The Alumni Association has existed and functioned very successfully
serving the alumni, cadets, and college without anytheis
contractproposed contract for the past 101 years. Working Together with the Foundation, through the Joint Fund, on the
Joint Fund, the
Alumni Association worked very hard to raise money for
scholarship moneys, each organization with a $100,000
commitment. Our
yearly commitment was about $100,000. It was withinfrom
the Joint Fund
frameworkis that that the Admiral's Ball developed so that the
foundation
Foundation could fund
provide their matching $100,000 annual commitment. to the pool. This
funding was
the genesis of the Admiral's Scholarhsip program, aid to admissions, campus
quality of life grants, and department grants, funds for the
Chaplain and help for other requirements not provided for in the SUNY
budget. The Joint Fund arrangement worked well for nearly
10 years through 1998.
Then the Alumni Association attention was
refocused on the SOS
Program to ensure the mission of SUNY Maritime College did not
change.
With the appointment of Vice Admiral Ryan
as Ppresident
of the Ccollege,
we anticipated returning our focus to raising scholarships and providing
whatever reasonable assistance to
the college might
require in launching a major Capital Campaign – considered under the prior administration, but never launched that
was requested. We understand that a
world-class institution requires much in the way of financial resources. The Ivy League schools
have been at
it a long time – successfully – but they treat their Alumni rather differently.
Simply grandfathering the Alumni Association will
refocus the Alumni community to help the College meet its ambitious goal. RememberU, united
we stand, divided we fall. “Grandfathering” the
Alumni Association needs to be the first step in this uniting
process.
A relationship based upon trust, which accepts an
independent and cooperative Alumni Association, can yield great benefits.
A relationship based upon dictated terms, threats and the establishment of
competing organizations will not yield significant benefits to anyone.
SUNY and the college
believe the college would be better served if the association’s staff was on
the SUNY payroll and all staff dollars could then go to scholarships. We have
two concerns with this. First, he who
pays the piper calls the tune – What control will the Alumni Association have
over the Director if their salary is paid for by the college. Secondly, this model does
not work. SUNY’s
Purchase campus has this model – the alumni have $1800 in the bank, a
department head is the alumni association president, they conduct no activities
or events, they raise no money, they have no dues and are in effect a shell.
SUNY Troy isTroy has a one
person alumni affairs office that puts out a newsletter and not much else. The
really odd idea is the notion that because SUNY would pay staff salaries the
costs don’t count – many of us are NY taxpayers and we feel shifting costs from
a willing independent alumni association to the
taxpayer is not
a good solution.
