Auditor, UH foundation negotiating

By Beverly Creamer
Advertiser Education Writer

Working under threat of a subpoena, the University of Hawai'i Foundation is trying to negotiate an agreement that would satisfy the state auditor's request for additional records to complete an audit of the foundation's $2.3 million contract with the university.

"The confidentiality is not absolute," said State Auditor Marion Higa. Advertiser library photo

State Auditor Marion Higa said they are trying to work out the details of donor confidentiality that the foundation is demanding.

"We're just discussing how we could get the records and still protect the essential anonymity the foundation is concerned about," Higa said.

Sloane said the foundation — the private, nonprofit agency that raises money for the university — expects to provide the last approximately 20 percent of what the auditor wants by the end of this month.

"It was not an issue of not wanting to cooperate, but scheduling," Sloane said. "It became a series of delays that were really not intended by anyone."

But a tough Nov. 4 letter from the auditor accused the foundation of trying to prevent or limit access to information relating to the foundation's contract with the university and raised the specter of a subpoena, a power rarely used by the auditor's office, according to the agency attorney.

The power to force compliance has been invoked only a handful of times, with the legislative watchdog preferring to "work with" agencies instead.

The dispute arose after the 2002 Legislature called for an audit of six university special funds, including the Tuition and Fees Special Fund, which is used to pay 40 percent of the foundation's budget.

Though the auditor asked for foundation records relating to the UH contract, the foundation balked on the basis the request could jeopardize donor confidentiality.

As well, the foundation argued that it is a private, tax-exempt institution overseen not by the legislative auditor but by the attorney general's office, as are other charitable foundations.

"Some of the concerns have been about the fact the legislative auditor is performing a relatively extensive full-on review of a private corporation," Sloane said. "On the other hand, we do receive this fee from special funds and we do feel that we'd like to voluntarily provide information so the public can feel comfortable the funds are being well spent."

After that Nov. 4 letter, the two entities have had meetings to work out a compromise, and the foundation is now satisfied the auditor will protect the confidentiality of its donors.

"We've given them all of the assurances in our own statute, which requires us to maintain confidentiality of the agency from whom we get records," Higa said.

A court could potentially compel her office to divulge names, she said, but she expects that would also be true of foundation personnel.

"The confidentiality is not absolute," she said. "Sometimes agencies are concerned about that."

Bill King, chief financial officer for the foundation, said he has been reassured that the auditor "is not interested in donor names.

"It took those personal face-to-face meetings to work through that," King said.

Higa and Sloane said all that remains is to work out a method to remove names from the documents being handed over.

Higa said her office is not auditing the foundation per se, but only the contract it holds with the university, which finances three elements, including: administration of the alumni relations program, a recent addition to foundation duties; the addition of new "development officers" who are primarily fund-raisers; and the stewardship of donor money as well as fund-raising duties.

Reach Beverly Creamer at bcreamer@honoluluadvertiser.com or 525-8013.