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Brown Requires Improved Management of CSU Stanislaus Foundation

Friday, August 6, 2010
Contact: (415) 703-5837

SAN FRANCISCO – Concluding an investigation into fundraising practices at California State University at Stanislaus, Attorney General Edmund G. Brown Jr. announced today that the CSU Stanislaus Foundation has agreed to improve oversight of the money it raises and spends for the school.

“We examined whether money given to a charitable foundation was handled appropriately, but found no violation of law,” Brown said. “However, the foundation board has agreed to make changes to improve oversight of its funds.”

Brown’s Charitable Trusts Section found that the foundation exercised inadequate oversight of its $20 million in assets, but found no misuse of its funds and no violations of state law.

In April, at the request of state Senator Leland Yee of San Francisco, Brown agreed to investigate the foundation, including whether it was spending its money for the benefit of the campus as it promises its donors, the university and the public. Brown also investigated the refusal of CSU Stanislaus to turn over records of an appearance by Sarah Palin at a university fundraising event.

Subsequently, Californians Aware, a non-profit watchdog group, filed a civil lawsuit against both the university and the foundation to compel disclosure, and Brown suspended his investigation pending resolution of the lawsuit.

Brown’s audit showed that the foundation’s accounting procedures were inadequate, it failed to understand fully its duties and responsibilities under the law – including basic charitable trust concepts – and it failed to implement its own auditor’s recommendation to prepare a budget for all fundraising events. Recently, the foundation has been working with an independent auditor to rectify these lapses.

The foundation’s board of directors agreed to:

• Participate in directors’ training on management of charitable organizations and the fiduciary duties of charitable boards of directors.
• Consider immediately all recommendations made by its independent auditor.
• Ensure that its relationships with all outside fundraisers comply with California law.
• Ensure that it consistently follows all its fiscal and governance policies.

The Attorney General’s Charitable Trusts Section oversees charities to make sure they comply with the law and their articles of incorporation. The Attorney General is authorized to bring legal actions against charities if they misuse funds under their control or otherwise fail to follow the law.

The closing letter to CSU Stanislaus is attached.

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Closing Letter252.92 KB

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