The Vice President for Business and Finance at a State College (the College) has requested advice as to whether he may serve on the Board of Directors of the Foundation of a State University (the University Foundation). Considering the nature of the Requestor's duties at the College and his anticipated role on the University Foundation Board, we advise him that his service as proposed would not be inconsistent with the provisions of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law).
In his capacity as his College's Vice President for Business and Finance, the Requestor serves generally as the financial advisor to the President of the College and the various departments of the College. He is responsible for preparation of the College's budget and for administration of its contracts. He also has general administrative functions, including responsibility for the Controller's Office, Internal Operations and Review, Business Services, Facilities and Public Safety, and Personnel.
The Requestor indicates that his duties do not specifically involve fundraising on behalf of his College employer. These functions are specifically within the job description of the Vice President for Development. There is a fundraising foundation affiliated with the College (the College Foundation), which is similar to the University Foundation on which he proposes to serve in his private capacity. The Requestor serves as an ex officio non-voting member of the College Foundation Board, where he apparently is primarily involved in providing general business advice. He advises that he does not participate in establishing the Foundation's policy or in its fundraising goals or activities, though as the chief financial officer he would advise the President as the financial needs of the College. This could involve recommendations on the need for external funding in a particular area, which could be recommended to the College Foundation as a funding priority.
The College's President and the Requestor both indicate that he does not have direct audit responsibilities regarding the College's Foundation, or participate in its day-to-day operations, or get directly involved in fundraising activities of the College Foundation. The Requestor advises that the gifts of the Foundation to the College do not as a general matter become a part of the College's operating budget, which be subject to his accounting and responsibility. Gifts tend to be in-kind donations, such as athletic equipment, or in scholarships.
The invitation to serve on the University Foundation resulted from the fact that the Requestor is an alumnus of the University, in addition to having been employed there for many years and active in its alumnae activities. The University Foundation is a private corporation set up for the purpose of raising funds to benefit the University. Its maximum number of Board members is 24, and it currently has 15. According to the Chairman of the Foundation's Board, it operates under guidelines established by the State Board for Universities and Colleges. It receives services from the University pursuant to agreement, and makes gifts to it in accordance with the general guidelines. In its fundraising policies and activities, it functions as a completely private entity governed solely by its board, which consists entirely of volunteers.
The University Foundation engages in several types of fundraising activities. It conducts special events, such as an annual gala and a scholarship ball. It makes direct mail appeals to alumnae, and has a telemarketing fund campaign handled solely by a private contractor and directed to alumnae. It also has specific fundraising appeals that may be directed at a particular purpose or a particular group, such as private corporations. All funds are placed in accounts that are audited by an outside auditor. The University Foundation works with the University President and his top staff, especially in the development area, to determine the institution's priorities and identify where Foundation funds would be helpful. Funding decisions are ultimately made, however, solely by the Foundation (recognizing that some donations are restricted).
The University Foundation Chairman indicates that the Board has several committees, including Membership, Budget and Finance, Special Events, Development, Alumni, and Investment. It also has an Executive Committee and occasionally sets up ad hoc committees for particular situations. She says that the Board members tend not to be involved in the direct solicitation of alumnae, as this is done by a private telemarketing firm. Nor have board members been involved in direct solicitation activities directed at corporations or other entities or persons. They work primarily in developing policy directions and administering and planning various events such as the annual gala. The Requestor indicates that he expects to be involved in this type of general organizational work, or to be asked to contribute generally based on his financial and budget expertise.
According to the Chairman, the University Foundation's fundraising activities are directed generally at the corporate and financial sources in the State. This type of fundraising approach is also confirmed by the President of the Requestor's College, who indicates that the two institutions are in a way competing within the same population for the same dollars, but that it is a very broadly based population that is really the same for all of the colleges and universities.
The Ethics Commission has in the past held that service on the operational and management boards of directors can be viewed as employment even if it is not compensated. The Requestor's service with the University Foundation would therefore be employment that could be within the employment prohibition of §3-103(a) of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law). This section of the Law prohibits an official or employee from being employed by an entity that contracts with or is under the authority of his agency (subsection (a)(1)(i)), and also bars any other employment that would impair his impartiality or independence of judgment in carrying out his official responsibilities (subsection (a)(1)(ii)).
Since there appears to be no authority or contractual relationship between the College and the University Foundation there would not appear to be a basis for applying the strict prohibition of subsection (a)(1)(i). The question would thus be whether the more generally worded impairment provision of subsection (a)(1)(ii) would limit or bar this service. In applying this provision we have generally looked to the nature of the official duties and to the private activity to determine if there is any relationship between the two that would impact on how the person does their State job. In this situation, the Requestor indicates, and the College President confirms, that his service with the College Foundation Board and his general duties regarding the College's finances do not directly involve him in the institution's fundraising or development programs.
Moreover, both the Requestor and the Chairman of the University Foundation advise that he is not expected to be involved in any direct solicitation or fundraising activity. He expects to be working on planning events and making his general financial expertise available to his former University through its Foundation. Apparently the University Foundation Board members do not directly solicit funds for the University, even from alumnae, and therefore Requestor would not be a contact person or otherwise in any way actually directly soliciting funds in competition with his College employer. Also, it would appear that the basis of his selection for this service has to do with his prior affiliation with the University rather than with any aspect of his current service with the College.
Under all of these circumstances, and in view of the advice of the College President, we conclude that the Requestor's service on the University Foundation Board would not be inconsistent with the outside employment limitations of subsection (a)(1)(ii). This advice is based, however, on our conclusion that the Requestor's official duties do not in any way involve activities that would be impacted by his private role on the fundraising board of another institution in the State's system of higher education, to create a conflict of interest. Should his duties change or his role on the University Foundation develop differently, or if issues or relationships develop between the fundraising and financial activities of the two institutions, then further evaluation may be required.
M. Peter Moser, Chairman
William J. Evans
Rev. C. Anthony Muse
Betty B. Nelson
Date: August 2, 1988