Old Model, New Money

FAYETTEVILLE -- Chuck Dicus peers out across his desk, situated in an office in the southeast corner of the seven-months-old Razorback Foundation building. A window behind him reveals Baum Stadium, one of several sports venues the foundation has helped build free of debt.

The president of the foundation spends the majority of his working time in this space, handling inquiries from the group's 11,000 members and potential members. He deals with ticket-upgrade questions. He resolves parking issues. He explains the foundation's protocol.
"The more people understand what we do here, the more comfortable they feel about making a commitment here," said Dicus, an All-America wide receiver at Arkansas in 1969. Dicus repeats himself often. The pitch to potential donors, the reassuring speech to existing donors, hasn't changed much since he accepted the job in 1991.
The way the foundation raises money has evolved little since Arkansas athletic director Frank Broyles dreamed it up 33 years ago. In 1974, the foundation -- then known as the Razorback Scholarship Fund -- began as the middleman for athletic fundraising. Donations were linked to football season-ticket seats. The more donors gave to the fund, the better chance they had of sitting closer to the field. Their benefits also increased with their donations.
Today, the same policies apply. The foundation's priority-seating system has expanded to include basketball and baseball and still accounts for most of its revenue. Donations are limited to three fund drives. Otherwise, no general solicitations are made.
What has changed is the amount of money the foundation raises and pays on behalf of the Arkansas athletic department. Those numbers grew steadily for almost 30 years and plateaued at $10 million or $11 million per year around 2001.
Because it is a private, nonprofit organization, limited public information is available on the foundation. The only financial reports available are tax documents required by the Internal Revenue Service.
"It's a way of protecting our donors," Dicus said. "Integrity, consistency and equality mean everything to us as we work with our donors."

Raised And Spent
The foundation's football drive starts in January and ends in November. The basketball drive starts in July and ends in May. The baseball drive starts in October and ends in August. Though football is the most lucrative, all three drives produce consistent revenue by offering benefits and potential seat upgrades.
Dicus said two events had the most substantial impact on the foundation's annual fund. The construction of Bud Walton Arena in the early 1990s increased basketball revenue, and a $110 million renovation in 2001 added more than 100 skyboxes and around 10,000 club seats to Reynolds Razorback Stadium. Money from those drives is unrestricted. It can be used to support the athletic department in many ways.
The most money goes to scholarships -- $3.5 million went toward scholarships in fiscal 2005-06, according to the foundation's tax documents. In that fiscal year, $3.1 million was spent on facility construction, renovation and operations.
Payments on current and deferred compensation for coaches totaled $1.7 million and about $200,000 went toward various departmental day-to-day expenses.
"It's very rare for us to spend our money on anything other than scholarships, facilities or operations," Dicus said.
An accounting is kept of every foundation expenditure.
The Morning News obtained a copy of the Razorback Foundation's expenditures on behalf of the Arkansas athletic department through a Freedom of Information Act request to the university.
Contained in the document are 352 expenditures totaling $5.1 million. Examples: Business cards for athletic department employees, large construction projects, country club dues and bonus checks for coaches, even severance pay for fired coaches. Some expenditures for the athletic department, such as meal tips and condolence flowers, are made by the foundation because of state regulations.
"There are plenty of things we need the foundation to pay for because the state simply won't let its funds be used for those things," said Tom Dorre, Arkansas' associate athletic director for business.
Expenditures show the advantages of the foundation's independent status. Because the foundation isn't a part of the university, it's under no obligation to undergo a regulated competitive bidding process. The foundation still goes through a competitive review process for most of its projects, and all facility projects go through the university's review process.
Multiple sources within the athletic department and foundation said some donors show their support by offering discounted services.
Broyles has helped to raise more than $200 million for Arkansas in his career.
The names of some of the biggest givers are accessible: Donald W. Reynolds Razorback Stadium, Bud Walton Arena, Randal Tyson Indoor Track Center, Willard and Pat Walker Pavilion, Jim Williams and Jim Lindsey Entry and Bob and Marilyn Bogle Academic Center.
For those naming rights, Broyles picked up the phone and asked for extra money, classified as "restricted gifts" that could be used only for those special projects. Other than that, Broyles has insisted no solicitation takes place outside of the annual fund drives.
"I don't want anyone from here or the foundation ever calling on people for money," Broyles said. "That's not how we do things."

Oversight And Secrecy
Each of the 352 expenditures underwent an approval process at the university.
Don Pederson, Arkansas' vice chancellor for finance, must sign the request form, which is generated by the athletic department, before it heads to the foundation for payment.
"I judge the requests on their reasonableness," Pederson said.
"The form has to be for the payment of something that's in support of the program. It can't be for anything else. I can't ever remember turning a form down, or sending one back, so they know what they're doing (at the athletic department)." If the amount requested is above a threshold set by the foundation, Dicus must first seek approval from the its board members. Dicus wouldn't give that amount.
Arkansas also must submit a 50-page report required by the NCAA, a copy of which goes to the university's Board of Trustees. The report is reviewed by an outside auditing firm as required by NCAA regulations.
"There are no disadvantages to having oversight," Dorre said. "If you don't have checks and balances, then who knows what's happening to the money?
"It's a way for the NCAA to judge every school's actions on an equal level."
On the other hand, there is no disclosure of donors' identities and the amount of their contributions. The privacy is by design, and the autonomy is a standard practice of most nonprofits. The biggest concern of donors, Broyles said, is the disclosure of their giving to the foundation would prompt solicitation from other organizations.
A majority of donors allow their names to be listed in game-day programs. Donors can request not being listed.
Lindsey, who serves on both the Board of Trustees and the foundation's board, said he believes the setup works.
"Some people just don't want others to know what they give. That's their choice," Lindsey said. "The bottom line is that Coach Broyles came up with a way for people in Arkansas to contribute and to know they were participating in the program. It's a vehicle for those who love the program."

Change In Status
Seven men, sitting at the Pleasant Valley Country Club in Little Rock. That's how it got started.
Before his first year as athletic director, Broyles inspected the books.
"We had a budget of $900,000," Broyles said. "And for what I wanted to do, that wasn't nearly enough."
Broyles, who came to Arkansas in 1958 as head football coach and was about to take over the entire athletic department, called six of the biggest boosters in Arkansas. Broyles recalled three of them -- Ed Penick, Jack Stephens and Bill Darby -- during an interview at his office in late June. He invited them to Pleasant Valley for a brutally honest talk.
Broyles wanted an all-sports program within Arkansas' athletic department. He wanted the department to be self-supported. He wanted no student fees or state money used for athletics.
He convinced these major players. The big-money donors helped establish the Razorback Scholarship Fund along with the priority-seating plan to fund it. Broyles picked former football assistant coach Wilson Matthews to run the fund, which operated within the athletic department for 15 years.
Its mission: Provide financial support for the Arkansas athletic department. The Scholarship Fund raised $450,000 in its first year.
"We were able to give out scholarships in tennis, golf, track and baseball for the first time the next season," Broyles said.
Broyles quickly realized more money could be raised when linked to season tickets. That mindset has never changed. In 1988, Terry Don Phillips replaced Matthews; the Razorback Scholarship Fund became the Razorback Foundation; its offices moved off-campus; and the organization became nonprofit.
Dicus took over in 1991, and former coaches Harold Horton and Norm DeBriyn are current vice presidents at the foundation, which has an eight-person staff.
The incorporation granted the foundation tax-exempt status and brought it out from under the university's umbrella. It would still raise money for and subsidize the athletic department but it no longer had to tell the public who gave how much money or what that donor received in return.
Arkansas is one of three Southeastern Conference schools whose fundraising arms operate separately from their universities. Florida and Louisana State are the others. By operating independently from their universities, those organizations enjoy more freedom than the other nine. This goes to the heart of why the Razorback Foundation's role has expanded since the change.

Same Old System
Broyles and Dicus have resisted changes to the way the foundation raises money.
Broyles will retire at the end of this year, and a new athletic director will enter the picture. And that person might think the foundation is missing out on millions of dollars.
The new athletic director will find a seat-priority system at Reynolds Razorback Stadium that uses minimum giving guidelines near the bottom of the SEC.
The most expensive required donation to the foundation for football is $150 per seat, for tickets located on the lower west side of the stadium. SEC schools such as Georgia and Tennessee require donations of more than $1,000 for equivalent seats. "You can go down tomorrow and find 100 faculty people that have had the same tickets for decades," Broyles said.
The frustration mounts for some of the 770 Broyles-Matthews Scholarship donors who write checks of at least $5,000 annually, Dicus said.
Broyles talked of some new Broyles-Matthews Scholarship donors who donated in the five-digit range but could only find seats on the 2-yard line. Dicus spent two weeks with Arkansas ticket manager Mark Scobey in June reshuffling the seat-priority list, making some fans happy and others upset.
"That's just the system we've decided on, and everyone understands it," Dicus said. "At least, they try to understand it. We try to treat all of our donors fairly, and we try to treat them all the same."
Broyles and Dicus don't want to mess with their system. The Arkansas athletic department has been self-supporting every year of Broyles' tenure. The foundation has built cash reserves in excess of $20 million, according to its tax documents.
At the end of most fiscal years, the foundation makes a one-time transfer to the athletic department to balance the budget, usually to pay for building projects or debt. In fiscal 2003 and 2004, no transfer was needed. This year, a $3.2 million transfer was necessary.
In fiscal 2006, Arkansas had record revenue allowing the department to pay down $10.7 million of stadium debt. In spite of a slimmer budget by SEC standards, Arkansas has managed to use the foundation to build top-notch facilities and carry a debt smaller than most competitors.
The university has $43 million left to pay on the Reynolds Razorback Stadium expansion, Bud Walton Arena and improvements to the university' outdoor track complex, John McDonnell Field.
A major threat to the athletic department's positive financial health would be a downturn in fundraising. But that hasn't occurred. Dicus said donations for the last fiscal year, which ended June 30, were up about 3 percent over the previous. Broyles said Razorback fans responded with candor, with honesty and, eventually, with financial support despite a year of seemingly endless controversy.
"There were some people that are close friends of mine that are Broyles-Matthews donors, giving a lot of money, and they were complaining," Broyles said. "They weren't asking for anything. They were just complaining. But they didn't stop their giving or anything else.
"My experience is the more people give, the more they support you. Because they have an investment, and we all share in that investment."

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