The George Mason University Foundation Inc. is an independent corporate entity whose records are not subject to freedom-of-information requirements, even if the records relate to funds used to support the University, itself a public body. Nonetheless, the University’s Gift Acceptance Committee, itself a public body, is subject to transparency laws.
This case presents the question whether the George Mason University Foundation Inc., a corporation established to raise funds and manage donations made to benefit the George Mason University, is a public body subject to the Virginia Freedom of Information Act (VFOIA). The ultimate issue is whether the Foundation’s fundraising records are subject to VFOIA.
Not a public body
The Foundation is not an agency of the Commonwealth or any of its political subdivisions, but the court must resolve whether the Foundation is supported wholly or principally by public funds and whether it is an entity created to perform delegated functions of a public body or to advise a public body. The court declines to create a new standard by adopting a “functional equivalent” or “multi-factor” test , thereby expanding the provisions of the VFOIA statute. Instead, the court applies the statute’s plain language to conclude that the Foundation is not a public body.
First, the Foundation is not supported wholly or principally by public funds simply because it engages in fundraising for the University or because it uses those funds to support University programs. Public monies derive mostly from the government’s power to tax and spend. Therefore, public funds – unlike private donations – are by their very nature procured involuntarily. In return, the public is entitled to know how those funds are spent by public officials.
Here, the funds at issue go directly to the Foundation and are not part of the Virginia Treasury. In the absence of a clear legislative directive that entities such as the Foundation are to be considered public bodies, their right to exist as independent and privately formed entities overcomes the right of public inspection.
Insofar as government actions are intended to benefit the public at large, VFOIA exists to promote openness in government actions and to eliminate the transacting of government business in secrecy. But the doctrine of openness does not extend to make available for public inspection the records of a private entity. Where the legislature has determined that certain entities ought to be subject to VFOIA, it has specifically named them. The General Assembly, not the courts, should decide whether foundations created to support public universities are public bodies.
Second, the Foundation is not a sub-entity of the University and does not perform a government function. The Foundation is an independent non-stock corporation that co-exists alongside the University it serves. The fact that a privately-formed foundation “serves” a University – even if that is its sole purpose – is not sufficient for the court co conclude that it is a sub-entity of the public body it serves. Both the Virginia Freedom of Information Council and the Virginia Attorney General have concluded that university foundations are not sub-entities of the university itself; rather, they act as independent corporate entities.
While the Virginia Code contemplates that university fundraising will be used to advance the statutory objectives of the institutes, fundraising itself is neither a service nor a statutory objective of the public institution in this Commonwealth. Advancing a statutory objective is not equivalent to transacting public business.
University subject to VFOIA
This decision does not mean that the University has unfettered right to keep secret its use of gifted funds to create programs in compliance with conditions and restrictions imposed on those gifts. The court does not hold that the University may accept funds from the Foundation without having to disclose any restrictions or conditions that may accompany the use of such funds. There is at least one entity of the University by which such records could be held: the Gift Acceptance Committee. The Foundation’s independence or exclusion from VFOIA does not extend to that Committee, and its work cannot be conducted in secrecy. The acceptance of every gift or endowment produces public records.
Under Code § 2.2-3705.4(7), the University’s acceptance and use of funds, consistent with the restrictions and conditions imposed on those funds, convert private funds and private records into public funds and public records. While it is possible that University officials strive to conduct their business orally and avoid all written records of its agreements, secreting all such records within the Foundation, the court declines to presume such intentional and evasive manipulation by University officials. But if such concerns were proven, the legislature retains the authority to remove the veils of such secrecy by defining the Foundation as a public body.
Transparent GMU v. George Mason Univ., Case No. CL17-7484, July 5, 2018. Fairfax Cir. Ct. (Tran). VLW No. 018-8-062, 12 pp.