September 8, 2016

VIA EMAIL
Board of Directors
University of Louisville Foundation, Inc.
103 Grawemeyer Hall
Louisville, Kentucky 40292
RE:

Request for Accounting/Open Records Act Request/James Graham Brown

Foundation/C.E. and S. Foundation

Fellow Board Members:

As I think each of you know, on August 29, 2016, Dr. Neville Pinto, Ms. Kenyatta
Martin, Mr. David E. Saffer, and I received a letter from Dr. Larry Benz in his capacity as
Chairman of the University of Louisville Board of Trustees (the Benz Letter) regarding the
University of Louisville Foundation, Inc. (the Foundation) and certain Related Entities. A
copy of that letter is attached.
As I also think each of you know, on September 2, 2016, I received a letter from the
James Graham Brown Foundation (the Brown Foundation) and on September 5, 2016, I
received a letter from the C.E. and S. Foundation (the CES Foundation). Copies of each of
those letters are also attached.
Dr. Benz requested on behalf of the University that the Foundation and its Related
Entities provide an accounting of all disbursements of Foundation assets (Accounting) for the
period commencing the 1st of January, 2010 through and including the date the Accounting is
delivered to the Board (the Accounting Period). His letter went on to request (the Open
Records Request)
(1) copies of any and all of its balance sheets, profit and loss statements
and general ledgers prepared with respect to any period encompassed within or
ending within the Accounting Period; (2) copies of any and all documentation
relating to any loan transactions or receivable agreements, including without
limitation the July 1, 2015, $38 million Memorandum of Agreement, entered into
between the University and the Foundation or one or more of the Related Entities
during the Accounting Period; (3) copies of any and all bank statements reporting
Foundation assets or assets of Related Entities for each month or other statement
period ending within the Accounting Period; (4) copies of any and all investment
account statements reporting Foundation assets or assets of Related Entities for
each month or other statement period ending within the Accounting Period; (5)
copies of the minutes of meetings of the Foundations Board of Directors and the
Boards of Directors of Related Entities (including any committees thereof)
approving the expenditure of Foundation assets or assets of Related Entities; and

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(6) copies of any and all documents relating to any commitment by the
Foundation or Related Entities to expend funds subsequent to the termination of
the Accounting Period.
In its letter (the Brown Foundation Letter), the Brown Foundation expressed its opinion
that the
University, [the Foundation] and the Louisville community would be well
served if ULF immediately (1) hired a nationally recognized forensic accounting
firm identified by the University to conduct an independent review of [the
Foundation and its related entities, (2) conducted a best practices governance
review with a nationally recognized organization such as the Association of
Governing Boards of University and Colleges (3) complied with the recent
request for accounting made by [Chairman Benz] and (4) complied with the Open
Records Act requests from [Chairman Benz].
The Brown Foundation also stated that [w]ithout evidence of these actions [it would] be unlikely
to approve any further grant requests from the University, [the Foundation] or the James Graham
Brown Cancer Center.
In its letter (the CES Foundation Letter), the CES Foundation requested immediate
action on the four recommendations contained in [the Brown Foundation Letter].
I believe that it is in the best interest of the Foundation and its express charitable purposes
to gather and provide the information requested in the pending Open Records Request, and to
hire an independent nationally recognized accounting firm to conduct a review of the
Foundation. This review will be in addition to the annual audit of the Foundations financial
statements. Likewise, I believe that the Foundation should honor the request to conduct a best
practices governance review with a nationally recognized governance organization. I will bring
recommendations to implement these actions for consideration and action at the Annual Meeting
scheduled for September 16, 2016.
Foundation representatives have begun to compile the records responsive to the Open
Records Request. Since more than six years of records have been requested, it will take a good
deal of effort to identify and provide them (the initial estimate is that more than 1,000,000
records have been requested), but the Foundation is proceeding with all due speed. As you
know, the Foundation is presently undergoing its annual audit and an extensive examination by
the Auditor of Public Accounts. Because the demands placed on limited Foundation staff exceed
their capacity, I personally have authorized the hiring of up to four (4) additional Foundation
employees to assist with these matters. My plan is to ask you to ratify that action at our next
meeting.

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With respect to the request for an accounting, I plan on presenting to you a request for
proposals for an independent nationally-recognized accounting firm to conduct an independent
review of the Foundation and its related entities. I will propose that the firm be selected, and its
work directed, by a committee of the Foundation composed equally of members of the
Foundations board who also serve as trustees of the University and two members of the board
who are not currently trustees of the University. At the same time, the Foundation intends to
reach out to the Brown Foundation, the CES Foundation and other important stakeholders to
listen carefully to their questions and concerns. I also plan to discuss with you whether we
proceed to conduct a best practices governance review immediately or upon the receipt of the
pending report of the Auditor of Public Accounts.
The Foundation appreciates the need to proceed promptly and thoughtfully in addressing
questions that have been raised by the University as well as all donors and supporters and that is
precisely what we intend to do. It is my hope that all of us will move forward together to
accomplish these steps in a spirit of teamwork and cooperation.

Very truly yours,

Dr. Robert C. Hughes, Chairman of the Board of

Directors

cc:

Dr. James R. Ramsey, President; via email

Dr. Neville Pinto, President; via email
Dr. Larry Benz, Chairman of the Board of Trustees; via email
University of Louisville Board of Trustees; via email