On March 24, Sul Ross State University President Pete Gallego sent two letters to Sul Ross State University Foundation board President Pete Peterson. One terminated the foundation’s agreement with the university, and the second demanded the foundation turn over the remaining balance of a $5 million donation made in 2020 by the family of late businessman Emmett McCoy.
Those funds had been earmarked for construction of a new complex at the university’s Museum of the Big Bend.
Then in correspondence to Sul Ross faculty and staff on March 29, Gallego said the university had fallen short in its fundraising efforts, and needed to maximize opportunities to raise money and earn interest on that money. According to Gallego, the foundation as organized wasn’t operating in the university’s best interests. He said the McCoy family gift had been deposited in an essentially non-interest bearing account, calling it “tremendously poor judgment.”
The foundation subsequently hired former Texas Supreme Court Justice and Austin attorney Craig Enoch for legal guidance and as its spokesman.
Enoch noted Gallego’s action wasn’t legal. Since the foundation is an independent 501(c)(3) governed by an independent board, all funds held by the foundation come from charitable contributions, and none of those funds belongs to the university.
Non-profit statutes allow for a foundation to wind down its business, but there are requirements about paying obligations, and a foundation has an obligation to appropriately shepherd any specifically directed funds that donors had contributed.
Enoch pointed out that state agencies cannot directly receive donations. Almost all state agencies, and universities in particular, will work with business and community leaders and alumni to develop an independent foundation not controlled by the university. The focus is then on dollars that can be used to partner with the university.
Further, the foundation is dedicated to Sul Ross State University, not the Texas State University System. Even if Sul Ross were in another university system, the foundation’s dedication wouldn’t change. Enoch added that movement from one university system to another was common now.
“The most immediate effect of what Gallego has done is not to benefit the university. It’s to start harming the university’s ability to move forward,” he said. “It gives credence to the background facts that the university is starting to fail. You’re proving the point of rumors out there that the university is in trouble.”
According to Enoch, the foundation is still looking at its responsibilities and duties and what its next steps should be.
Said Enoch, “The foundation looks forward to working through the issues with the president, but they’re adamant that whatever is being requested by the university president, he must make sure the foundation’s purpose remains intact to properly administer donor funds in support of Sul Ross. The board of directors remains committed to supporting those directed programs.”