The official minutes of the University of South Carolina Board of Trustees are maintained by the Secretary of the Board. Certified copies of minutes may be requested by contacting the Board of Trustees’ Office. Electronic or other copies of original minutes are not official Board of Trustees' documents.

The Ad Hoc Committee on Advancement of the University of South Carolina Board of Trustees met on Thursday, February 10, 2000, at 11:00 a.m. in Room 107-C of the Osborne Administration Building.

Members present were: Mr. Mack I. Whittle, Jr., Chairman; Mrs. Helen C. Harvey; Mr. Toney J. Lister; Mr. Miles Loadholt; Mr. Robert N. McLellan; Mr. J. DuPre Miller; Mr. M. Wayne Staton; and Mr. William C. Hubbard, Board Chairman. Mr. Herbert C. Adams was absent. Trustee James Bradley was also in attendance.

Others present were: President John M. Palms; Secretary Thomas L. Stepp; Executive Vice President for Academic Affairs and Provost Jerome D. Odom; Vice President for Development Charles D. Phlegar; Vice President and Chief Operating Officer J. Lyles Glenn; Vice President for Business and Finance John L. Finan; Vice President for Human Resources Jane M. Jameson; Vice Provost and Executive Dean for Regional Campuses and Continuing Education Chris P. Plyler; Director of Internal Audit Alton McCoy; Manager of Visual Media, Distance Education and Instructional Support, Steve Adams; Director of Public Affairs Russell McKinney; Media Relations representative Jason Snyder; and a member of the media.

Mr. Staton presided. He called the meeting to order and asked everyone present to introduce themselves. Mr. Snyder introduced the member of the media. Mr. Staton noted that the agenda had been posted and the press had been notified as required by the Freedom of Information Act; the agenda had been mailed to the Committee; and a quorum was present to conduct business.

Mr. Staton directed attention to the agenda and called on Mr. Phlegar.

Mr. Phlegar said that the total amount raised in the Bicentennial Campaign as of December 31, 1999, was $262.5 million.

Mr. Phlegar said that the total amount raised in the first six months of the 1999/2000 fiscal year was $31.4 million. The goal for the current fiscal year was $50 million, and progress was being made toward that goal. The goal of the Development Office was to raise $65 million during the current year, and thereby, the Bicentennial Campaign goal of 300 million would be reached one year ahead of schedule.

Mr. Phlegar said that the efforts to raise money to construct a new law school building had been very successful. He commended the work of law school development officer Ms. Debbie Wells and Campaign Chairman Mike Kelly.

To date, the law school had $6.5 million in signed commitments, $6.2 million in oral commitments, and $5.1 million in probable gifts. These were conservative, solid estimates which totaled $17.9 million. Mr. Phlegar said that the Development Office had been charged with raising $15 million to address the portion of the construction which was designated to be funded with private money. There was an excellence chance that the $15 million would be raised, and it was more likely that between $15 and $20 million would be raised.

In response to Mr. Staton's question, Mr. Phlegar explained that the General Assembly indicated that it would provide $15 million for the construction of a new building for the law school, $5 million of which had been committed to date. It was hoped that at least an additional $5 million would be appropriated this current year, if not the full $10 million. Mr. Phlegar voiced his understanding that the appropriations process was moving forward in a positive and speedy fashion.

Mr. Loadholt asked if there had been any changes to the proposed site. Mr. Phlegar replied that everything indicated the most desirable site was directly across the street from the National Advocacy Center.

Mr. Phlegar directed attention to the document distributed for this meeting representing an overview of the effort of the Development Office to raise money for the National Merit Scholarship Program. This could be accomplished with gifts of $30,000 pledged over four years or $150,000 to endow each National Merit scholar.

The process had begun two months prior when a new staff person was hired. She had received very positive feed-back regarding these scholarships. Complete funding would take time, but seven commitments had been received in the first two months. Mr. Staton noted that this program had been spearheaded by Mr. Whittle.

Mr. Phlegar stated that the College of Hospitality, Retail, and Sport Management wanted to raise money for either a new building or space in the new arena. He was meeting with the leadership of the College to make sure that they understood what would be involved in the process.

Mr. Hubbard stated that the Board of Trustees had not authorized the movement of the College to a new facility. Dr. Odom responded that the Board had not yet been asked to approve the matter and any action to raise funds was part of the ongoing discussions. Dr. Odom replied that even if the Board does not approve of its move, the College still had a great need for money.

Discussion ensued regarding the desire of the College of Hospitality, Retail, and Sport Management to move from the Coliseum. Dr. Palms said the matter would be discussed as part of the discussions of the arena project in the Buildings and Grounds Committee scheduled for later in the day.

At this time, Chairman Whittle joined the meeting and assumed the Chair.

Mr. Phlegar reviewed several key areas of the Campaign which would occur during the next eighteen months. There were 39 major gift prospects that would be solicited for a total of $172 million. Each constituent unit of the University was working its list of leadership gift prospects and final prospects to focus on to close as many key gifts as possible within the next twelve months.

Regional Campaigns were scheduled to be held in the cities of Charleston, San Francisco, Los Angeles, San Diego, Washington, Richmond, Wilmington/Philadelphia, Florence, Sumter, Chicago, Nashville, Denver, and Columbia. Mr. Phlegar reported that the Regional Campaigns had been very successful; many new prospects had been discovered and Dr. Palms had been effectively articulating the message of the Campaign.

President John Casteen of the University of Virginia would be on campus March 1, 2000, to meet with the Board of Trustees, the Foundations, the President, the Provost, the Deans, and the Development Officers to discuss aspects of the University of Virginia's campaign. President Casteen would also serve as Chair of USC's re-accreditation committee.

Strategic Planning Review would occur from March through June 2000. Mr. Robert Sweeney, Vice President for Development at the University of Virginia, would be asked to review the effort by USC's Development Office and to provide any insight and advice that he might deem appropriate. A direct mail and phone blitz would take place from September 2000 through June 2001 to offer everyone the opportunity to make a gift to the Bicentennial Campaign. Mr. Phleger added that although telephone solicitation was the least favored fundraising method, it yielded approximately $2 million annually.

Mr. Phlegar hoped to announce that the University had reached it goal of $300 million by August 2000. The Campaign would officially end June 30, 2001, and it was projected that the Campaign total would be between $350 and $375 million. A celebration was planned for December 2001.

When Chairman Whittle questioned the current amount of the endowment, Mr. Phlegar estimated that the endowment would exceed $300 million by the end of the current year. He noted that five years before, the endowment had been $64 million.

1. Remarks by Mr. Phlegar: Mr. Phlegar said that he had the opportunity to speak at one of the "Lunch with Lou" events in the Fall 1999. He addressed a football audience about fundraising and gave the following overview of the Campaign:

I wanted to talk about the Bicentennial Campaign in terms we can all understand -- football, The Southeastern Conference, and wins and losses.

In 1995, the first year of the campaign at USC, we won zero and lost eleven. Every school in the conference raised more money than we did.

Coach Holtz, we just couldn't block or tackle. No fundamentals. Our problem was we never asked anyone for money. Pretty basic concept. We had too many administrators and not enough fundraisers.

In 1996, we were 4 and 7. We beat LSU, Arkansas, Mississippi State, and Mississippi. Could have won more, but we had no depth. Dr. Palms said, "hire more fundraisers" and we did.

In 1997, we went 7 and 4. Only lost to Tennessee, Georgia, Florida, and Vanderbilt. Coach, who put us in this Eastern division anyway? The Board of Trustees said recruit out-of-state; you need that blue-chipper to turn this program around. So we did. We signed Darla Moore for $25 million and Bob McNair for $20 million. Now, they're not as fast as Derek Watson, but they're rich. Our recruits pay us B isn't that a novel idea?

In 1998, we went 10 and 1, losing only to Florida, raising a record $101.3 million. Played in the "Fundraising Bowl" that year but lost to UVA.

Since 1995, when our endowment ranked last in the SEC at $83 million, we've moved up to 5^th in the SEC at $257 million.

Coach Holtz, I'm not sure fundraising affects athletics, but athletics sure affects fundraising. In 1998, we had our best three fundraising months during the football season, and this year September and October have been our best months ever. Now, I don't know about you, but I'm worried what will happen when you guys start winning.

Virginia Tech finished their first fundraising campaign in 1997. Now, two years later, they're contending for the national title. Our campaign ends July 2001. I bet we're a lot like Virginia Tech, so I can't wait until 2003.

As of December 31, the Bicentennial Campaign has raised more than $262 million, easily surpassing the original goal of $200 million and ahead of schedule on our revised goal of $300 million. The money is great, it's helping us recruit outstanding students, retain top faculty, and build new facilities; but, it's the involvement of friends like you that makes this work. Thank you for supporting academics and athletics at USC. And when you get that phone call from USC asking for money, please give generously.

2. Cost of Fundraising:

Chairman Whittle said that several months prior, Mr. McLellan had asked the Committee about the cost of raising money. Mr. McCoy had been asked to review other Southeastern Conference and institutions and AAU institutions to determine if they used a standard methodology to determine the cost of fundraising. If a standard existed, he was to compare it to how Carolina calculated its cost. It was important to know if Carolina was using the same criteria to make the same type of comparison. Chairman Whittle said that Carolina mostly counted the same things as the other institutions with a few exceptions, and those exceptions would be corrected.

Mr. McCoy said that the Council for Advancement and Support of Education (CASE) had established a format for preparing financial statements and annual reports to be given to governing boards. It had specific guidelines for what should and should not be listed as revenue and there were minor differences that existed between those guidelines and what Carolina listed. With respect to expenses, CASE separated items into three areas: development costs, cost of the alumni association, and some other costs such as receptions and social functions. There was also a report to be used during capital campaigns with a specific format to be submitted annually to governing boards and to CASE. The president was to sign the report and confirm that it complied with CASE standards. If it was not in compliance, the variances were to be listed. In the future, that report would be filed.

Mr. Phlegar said that the big area of noncompliance was not counting fringe benefits of the salaried employees. He explained that fringes had not been counted because they were not included in his budget, but they would begin adding them to the cost of fundraising. They would also begin capturing the expenses of the Alumni Association and some other items such as receptions even though they did not fall within the purview of the Development Office.

Mr. Phlegar added that the University of South Carolina had been a member of CASE, and all of its reporting had been sent to CASE for review.

When Mr. Phlegar was asked to estimate the affect that the new criteria would have on the cost to raise money, he replied that it would be difficult to say because the expenses of the Alumni Association would be included but its revenue would not be included because the revenue was considered "dues." Fringe benefits would certainly effect the cost of fundraising, and Chairman Whittle estimated it would increase approximately five cents for each dollar raised. The University would still be positioned beneath peer institutions with respect to this cost, but its position would move closer to the median.

Chairman Whittle said that this action would make the University's information on the cost of development authorized and standardized by a third outside party. This would create an "apples to apples" comparison.

Mr. McLellan inquired about appraisals which were required for gifts contributed by artists. Mr. Phlegar said that the cost of an appraisal was the responsibility of the donor. Discussion ensued, and it was further explained that the donor must pay for an authorized independent appraisal.

Mr. McLellan asked about the appraisal of some specific computer equipment which had been donated to the University, and subsequently was not used. Mr. Phlegar said that the donor's appraisal had been used. However, when the donation was returned to the donor, the value of it was removed from the Campaign totals.

Chairman Whittle summarized that all University action with respect to the acceptance of gifts, the nature of appraisals received, and the overhead and costs associated with fundraising would meet CASE standards in the future. He said that the University had done an excellent job with its return on fundraising investment, but compliance with CASE standards would remove any room for questions or concerns.

When there were no other matters to come before the Committee, Chairman Whittle declared the meeting adjourned at 11:45 a.m.

Respectfully submitted,
Thomas L. Stepp
Secretary