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Private money bolsters fortunes of public Fashion Institute and its president

Fundraising in state university system shielded from outside scrutiny

Times are tough for public education, where budget cuts have reduced funding to the State University of New York and sent tuition rising. But at SUNY’s Fashion Institute of Technology campus, in midtown Manhattan, President Joyce Brown is doing well.

Dr. Brown received $284,000 in salary from the Fashion Institute of Technology last year. She also gets paid by the private Fashion Institute of Technology Foundation — in 2011-’12,  nearly $46,000 for 10 hours of work a week.

Dr. Joyce Brown, left, the president of the Fashion Institute of Technology, with actress Jessica Chastain at FIT's June fundraising gala. Photo: JP Yim/Getty Images

Dr. Joyce Brown, left, the president of the Fashion Institute of Technology, with actress Jessica Chastain at FIT’s June fundraising gala. Photo: JP Yim/Getty Images

Her most lucrative arrangement of all is with a donor to FIT: the fashion industry giant Ralph Lauren Corp. Brown is a paid member of the Ralph Lauren board of directors, earning $84,254 last year, according to company filings, and since 2007 has cashed in stock options worth more than $1.7 million.

Lauren Corp. has in turn been generous to the Fashion Institute of Technology Foundation — though how generous is unclear, because as private nonprofit organizations, foundations affiliated with SUNY schools do not have to report contributions. The FIT Foundation follows the Donor Bill of Rights adopted by the Association of Fundraising Professionals and other organizations, which calls for information about donations to be handled “with respect and confidentiality to the extent provided by law.”

The school has in recent years publicized $5,000 Ralph Lauren International Trade and Marketing scholarships for three students a year, drawing from an endowment established with $300,000 of the proceeds from an event honoring a Lauren Corp. executive. Company executives and suppliers have contributed to the FIT Foundation.

Like dozens of other SUNY schools, FIT, which has 7,200 full-time students, relies on its affiliated private organization to supplement state subsidies and tuition payments. The largest share of the FIT Foundation’s spending goes not to student aid but to the operation of the foundation itself.

In the 2011-’12 school year, the FIT Foundation reported spending $1.29 million on scholarships and awards. Fashion Institute departments spent another $202,000 on student scholarships and stipends funded by the foundation that year.

That’s dwarfed by the $1.8 million the foundation spent on its operations that year, including more than $1.2 million on employee pay and benefits.

Another big recipient of foundation funding is the Fashion Institute’s museum. In 2010-’11, it received nearly $464,000, including support for a retrospective of the “extraordinary socialite” Daphne Guinness. The following year, the museum and the school’s departments split $1.36 million in funds from the foundation.

An FIT spokesperson says that the foundation’s spending is in line with accepted practices, and well worth the money spent. “The $1.2 million in salaries resulted in $7.1 million in donations — almost six times what was paid in salaries,” she wrote in an email statement. She also noted that the school and its affiliated housing corporation received $1.5 million in aid from the foundation that year.

As for Dr. Brown’s position as a Ralph Lauren Corp. director, the spokesperson wrote: “The FIT Board encourages the president to engage with corporate boards. The Board recognizes that having the college’s president engage directly with the corporations and industries that will employ FIT graduates is a great benefit to the college and its students.”

FIT declined to make Brown available for an interview. The State University of New York did not respond to requests for comment.

The glitzy fashion business is a heady place for Dr. Brown, who has a Ph.D in psychology and rose to the FIT presidency in 1998, while her husband, H. Carl McCall, was serving as New York State comptroller.

McCall is now chair of the SUNY Board of Trustees, where he has promised to stay out of any dealings with the Fashion Institute of Technology and his wife of 30 years. His financial disclosures filed with the state ethics commission note Brown’s income from FIT and Ralph Lauren but not the proceeds from the exercise of her stock options, which state ethics rules do not explicitly require to be disclosed.

The FIT Foundation fundraising operation, which currently has nearly $39 million in assets, has helped the midtown institute build an endowment to fund student scholarships.

The Ralph Lauren Corp. is far from the only fashion industry donor to the Fashion Institute, according to a recent annual report. In the 2011-’12 school year, the Calvin Klein Family Foundation donated $1 million, matched by $1 million from the garment company. Other major industry sponsors last year included PVH Corp, the Warnaco Group, Lafayette 148 and Estee Lauder.

Dr. Brown is designated by Ralph Lauren as an “independent director” — meaning that she’s not supposed to be affiliated with company’s management, and should be willing to stand up for the interests of investors.

In its filings with the SEC, Ralph Lauren’s board indicates that it has examined charitable contributions from Ralph Lauren Corp. to entities affiliated with company directors — including, presumably, the Fashion Institute — and found the contributions by the company to be small enough to be “immaterial,” not affecting board members’ independence by the standards set by the New York Stock Exchange. The NYSE considers board members independent as long as they are giving $1 million or less annually, or the company discloses the contribution.

Company spokesperson Amanda Schilt would not say how much money the Ralph Lauren company, its executives or its suppliers had donated to FIT over the last several years.

Shareholders use a much tougher standard than the NYSE to evaluate board member independence. The Council of Institutional Investors, an association of pensions and other funds, holds that any donation of more than $100,000 a year from a company to an organization means that a board member from that organization is not independent.

“It’s hard to know whether Joyce Brown can be considered truly independent without knowing how much money Ralph Lauren or the company has given FIT,” says Amy Borrus, deputy director at the Council. What’s more, says Borrus, Ralph Lauren Corp. “should disclose annually the amounts and recipients of all charitable contributions, monetary or in-kind, that it makes with shareholders’ money.”

The private fundraising is a drop in the bucket next to the SUNY school’s funding from the city and state of New York, and from New York counties sending students to the school: Together, they granted nearly $90 million last year to FIT’s operations.

But state funding has diminished, and students have been feeling the pinch. FIT tuition has gone up 5 percent this year, to more than $6,000 an academic year for in-state bachelor’s degree students and $16,000 out-of-state, not counting fees. (Students pay slightly less in their freshman and sophomore years, as they earn an associate’s degree.) Since 2010, tuition has increased 35 percent for out-of-state bachelor’s students and 17 percent for in-state students.

On its website FAQs for donors, the Fashion Institute says that it uses donations for student scholarships and academic awards, student housing aid, and pre-college programs for talented high-school students, as well as curriculum support.

The FIT Foundation reported to the Internal Revenue Service that it awarded a total of $827,779 in scholarships and awards to 516 students in the 2010-’11 academic year, or an average of $1,600 a student. In 2011-’12, it reported giving $1.29 million in scholarships to 365 students, more than doubling the average amount of aid per student.

“FIT spends approximately 5 percent of its endowed accounts each year on scholarships,” the spokesperson said. “This is considered to be a prudent amount (and is in accordance with New York State regulations) and ensures that there will be funds to award scholarships in subsequent years.”

That leaves most students without scholarships. “I’m not really surprised” that student aid is a small portion of foundation spending, said Mathieu Gibbs, of East Harlem, an FIT alumnus who graduated in 2012 and now works as a men’s accessories designer. “But it’s annoying, since I’m struggling to pay back student loans from my time there. They didn’t even offer me a scholarship, and I consistently had a 3.8 [grade-point average] and above.”

Foundations affiliated with SUNY schools have drawn scrutiny recently, with reports questioning the groups’ spending on lobbying and salaries. The Times Union counted $1.8 billion in assets among 30 SUNY foundations statewide. As nonprofit organizations, they do not have to open their meetings or internal records to the public.

The foundations are supposed to be audited by the State University of New York, but SUNY has not made audits publicly available or even confirmed that it has conducted them.

SUNY-affiliated groups helped kill a bill in the state Legislature that would have shed more light on the foundations’ practices by making their records subject to the state’s Freedom of Information Law. Another bill, which failed this year in the Legislature, would require financial disclosures from foundation employees. Five SUNY schools, and the political action committee for a union representing SUNY employees, lobbied on the measure.

Thad Calabrese, an assistant professor of public and nonprofit financial management at New York University, says that the FIT Foundation’s numbers raise questions about its priorities. Scholarships as a share of the foundation’s spending have declined since 2001, the earliest year for which IRS filings are available online.

“The foundation exists (in theory) to benefit the students and FIT,” he commented in an email. “I might argue that it appears that one-third of the spending benefits students, one-third the school, and one-third the foundation staff. You’d ideally like to see more devoted to the students and school.”

Additional reporting by Emmanuel Felton