Attorney General's News Release

September 1, 2004

Kauffman Board recommits Foundation to benefit Kansas City, in keeping with recommendations from AG Nixon

Kansas City, Mo. — At a news conference today in Kansas City, Missouri Attorney General Jay Nixon said recent changes made by the Board of Directors of the Ewing Marion Kauffman Foundation will formalize and strengthen the Foundation's commitment to benefit the Kansas City area. Those changes, made in response to recommendations from Nixon and detailed in a report given to his office this week, solidify the $1.6 billion Foundation's ties with the community.

"These changes will help ensure that the Kauffman Foundation remains a highly prized resource for philanthropy, particularly for the youth of Kansas City, for generations to come," Nixon said. "I am pleased the Board of Directors put my recommendations into action."

Nixon's office conducted a six-month review of the Foundation and released a 24-page report of recommendations last March. Nixon initiated the review to address concerns that the Foundation had departed from the original intent of founder Ewing Marion Kauffman to benefit Kansas City; that there was a lack of appropriate oversight of the Foundation by the Board of Directors; and that there were certain instances of conflicts of interest by Board members.

Nixon's report found that specific violations of law could not be substantiated, but that future concerns could be alleviated through changes to the Foundation's governing documents and conflicts of interest policies.

In response to the changes recommended by Nixon, the Foundation Board of Directors took the following actions to strengthen the benefits to Kansas City:

• Committed in the bylaws and the five-year strategic plan of the Foundation to keep spending in Kansas City at levels consistent with past spending. Over the past five years, more than 50 percent of the dollars awarded in grants have gone to initiatives focused on the Kansas City area.
• Amended the Foundation bylaws to permanently establish the size of the Board at eight members, and provide that at least three of the directors will be residents of, or have significant ties with, the Kansas City area.
• Amended the bylaws to require that the chief executive officer of the Foundation must live in the Kansas City area. Current CEO Carl Schramm has moved to Kansas City in compliance with this request.
• Changed the bylaws to require that the foundation headquarters must be in Kansas City. No move can be made without a unanimous vote, or a vote by 75 percent of the members at two consecutive quarterly meetings.

The Board, also upon Nixon's recommendation, strengthened its conflict of interest policy with regard to both actual conflicts of interest and situations in which there is an appearance of impropriety even though there may not be an actual conflict of interests. The Board also specifically addressed remedies for non-disclosure of conflicts.

"Ewing Kauffman's vision for this Foundation to perpetually benefit Kansas City will continue to be strengthened, sharpened and fulfilled through the Board's actions," Nixon said.

The Attorney General, under state statutes and under common law, represents Missourians in matters related to non-profit entities, including charitable trusts and charitable corporations. The Attorney General frequently reviews the activities of those entities to ensure that the directors are fulling their fiduciary duties, including honoring the intentions and restrictions of the donors, and exercising appropriate oversight of the corporations' affairs.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

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