Frostburg donor says he may withdraw gift

November 06, 1990|By Patricia Meisol

A major contributor to Frostburg State University who is on its faculty said yesterday that he may try to withdraw his endowed scholarship fund from the university's non-profit foundation because the university president used money from the foundation to make political contributions.

The donor, French professor J. B. Kerbow and his wife, Dorothy, gave about $60,000 to Frostburg State University Foundation Inc. last year for creation of the scholarship fund. Dr. Kerbow also called for the resignation of the university president.

Expressing concern that Frostburg President Herb F. Reinhard Jr.'s use of part of a foundation discretionary fund to make political contributions "could very well result in the loss of tax-exempt status for the foundation," Dr. Kerbow said he would investigate whether the money he contributed in the name of Leila Brady Suter should be removed.

"It is now public knowledge that Dr. Reinhard did indeed engage in improper activities and persisted in those activities after having been informed on more than one occasion that those actions were in violation of IRS rules and could very well result in the loss of tax-exempt status for the foundation," the professor wrote in a letter to the foundation's executive director, Mark L. Atchinson.

"That consequence, if not even more dire ones, will most certainly be forthcoming. When it does, we are concerned about the funds already in the foundation . . . ," Dr. Kerbow continued.

The foundation, through its executive director, was warned in 1988 that using foundation money to purchase tickets to political fund-raisers is "flatly" barred by U.S. tax law. Dr. Reinhard continued to use a presidential discretionary account he controlled within the foundation to purchase such tickets, including a $100 ticket to a fund-raiser for the governor.

The Suter fund, one of 153 separate accounts held by the foundation, provides up to four scholarships a year for foreign language students. The money was a gift to the Kerbows from Mrs. Suter, a Latin teacher with a long interest in language study, Dr. Kerbow said yesterday. It is one of the largest endowed scholarships in the foundation.

The professor said his letter, which included a call for Dr. Reinhard's resignation, was prompted in part by what happened to another gift to the university from the estate of Grace S. Kopp.

Mrs. Kopp, an Allegany County teacher, willed the university stock to be used for scholarships, but sold the stock before she died in 1986. While not obligated to give any money, her heirs in a compromise gave the university a check for $10,000. Dr. Reinhard put the money into his discretionary account after obtaining a legal opinion from a state attorney general and permission from the estate's representative to use it for any purpose.

When the foundation members learned about it a year later, they voted to restore the money to a scholarship account in Mrs. Kopp's name. According to C. William Gilchrist, a lawyer and foundation member, the estate representative did not have authority to give permission for the money to be used for any purpose, and the state attorney general's opinion was rendered without access to all the facts.

"We find Dr. Reinhard's betrayal of the faith of all contributors to the foundation and the students of Frostburg State University abhorrent," Dr. Kerbow wrote.

His letter accused Frostburg's president of doing "irreparable damage to the university, as well as the foundation" and said that "at the very least, he should resign immediately."

"I would hesitate to contribute anything at this point until they settle the question of the non-taxable status," Dr. Kerbow said yesterday. "If it turns out that this fund is affected financially, I would indeed take it out."

Dr. Kerbow said he is asking the faculty to censure Dr. Reinhard as well as ask for his resignation.

The newly elected president of the FSU Foundation, Al Boxley, said yesterday that he had received a copy of the letter and would respond to it. While he said he did not know about IRS implications, he said 85 percent of the foundation's money is in endowed scholarships and is well protected under a two-signature check system and other measures.

"The unfortunate thing is that the university and the foundation's reputation is being somewhat discredited," Mr. Boxley said. "It is unfortunate this is happening, because our foundation is as sound as any foundation within the state university system."

The FSU Foundation, with assets of $1.2 million, grew by 65 percent last year.

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