Less money for scholarships?

  • Sonoma State University is in the process of taking posession of land that developer Clem Carinalli mortgaged for $1.25 million loan from the University's foundation. The land, located on Los Amigos road in just north of the Town of Windsor, is basically a weed and oak strewn lot. (Kent Porter / Press Democrat) 2009

The impact of the unpaid loan on the foundation?s finances is unclear.

Six donors who invested in the foundation?s charitable remainder trusts, which entitles them to regular interest payments until their deaths, might see those cash payments decrease, said Patricia McNeil, vice president for development at SSU and president of the foundation.

She would not identify the donors.

Any losses to the principal balances of those charitable trusts would likely result in less money going to fund scholarships and academic programs when those donors die.

Any losses from the Carinalli loan to the endowment fund would not impact scholarship recipients until the next academic year, McNeil said. Scholarship disbursements for the incoming class were decided last year. This summer?s decision about disbursements has been postponed, she said.

The $31 million endowment fund has suffered large losses of about 20 percent from the tumultuous downturn on Wall Street, which is expected to result in fewer scholarships next year, McNeil said.

Donations are already down 66 percent compared to last year due to the recession, McNeil told board members in March, before the disclosure of Carinalli?s loan.

If the public loses faith in the foundation?s ability to manage and invest their donations, it could hurt further fund-raising efforts, Aikin said.

He thinks the university will lose money going forward from potential donors who have lost trust in the foundation. ?They really should have factored that into their decisions,? he said.

Supervisor Zane said she will not give any more money to the foundation until it re-establishes itself as trustworthy.

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