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.
Zane said she received a scholarship from the foundation when she was a student. She later created an annual $500 scholarship, and invested an extra $250 annually with the foundation?s endowment in hopes of creating a large enough pool of money that it would one day generate enough investment return to fully fund the scholarship indefinitely.
?Now I?m not going to give any money to the foundation. I?m going to give it all to the student,? she said. ?The foundation has lost my trust.?
McNeil said she is confident that the public and alumni will continue to support the university, and that she has not heard from anyone expressing sentiments such as Zane?s.
?I have not heard that from others,? she said. ?I think our donors will recognize that the foundation followed appropriate policies and made wise investment choices.?
News researchers Michele Van Hoeck and Teresa Meikle contributed to this story. <em>You can reach Staff Writer Nathan Halverson at 521-5494 or firstname.lastname@example.org.</em>