Minutes of Meeting of the Winthrop University Foundation Board of Directors
Wednesday, September 14, 2011

Members present:
Pat Bean, Marc Bogan, Vivian Carroll (Ex Officio), Anthony J. DiGiorgio (Ex Officio), Nancy Donnelly (Ex Officio), Carlos Evans (Chair), Debra Fetner (Ex Officio), Debbie Garrick (Ex Officio), Sig Huitt, Brien Lewis (Ex Officio), Kristen Magee (Ex Officio), Irvin Plowden, Gerry Schapiro, Andy Shene, Ann Terry, Spratt White, Linda Warner (Ex Officio), and Gary Williams.

Members absent:
Bruce Brumfield, Mark Carter, Tom Keith, Reggie Lloyd, Michael Marsicano, David Pennell, Pat Robertson, Cece Stewart, Frank Viola, Kathy Viola.

Board Staff present:
Betsy Angerman, Director of Financial Affairs; Susan Lee, Campaign Coordinator and Associate Director of the Winthrop University Board of Directors; Laura Lynn Stubbs, Administrative Assistant, Office of the President

The Winthrop University Foundation Board met on Wednesday, September 14, 2011, in Tuttle Dining Room of McBryde Hall.

Call to Order
Mr. Carlos Evans, the President of the Foundation Board, called the meeting to order at 1:15 p.m.

Approval of Board Minutes of April 14, 2011
Mr. Andy Shene moved, seconded by Mrs. Vivian Carroll, to approve the minutes as presented. The minutes were approved as presented by a unanimous voice vote.

Nominating Committee Report and Election
Mr. Gerry Schapiro, Chair of the Nominating Committee, reported on the current Board distribution statistics and reviewed the current and upcoming changes to the Board. Mr. Schapiro reported that the terms of eleven directors will end on December 31, 2011. Of the eleven directors, eight have agreed to serve another three year term. The directors who will renew their term include Mr. Marc Bogan, Mr. Bruce Brumfield, Mr. Michael Marsicano, Mr. Dave Pennell, Mrs. Ann Terry, Mrs. Cece Stewart, Mr. Gary Williams, and Mr. Spratt White; and the directors who are not renewing their term include Mr. Carlos Evans, Mr. Frank Viola, and Mrs. Kathy Viola. In addition, Mr. David Dooley and Mr. Bob Gahagan have recently resigned from unexpired terms.   

Mr. Schapiro presented a list of seven nominees for new Board Directors.  Two of the nominees, Mr. Sig Huitt and Mr. Reggie Lloyd, are recommended to fill the two unexpired terms immediately.  The five nominees to begin three year terms in January 2012 are Mr. Derick Close, Mr. Bennish Brown, Ms. Jan Ivey, Mr. Frank Marshall, and Mr. Steve McCormick. The Committee made a motion, seconded by Mrs. Pat Bean, to appoint the seven nominees to the Board of Directors. The motion passed unanimously by voice vote. Mr. Huitt joined the meeting following the vote.  

Mr. Carlos Evans presented the slate of nominees for election to the Foundation Board as officers for calendar year 2012. Nominating Committee Chair, Gerry Schapiro, presented the recommendation of the Committee. Mr. Gary Williams was recommended for President, Mr. Marc Bogan for Vice President, Mr. Gerry Schapiro for Treasurer, and Mrs. Ann Terry for Secretary. Each agreed to serve if elected. The Committee made a motion, seconded by Mr. Irvin Plowden, to elect the executive officers of the Board. 

The motion passed unanimously by voice vote. The new officers will assume their duties on January 1, 2012.

University President's Report
Dr. Anthony DiGiorgio, President of Winthrop University, reported on the latest activities and changes with the federal and state budgets that have impacted the allocation of funds to Winthrop. Governor Nikki Haley has charged the Presidents of public four-year institutions to develop a performance-based system, referred to as Accountability-Based Funding, to distribute funds to each institution. If written into law, each institution would compare its own progress in the following categories: producing graduates, economic development and job placement, access and affordability, and accountability and transparency.  

Dr. DiGiorgio updated the Board on the beginning of the 126th academic year. Dr. DiGiorgio reported that this is the first time in twelve years that the campus does not have a major construction project in process. Preliminary data indicates that freshman enrollment has increased 2 percent and transfer enrollment has increased 10 percent. The Great Recession has changed how Winthrop recruits students just as shifts in technology and innovation have changed the way courses are offered and taught. Dr. DiGiorgio announced that Dr. Debra Boyd is the new Vice President for Academic Affairs, replacing Dr. Tom Moore who is the new chancellor at the University of South Carolina Upstate.  

Dr. DiGiorgio reported that Winthrop and the City of Rock Hill are involved in the College Town Action Plan working group.  The successful Pennies for Progress vote will positively impact Winthrop by creating a safer area for the Winthrop community to cross Cherry Road to access nearby businesses.  In addition, White Street, which connects Winthrop to downtown Rock Hill, will undergo improvements to create easier access to downtown.  

Dr. DiGiorgio reported that the Princeton Review and U.S. News and World Report have recognized Winthrop University as one of the best public universities in the South. Winthrop is still receiving accolades and showing improvement each year during a time of diminished resources.

Treasurer's Report
Mr. Gerry Schapiro, Treasurer of the Foundation Board, presented the Treasurer’s Report as of August 2011. Mr. Schapiro noted the total portfolio is approximately one percent less than it was at the beginning of 2011. The portfolio value had slightly increased in Spring 2011, but is currently slightly below the total portfolio value for the beginning of the year.

Investment Committee Report
Mr. Marc Bogan, Chair of the Investment Committee, reported that the portfolio outperformed the policy benchmark by approximately 1.18 percent in the first six months of 2011. With the portfolio reconstruction now complete, the portfolio should start to show better results. Year to date, seven out of 12 asset classes outperformed the benchmark, and in the second quarter 12 out of 12 asset classes outperformed the benchmark. Mr. Bogan reported that the Bank of America investment managers have an 18-month outlook, but they are sending daily portfolio updates due to the current volatile market. Mr. Bogan reported that the Investment Committee does not believe a RFP is necessary at this time, but the Committee will closely monitor the performance of the Bank of America investment managers.   

Mr. Bogan discussed a recommended change to the Investment Policy. Currently, cash holdings are not recognized in the policy. With a change in the policy, the target allocation of cash would be zero with a maximum allocation of 75 percent in case of a significant market event. The Committee made a motion, seconded by Mrs. Ann Terry, to approve the change in the Investment Policy. The motion passed unanimously by voice vote.  

Mr. Bogan reported that Mr. Larry Carroll requested that the Investment Committee develop a benchmark for Mr. Carroll to use as he manages an endowed fund. The benchmark will be comprised of 60 percent stocks (S&P 500 index), 10 percent foreign stocks (EAFE index), and 30 percent bonds (Barclays Aggregate Bond index).

Operations Committee Report
Mr. Gerry Schapiro, Chair of the Operations Committee, reported that the 2010 audit is not yet complete. He expects the audit to be finished by Friday, September 16, and to be clear of any findings. 2011 is the last year Mr. Jim Pierce will be the auditor for the Winthrop University Foundation.   

Mr. Schapiro reviewed the unaudited, year to date Budget as of July 2011. The percentage use of the budget of Total Working Capital, Total Personnel Costs, and Total Expenses are as expected for the first seven months of the fiscal year. The projected 2012 budget will look very similar to the 2011 with the exception of the campaign consultant expense which will decrease as the public phase of the campaign will already be under way.  

Mr. Schapiro reviewed a proposed change in the bylaws. In the past, Mr. Schapiro served as both Secretary and Treasurer of the Foundation Board. Two years ago, the roles of Secretary and Treasurer were split, and Mrs. Ann Terry began serving as the Secretary while Mr. Schapiro remained the Treasurer. The current bylaws do not reflect this separation of duties, and the proposed revision would clarify the duties of the Secretary and Treasurer of the Board. The Committee made a motion, seconded by Mrs. Pat Bean, to approve the revision in bylaws. The motion passed unanimously by voice vote.   

Mr. Brien Lewis updated the Board on the status of the endowment and underwater funds. Mr. Lewis explained that the endowment is comprised of over 600 individual funds. After the 2008 financial crisis, 85 percent of the funds were underwater, meaning the funds had less money in the endowment than had originally been placed there by the donor. At that time, the Foundation Board changed the spending policy to 4 percent of a five-year average to spread out the negative impact, and a scholarship prioritization plan was established. This prioritization plan determined that multi-year scholarships and scholarships for freshmen were most important for Winthrop’s retention and recruitment of students. By July 2011, only 54 percent of funds were underwater, until the recent market fluctuations which have brought approximately 81 percent of the funds back underwater. Mr. Lewis explained that several unrestricted gifts used to award scholarships during the past three years are nearly depleted.   

Mr. Lewis reported that under South Carolina law, UPMIFA guidelines allow for the invasion of the corpus of a fund under specific conditions, in which case, the Foundation would be able to award more scholarships. Based on calculations done in July 2011, an invasion of 5 percent of the corpus would mean only 26 percent of funds would remain underwater. An invasion of 10 percent of the corpus would mean only 6 percent of funds would remain underwater. Mr. Lewis cautioned that significant drops in the market have likely changed these figures, demonstrating that there is a thin margin here that has significant impacts on individual funds. However, an invasion of corpus would only be a short-term solution to the underwater funds. Mr. Lewis explained that there are several possibilities to combat the underwater funds. One option is to amend the spending rule, again. Another possibility is to utilize the mechanisms of UPMIFA which would require contacting all living donors to get permission to change the deed of gift and invade the corpus of their endowment. With the market still in turmoil, the Foundation Board will need to take action at the December 2011 meeting so that Winthrop Admissions and Financial Aid know how many scholarships can be awarded in the 2012-2013 academic year.

Development Committee Report
Mr. Gary Williams, Chair of the Development Committee, updated the Board on the success of the D.B. Johnson Society. He reported that there are 304 planned gifts that have been received in Winthrop’s history, and nearly half of these have been received since the start of the Distinction campaign in 2008. Mr. Williams reviewed the details of the October 14 Kickoff Event. The charter class of the D.B. Johnson Society will be inducted at a pinning ceremony which will be followed by a cocktail reception where there will be several interactive exhibits to display Winthrop’s history through the years. The final event of the evening will be a dinner to thank friends and supporters of Winthrop. The entire event will be a celebration of the past with a symbolic move to the future.   

Mr. Williams reported that the Foundation Board Campaign is close to 100% participation. Mr. Williams encouraged the Board Directors to finalize their gifts with formal documentation before the October 14 deadline.   

Mr. Brien Lewis, Executive Director of the Foundation, highlighted the fundraising success of the silent phase of Distinction: The Campaign for Winthrop. The silent phase has just passed the total amount given in Winthrop’s first official campaign. Mr. Lewis thanked the Board for their time, talent, and treasure that have contributed to the success of the silent phase of the campaign. Mr. Lewis reported that while national giving percentages are down, giving to Winthrop continues to increase in total gifts and number of donors. In 2011, the Winthrop Fund has increased 9.8 percent, the amount of cash gifts has increased 25.6 percent, and the number of donors has increased 11.9 percent compared to the same point in time last year.  

Ms. Susan Lee, Campaign Coordinator and Associate Executive Director of the Winthrop University Foundation, reported on her efforts to engage the Winthrop faculty in the Distinction campaign by connecting interests and opportunities with donors and faculty. Ms. Lee discussed the City Campaigns that will take place in York County, Charleston, Greenville/Spartanburg, Columbia, and Atlanta over the next three years. The City Campaigns are in the initial planning stages as potential leaders and resources in those communities are identified.

Foundation President's Report
Mr. Carlos Evans reported that after over 17 years of service to the Board, he will not be renewing his term in keeping with good Board governance. Mr. Evans is serving as Campaign Co-Chair and looks forward to supporting Winthrop in different capacities.

Lastly, Mr. Bogan conveyed the concerns discussed by the committee of the investment manager’s performance. One concern is whether the fees paid are justified on cost-benefit analysis compared to cost of simply using an indexed fund. Also, another concern is whether the selection of managers has been to the best advantage of the Foundation. Mr. Bogan reported that he and Mr. Lewis expressed these concerns with the investment managers, and the managers responded positively and agreed to address the concerns. The Investment Committee made a motion to recommend that the Committee be authorized to explore alternative investment management strategies for future consideration by the full Foundation Board. The motion passed unanimously by voice vote.

Winthrop University Real Estate Foundation Report
Mr. Carlos Evans reported that he will also be stepping down as President of the Winthrop University Real Estate Foundation. Mr. Skip Tuttle has been elected by the WUREF Board to replace him as President. Mr. Evans reported that the Courtyard property has been refinanced.

Old Business
None.

New Business
Mr. Brien Lewis notified the Board that the December 7 meeting will begin at 2 p.m. followed by a reception and dinner celebration.   

Mr. Lewis reported that two Winthrop biology majors discovered a new species of flatworm, and named the new species after a promising Winthrop graduate, Hannah Floyd, who passed away last year. The Floyd family has already established a scholarship at Winthrop in Hannah’s memory. This naming, a bright note amidst difficult economic times, is a welcome example of students creatively establishing a legacy for their former classmate and friend.

Adjournment
There being no further business, the Board adjourned at 2:58 p.m.

Minutes submitted by Laura Lynn Stubbs, Administrative Assistant, Office of the President.

Winthrop University Foundation
Phone: 803/323-2229
Fax: 803/323-4550

302 Tillman Hall
Rock Hill, SC 29733, USA