Q&A: Giving Transparency

This article is one of several that will appear in the Alumni Review or in Turnouts, our monthly digital newsletter, delving deeper into some of the issues addressed by the recent VMI Alumni Association survey. Several of those responding to the survey seemed curious to learn more about how charitable gifts are made, spent, or invested and about accountability measures. With the goal of ensuring alumni have a number of perspectives from current and past leaders about this very important topic, below is a Q&A with several individuals whose professional and volunteer backgrounds make them well-suited to address the issue of proper stewardship of donated funds.

Ernesto Sampson ’98

Ernesto Sampson ’98 is the current VMI Foundation Board of Trustees president and a former VMI Board of Visitors member. In addition, he serves on the VMI Investment Holdings, LLC, board, which is responsible for oversight of the Alumni Agencies’ endowment. He is an ex officio member of the Jackson-Hope Board and the Keydet Club Board of Governors. He holds a Bachelor of Arts degree in economics and business from VMI and a Master of Business Administration degree from Virginia Commonwealth University.

Q: You have served VMI on a wide variety of boards and in a large number of capacities. What’s your perspective on how the Agencies stewards the funds entrusted to it?

A: As VMI Foundation president, it is important to me to speak to concerns mentioned regarding transparency raised in the recent VMI Alumni Association survey. Several respondents seemed curious to learn more about how charitable gifts are made, spent, or invested, and about accountability measures. The fair and honest charitable support and management of gifts for VMI’s sake has always been at the forefront of every decision, but I certainly appreciate any opportunity we have to more deeply explain the details of the process. To that end, we have brought together several subject-matter experts to address the issue in this article.

From my perspective, we manage all funding activities in a safe and prudent manner, first and foremost by honoring the intent of the alumni in directed gifts and paying close attention to funding priorities through the annual giving process. It is all about the cadets, and we’re always looking to better not only the quality of life of the cadets, but also their wellbeing, academic excellence, athletics, all things that support cadet accomplishment and achievement. And, we also consider the strength of VMI as a whole. There are dedicated individuals within the VMI Foundation and the members of the VMI Investment Holdings, LLC, board who ensure that the funds are managed in a prudent and appropriate manner and are not overly risky. I can assure you that steps are taken every day to make certain the funds are being used properly.

From an investment standpoint, we are always aware that our charge is to manage the funds properly, looking at the appropriate level of risk considering the returns and how best to support the Institute and future cadets.

Q: What else should alumni know about the management of donated funds?

A: How carefully the money is managed. When a donor gives to any fund other than Annual Giving, it is carefully invested. I have experienced firsthand the checks and balances in place to continue support in perpetuity.

Steve Hupp ’84

Steve Hupp ’84 has served VMI and the VMI Alumni Agencies in a number of capacities. He is a former VMI Foundation Board of Trustees member, serving as that board’s president from 2019–21. In addition, he is a former member of the Alumni Agencies Board of Directors, the Peay Endowment Cabinet, and the Jackson-Hope Board. He is a current member of the Keydet Club Board of Governors. In January 2024, he and his brother, William T. “Billy” Hupp ’77, were honored with the Keydet Club’s highest honor, the Spirit of VMI Award, for their outstanding support of VMI athletics.

Q: How does the Agencies steward unrestricted funds? Can you give us a big-picture overview of this process?

A: Each year’s unrestricted budget begins with determining what funding is available to the Institute through either the spin-off of a portion of the interest earned from the unrestricted endowment, currently 4.25%, or funds received each year through the annual giving process for both the VMI Foundation and the VMI Keydet Club in scholarships and team operations funds. The largest contributor is the unrestricted endowment.

Each spring, Brig. Gen. Dallas Clark ’99, deputy superintendent for finance and support, comes to the VMI Foundation Finance Committee. This has been going on for 20 years or more, and [he presents] a projected budget for the next fiscal year. For example, in early spring, the VMI Alumni Agencies would prepare the projected available funding for FY25 and provide that to the Institute. In April 2024, Brig. Gen. Clark would then present the FY25 unrestricted budget to the Foundation Finance Committee to show them exactly where that allotment of funds from the Agencies will go by line item.

Then, at the following VMI Foundation fall board meeting, Brig. Gen. Clark and his team will come to the Finance Committee and bring the actual numbers from the previous FY, in this example FY24. They carefully review that budget and show them exactly where the dollars went and point out any differences from their original intent.

The Finance Committee of the Foundation Board has full visibility to the unrestricted use of the unrestricted funds that the Foundation gives VMI.

Q: Where do the unrestricted funds go once they are handed over to VMI, and how do state laws concerning fund allocation affect their use?

A: State funding supports certain and particular buckets at VMI very much like restricted funding. State funding can’t be used for anything else. However, those buckets can come up short in the implementation of the need or purpose. Our unrestricted funds will often help complete and meet the need in those buckets, as well as the programs and operations not supported by those buckets.

And what I’ve seen in those buckets is a lot of ongoing repair and maintenance of the VMI post, new buildings, upkeep and renovations, cadet scholarships to encourage top prospects to attend VMI, academic programs and faculty salaries, and cadet uniform upkeep, any area like that which may have a shortfall.

The key to unrestricted funds, which many alumni recognize as the most beneficial to VMI operations, is that the leadership has the opportunity to use it where needed. I don’t know of a successful operation that runs without a fund that allows the leadership to make decisions that best serve their mission, goals, and objectives each year. But even in this case, the Institute seeks our partnership, agreement, or open discussion on their plans for its use. The VMI Foundation Finance Committee and Agencies leadership have the full opportunity to ask questions and share any preferences or concerns we have.

Q: What is your overall impression of the VMI Alumni Agencies’ stewardship of donated funds?

A: I wouldn’t be a donor if I didn’t have every confidence in the world of their practices. The growth of the endowment stands as proof and evidence of their success. There is no way an organization could work its way up to a $750 million endowment today, one of the top in the nation per student of a public college, without properly stewarding the monies that have been given to them. In addition, our financial statements are audited annually and consistently receive clean reports.

I’m always impressed by the integrity of the staff and leadership of the VMI Alumni Agencies. We alumni tend to think the only people with honor and integrity in the world today are VMI grads, but that is not the case; the expectation of VMI employees is that they embody these traits, as well. Therefore, they go above and beyond to show their integrity and honor and character because they realize how important it is in the atmosphere they’re working in and to the people they’re talking to.

VMI Alumni Agencies Staff

On the staff side, Andrew Deal ’12, Alumni Agencies chief development officer, and Crissy Elliott, chief financial officer, play vital roles in ensuring donated funds are stewarded in the best interests of both the donor and the Institute. Among many other duties, Deal is responsible for raising funds and working with donors. For each restricted gift, his team establishes a memorandum of understanding, referred to as an MOU, for a specific, donor-authorized purpose.

“It is important as a fundraiser to understand the donor’s interest and intents,” said Deal. “Our goal is taking those interests and aligning them with the Institute’s priorities to make the maximum impact on the Corps of Cadets. When it comes to establishing MOUs, we want to make sure that we are defining these in a way that provides VMI with the ability to utilize the funds to their full potential. At times, a very narrow focus for a restricted fund causes us to not be able to spend the resources. To ensure utilization of the funds, at times, the donor will use the word ‘preference’ when outlining an intent for a gift to provide flexibility if there is a year we can’t meet the specific restrictions. This is all done through conversations with the donors when possible.”

Elliott, who brings over a quarter century of financial expertise to her role, noted the close communication and coordination needed for the Agencies to support VMI’s mission.“With the amount of support we provide increasing—we now rival state support—our operations must be a well-oiled machine,” she stated. “This is true not only from the viewpoint of outside transparency but internally, as well, from start to finish. We begin with understanding the needs and priorities of the Institute and continue on to finding donors’ philanthropic interests that align with those needs and priorities. We then work with donors to document the terms of their gift through a clear and concise MOU that is signed by all parties (donor, VMIAA, and VMI) and steward the relationship through consistent reporting to the donors and communication with the Institute on funding resources. We can only work effectively if we work together.”