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KANSAS CITY, Mo. -- The charitable foundation established by Ewing Kauffman, the self-made billionaire who founded a pharmaceutical company and the Kansas City Royals, needs tighter control from its board and should make sure the Kansas City area gets "substantial" benefit from the grants it makes, Attorney General Jay Nixon says.
Nixon began an investigation of the $1.7 billion Ewing Marion Kauffman Foundation six months ago following complaints that it had strayed from its founder's intent under the direction of a new president. Six members left the board of directors, three in one week, and some of them were strongly critical of president Carl Schramm, hired in April 2002. An attempt to oust him from the job failed on a 4-3 vote last year.
Nixon's investigation came in the role of his office as "steward of nonprofit assets" in Missouri. In the report released Thursday, the attorney general asked the board to implement his recommendations by Sept. 1, without saying what would happen if it didn't.
"Today is not a day for threats," Nixon said. "We've said what they should do."
Nixon said his 24-page report and the changes it recommends should be a "roadmap" for cementing the foundation's relationship with the city where it is based.
"It provides them an opportunity to guarantee to the community that they are going to remain engaged with Ewing Kauffman's beloved Kansas City," Nixon said.
In a statement, the foundation board said it would make a thorough review of Nixon's recommendations and respond "well within the timeframe."
"We are pleased that the attorney general's review confirms that the Kauffman Foundation 'continues to embody the hopes and promise of its visionary founder,' and further, that there is no evidence of any act of bad faith, lack of interest or mismanagement," the board said.
Jim McGraw, a former board member who resigned early last year, said he thought the report gave the board a lot of leeway.
"I think they got a rap on the knuckles," he said. "I think (Nixon) could have come down a lot harder than he did. I think he gave them the benefit of the doubt because it's still a relatively young foundation."
Kauffman, who died in 1993, was one of Kansas City's best-known and most popular personalities, admired for his philanthropy and affectionately known as "Mr. K." He took particular interest in helping young people and in guiding business entrepreneurship.
In his report, Nixon recommended that a "substantial" portion of the foundations grants -- which are around $50 million a year - benefit the Kansas City area, and also that a "substantial" number of its board members have ties to the area.
Further, he called for Schramm, a former health industry executive who has an apartment here but maintains his residence in Baltimore, to move permanently to Kansas City, and he recommended that the board revise and clarify its bylaws and articles of incorporation to "reassert its role" in governing the foundation.
The report recommended that articles of incorporation be changed to add a provision that an undefined but "substantial" portion of annual grants "have a positive impact on the Kansas City area."
June 20, 2013
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