University of Kentucky

[Introduction]

1. Mechanisms of Contractual Control

A. IDEOLOGICAL CONDITIONS FOR DONOR WITHDRAW

At universities where the public has been able to see a contract between by a university and the Charles Koch Foundation, a common stipulation is that any activities comply with the a provision of the contract that CKF calls its “Objectives and Purposes.” In later contracts, this provision is restructured so that the activities must comply with a predefined "mission" of the program.

At the University of Kentucky, a 2015 MOU created the John H. Schnatter Institute for the Study of Free Enterprise in a partner donorship with John Schnatter (CEO of Papa John’s). Much like the University of Louisville, the "Institute's Mission" replaces Koch's “Objectives and Purposes.”

In this instance, the agreement's preamble asserts that "has for at least (10) years engaged in academic programming, teaching, research and support for faculty and graduate students within the Gatton College for the study of free enterprise" and the "Parties desire to expand those existing activities." 

The agreement stipulates Dr. John Garen to be the director of the Institute, and ten years prior to this agreement, in 2005, Garen became chair of the UK's economics department. According to his CV, he began coordinating the BB&T Program for the Study of Capitalism in 2007. 

Attachment A attributes the Institute's "Mission" to the University:

The Gatton College of Business and Economics will house the newly created John H. Schnatter Institute for the Study of Free Enterprise (the "Institute"). The Institute enables the Gatton College to continue and expand its longstanding mission to discover and understand aspects of free enterprise that promote the well being of society (UK 2015 MOU, Attachment A)

The agreement then carefully states:

the University has informed the Donor, and the Donor is relying on such representation, that the Institute's mission is to discover and understand aspects of free enterprise that promote the well-being of society (the "Institute's Mission") (UK 2015 MOU, Section 2.a).

The MOU further clarifies that compliance with the "Institute's Mission" is determined by the sole and “reasonable discretion” of the Donor, who retains the ability to withhold funding at anytime, and revoke the agreement altogether:

The Donor has the right to terminate this Agreement and discontinue or withhold any Contributed Amount. . . .If at any point during the Term, the Donor determines in its reasonable discretion that: (i) the Foundation or the University has not acted in good faith under this Agreement; (ii) the Center Programs are not advancing the Center's Mission as stated in this Agreement, . . . the Donor shall notify the Foundation and the University of its determination, and the Parties shall make a good faith effort to meet within sixty (60) days to discuss the Donor's determination. If the Donor's determination does not change after the end of this sixty (60) day period, the Donor has the right to terminate the Agreement upon providing thirty (30) days' notice to the Foundation and the University. During the pendency of the sixty (60) day period and any following thirty (30) day notice period, the Donor shall not be obligated to provide any Contributed Amount. In the event of termination of the Agreement, the Foundation and the University each agree to return all uncommitted Contributed Amounts to the Donor within fifteen (15) days of the Donor's request. (UK 2015 MOU, Section 8.a)