University of Louisville

[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 Louisville, a 2015 MOU creates the John H. Schnatter Center for Free Enterprise in a partner donorship with John Schnatter (CEO of Papa John’s). Unlike many past agreements, where all programs and hiring must comply with a centrally defined “Objectives and Purposes,” the "Center's Mission" and “Objectives” are stipulated a supplementary document:

The mission of the Center is to engage in research and teaching that explores the role of enterprise and entrepreneurship in advancing human well-being (the "Center's Mission").

The Center’s staff and activities are required to “support the Center’s Missions.” In fact, the MOU states unambiguously that “the Donor agrees to contribute funds to the Foundation exclusively to support the Center Programs to advance the Center's Mission” (UL 2015 MOU, Section 4.a).

The MOU further clarifies that compliance 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. (UL 2015 MOU, Section 8.a)