A new report finds that 70 percent of Massachusetts’ wealthiest private colleges did business in fiscal 2009 and 2010 with companies affiliated with trustees on the schools’ boards, a number strikingly higher than the national average of 25 percent.
Such arrangements are widely considered to be conflicts of interest. Several of the 20 schools in the report, including Harvard University and Boston University apparently did not fully disclose all the ties on forms required by the Internal Revenue Service and the state attorney general.
The report, expected to be released Tuesday, was written by the Boston think tank Tellus Institute, which has published several critical analyses of universities’ financial policies. It was paid for by SEIU Local 615, a union that represents workers at several of the colleges. The union is lobbying for a state bill that would call on private colleges to reveal more information about finances than currently required.
Several of the colleges said the union sponsorship was itself a conflict of interest.
“I’m underwhelmed by this report,’’ said Rich Doherty, president of the Association of Independent Colleges and Universities in Massachusetts. “There’s a tremendous amount of disclosure that these colleges make.’’
‘Conflicts can compromise the integrity of boards.’
Many of the schools said they have policies designed to keep conflicts of interest from adversely affecting university decisions. But none of themdenied that some of their trustees do have conflicts. At least one acknowledged problems with filings.
BU, which vowed under scrutiny years ago to carefully police its board for such arrangements, said it failed to send a 2010 form to the attorney general. The form requires schools to disclose transactions worth $10,000 or more involving companies with ties to college trustees.
“The report is quite right; the schedule is not there,’’ said Todd Klipp, BU’s general counsel. “But it truly is through some kind of screw-up. There was absolutely no effort to hide anything.’’
The school is preparing a letter to the attorney general to correct the mistake. Outside specialists on nonprofit governance said the existence of conflicts is troubling, regardless of how fully and clearly they were disclosed.
“It’s not illegal to have conflicts, but it’s stupid, especially from a public relations standpoint,’’ said Jack Siegel, a Chicago consultant who has studied the issue. “Conflicts can compromise the integrity of boards. If you’re a trustee who’s getting business from the institution, even if you’re not voting on matters related to your business, how are you going to vote on unrelated matters? You’re going to say, ‘Well, the chair of the executive committee scratched my back, so I’ll scratch his.’ ’’
The report, which Tellus assembled by matching up two years’ worth of publicly available state and federal forms, found that six of the 20 schools appeared to do no business with trustee-affiliated companies.
The other 14 account for 70 percent of those studied. A 2010 investigation by the Chronicle of Higher Education found a much lower rate among 600-plus schools nationwide: 25 percent.
The new report may have found a higher percentage because, unlike the Chronicle investigation, it looks only at colleges with large endowments. Those schools are more likely to have high-profile bankers on their boards.
Richard Legon - president of the Association of Governing Boards of Universities and Colleges, the industry group for trustees - said such conflicts “are not something that can always be avoided or that need to be fully avoided. The key is adhering to a policy to address them and taking transparency seriously.’’
Of the 14 schools that disclosed at least one conflict in 2009 and 2010, just two, Brandeis University and Northeastern University, filled out their forms in ways the report deems adequate.
The report flags eight other schools for filing forms “of uneven quality.’’ It cites Tufts University as problematic but does not lodge specific complaints.
It reserves most of its criticism for BU, Williams College, and Harvard. Williams, for instance, discloses in its state filings that eight of its trustees have conflicts, but does not specify the amount of money those conflicts involve. None of the transactions appear on its federal form.
Jim Kolesar, Williams’s assistant to the president for public affairs, said the college’s reporting was compliant. He added that the IRS form requires schools to disclose only transactions that meet certain thresholds, such as the percentage of a company a trustee owns. The state asks for a wider range of transactions.
On Harvard, the report questions why the school’s IRS forms - some of which were filed under the auspices of the Harvard Management Company, which oversees the school’s investments - do not mention Greylock Partners, a venture capital firm that counts HMC chairman William Helman among its partners. The Globe, among others, has reported that Harvard has invested in Greylock.
Harvard declined to answer the question specifically, but released a statement noting that it has a conflict-of-interest policy and saying that “all tax filings and disclosure forms are completed in full accordance with all IRS and state requirements.’’
Mary Carmichael can be reached at email@example.com.