Fiesta to Fiasco

April 7, 2011

Where do I begin?

That ‘60s Erich Segal book, “Love Story,” opened with those words, remember? It was about a college romance that ended in tragedy.

The Fiesta Bowl debacle is about college, all right, but there’s no romance in it, and the tragedy is that there has been so little oversight by the board for so long—if one believes the findings of the 276-page Final Report of the Counsel to the Special Committee.

Some background for those of you who may not be up on your U.S. collegiate sports: I certainly am not, but believe me, this governance nightmare transcends any “football versus soccer” debate. The Fiesta Bowl is an Arizona nonprofit that runs, among other things, the Tostitos Fiesta Bowl, a postseason football game that pairs up top college teams. It’s one of five postseason games that alternate hosting the “national championship” of college football, through a consortium called the Bowl Championship Series, or BCS. The organization came under investigation when allegations surfaced that it was reimbursing employees for political contributions, a violation of election law.

The Fiesta Bowl board fired their CEO, John Junker, following release of the resulting report that, in addition to detailing such contributions, describes years of egregious practices. But where was the board all along? According to the report:

  • Junker and other employees were reimbursed for tens of thousands of campaign contributions, grossed up to net the amount of the contribution.
  • A lobbyist who worked with the Fiesta Bowl chose the investigator for an earlier investigation into allegations; the lobbyist chose which employees the investigator would talk to and coached them in their answers. The investigator paid the lobbyist a third of his fees. Result: no fraud uncovered.
  • When the Bowl planned a political fundraiser and couldn’t send out invitations to it from their organization’s e-mail because of campaign laws, they asked a board member to send the invitations from his company.
  • The Fiesta Bowl paid for four private golf-club memberships for Junker, plus cars and monthly auto stipends for him and his wife, a non-employee.
  • The Bowl paid $33,000 for a 50th birthday party for Junker.
  • One board member’s company received a no-bid $300,000 contract to perform construction work for the organization.

I could go on and on. There’s much more in the report, and some of it is even more titillating than what I’ve written here. But there are so many more questions than answers: Who was watching over the Bowl’s tax-exempt status to ensure there was no personal benefit to any employee? Whose job was it to know enough about campaign law? Who was worried about conflicts of interest?

One sad statement stood out in the report. An executive committee member said, referring to Junker and his staff, “they don’t tell the board members anything.”

Just one more question: If the staff doesn’t tell the board anything, whose responsibility is it to find out?


4 Responses to “Fiesta to Fiasco”

  1. Joshua Odetunde Says:

    Why are nonprofit organizations not held accountable for their mission statements when every registered nonprofit must have had a mission statement? This story tempts one to rush to judgment about nonprofit organizations. But there are genuine nonprofits struggling to make positive social impacts.

    • Deborah Davidson Says:

      Joshua, you have asked an extremely important question that is easy to answer but often very difficult to enact: it is the board that is responsible for keeping the organization aligned with its mission. And frankly, if boards, overall, don’t do a good job, we can all anticipate the spectre of Congress and the IRS doing it for them. None of us wants that. Boards are there to oversee the finances, activities, and management of the organization, and at the root of all those things is the mission. We don’t relish writing about scandals at BoardSource–but stay tuned for our next post, about the Central Asia Institute–these stories serve as cautionary tales about what happens when oversight is deficient or virtually absent, and we hope, a wake-up call. Thanks for writing.

      Deborah Davidson, BoardSource VP for Governance Research and Publications

  2. Eliz. Scherz Says:

    I believe Board Members have an important obligation to provide oversight but it becomes very challenging to keep track of an organization when there is a lot of money and a lot of contracts and grants involved. We look at the financial statements and depend on the annual audit but even here in California auditors have failed to red flag a city such as Bell. It is difficult to recruit Board Members.

  3. I am of the 100% school. That is, each person is 100% responsible for any organization that we join. While all board members may not be accountable for the particular actions taken that are illegal or unethical, each is responsible for knowing what is going on and asking hard questions when needed.

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