An ongoing, two-year battle for financial oversight within the ISU Foundation will enter the Iowa Supreme Court Chamber for the first time.

The Iowa Supreme Court will hear oral arguments Thursday in Des Moines on an appeal of a Story County District Court ruling. The ruling upheld the status of the Foundation as a non-profit, private fund-raising organization, whose records are not subject to open-records laws.

Filers of the appeal — Mark Gannon, former land manager for the ISU College of Agriculture and owner of Gannon Real Estate Services Inc. and Des Moines businessman Arlen Nichols — contend the Foundation is a “fiduciary or third party” arm of the Iowa Board of Regents and Iowa State, making it a “quasi-governmental” body whose records are liable to the scrutiny of state open records stipulations.

Under Iowa Code, the foundation is an “affiliated organization” of the Board of Regents — which is also listed as a defendant in the appeal. Despite this, District Judge William Ostlund dismissed the lawsuit in Story County District Court, stating the Foundation was not engaged in government functions. As a result, donation records are not a matter of public record until Foundation funds are dispersed to Iowa State, Ostlund ruled.

“The Court agrees with the Respondents, the Iowa Code grants the Regents authority to ‘accept and administer’ trust and is the authority by which the ISU Foundation may serve as trustee. The Court further agrees with the Respondents that even though the Regents may have the authority to engage in private-fund-raising, it is not the function of Iowa State University to do so,” the ruling states. “However, this court finds that Iowa State University did not abdicate any of its functions to the Foundation in order to ‘prevent the examination or copying of a public record’ in violation of Iowa Code.”

Gannon said the court erred in its ruling.

“The regents have a requirement to oversee their books and they’re deciding to ignore that responsibility,” he said.

“It’s as much or more to get the regents to do their job than getting the ISU Foundation to open their records. We just want to make sure when people give money, that it’s used for the purpose it was given for. The foundation does nothing to guarantee that.”

Gannon cited a 2001 controversy where claims were made that the Foundation had mishandled the Kiley and Marie Powers estate, selling it against the wishes of Marie Powers in 1996.

Gannon said the Power’s case is a glaring example for the need of an outside audit of the Foundation.

The Foundation disagrees.

“It is important to have donor privacy and to maintain that level of trust and confidence as they’ve entrusted us with private, personal financial information,” said Jason Menke, assistant director of communications for the Foundation. Menke also said Gannon and Nichols are wrong in their interpretation of the Foundation’s relationship with the regents.

“The Foundation is overseen by a voluntary body of governors who elect a board of directors. The regents don’t have direct oversight,” he said.

The regents direct the course of the university from a research and educational standpoint, telling the university which initiatives it needs to target.

The university is able to come and request private funds and fund-raising, if it is in need of them, from the Foundation to help finance certain projects directed by the regents, Menke said.

“We are impacted by the Board of Regents by the direction it gives the university, but the board doesn’t directly tell us, ‘You need to direct or raise funds for this project,'” he said. “Our fund-raising initiatives don’t come from the board, they come from the university.”

“We remain accountable to the university and donors, but we will steadfastly protect the privacy of those individuals who choose to support the university in confidence,” he said.

“It would have an impact on future donor decisions as there are often provisions in the wills, deeds and other financial information they entrust us with that a donor may not want published for a variety of reasons.”

Menke said the Foundation is optimistic.

“We remain confident in our position as a private non-profit and believe the district court ruling will be upheld,” he said.