Naming of donors wasn’t mandated

Investigation

the state agency as well as some of the same board members.

Its purpose is to raise money to support agency operations not paid by taxpayer dollars, such as supplementing the $700,000 salary for the agency’s chief science officer and the $300,000 salary of the chief executive.

The Legislature authorized the foundation’s creation, capped the salary supplements, required that a financial summary be filed with the state and prohibited foundation donors from receiving grants from the cancer agency.

Lawmakers did not, however, mandate the disclosure of donors or require anyone outside the agency to confirm in a timely fashion whether donors to the foundation received grants.

The foundation says there’s been no legal lapses and that the state auditor reviews for conflicts.

But the state auditor’s report, due in January, will be the first audit of an embattled, 3-year-old agency that has awarded almost $805 million of the $3 billion Texas voters approved to find cures for cancer.

The foundation refused to release the names of donors to the Austin American-Statesman.

It also produced a letter from the IRS saying it doesn’t need to file 990 forms required of many nonprofit groups because it was created as an “affiliate of a government unit.” The forms provide the public with details about how a tax-exempt organization raises and spends money.

“We chose from the beginning to adopt a donor bill of rights to protect their privacy,” said Jennifer Lustina Stevens, who serves as the foundation’s executive director and whose marketing company also manages TexasOne, the nonprofit organization that raises money to pay for Gov. Rick Perry’s economic development trips.

The Legislature bars “an individual, an organization, or an employee, officer or director of an organization that makes a donation” from receiving a grant from the state cancer agency.

State Rep. John Otto, RDayton, said he included that language in the state appropriations bill as a preventive measure.

“CPRIT grants were to be awarded based on the best science and after an independent review of each submission,” Otto said. “The rider was a way to enhance the independence of that process.”

Dr. Joseph S. Bailes, who recently became the foundation chairman and serves on the agency’s oversight committee, said that the wall the Legislature erected between donors and grant recipients is respected.

“The CPRIT Foundation strictly abides by that restriction,” Bailes wrote in an email. “No foundation donor has received a grant.”

Bailes wrote that the foundation donors include pharmaceutical companies, individuals and a couple of private foundations.

The public is protected from conflicts, Bailes said, because “the state auditor reviews the Foundation activities” in conjunction with the agency. Otto also said, “I would expect the State Auditor’s Office to have access to this information in order to ensure a proper level of independence is maintained.”

But the state auditor, according to its website, has never before audited the agency or foundation.

The auditor’s findings in January might hinge on his definition of “organization” because the cancer agency’s interpretation, according to agency spokeswoman Ellen Read, has been that someone could receive a grant even if an affiliated foundation gave money to the cancer foundation.

She said that would be OK as long as the grant recipient and foundation donor are considered separate legal entities.

Although the cancer foundation refuses to disclose its donors, some of the donors, particularly those supporting univer- sities, disclose their donations through their own IRS filings.

For example, the Southwestern Medical Foundation, whose main mission is to support the University of Texas Southwestern Medical Center in Dallas, donated $22,500 over two years to the cancer foundation, according to the medical foundation’s IRS filings.

UT Southwestern is a major recipient of cancer institute grants for scientific research. UT-Austin, the M.D. Anderson Cancer Center in Houston and other UT System campuses also have received cancer institute grants.

The University of Texas Foundation, which supports the UT System and its 15 academic and medical campuses, donated $33,810 to the cancer foundation over three years, said Jenny LaCosteCaputo, a system spokeswoman. It also covered the $6,190 bill for two dinners for the cancer foundation at the Bauer House, the chancellor’s residence in Austin.

Randa Safady, executive vice chancellor for external relations, said the UT System is aware of the restriction in the appropriations bill and abides by it.

“The university-affiliated foundations are separate nonprofit organizations,” Safady said. “They’re not governed by our Board of Regents. They’re stand-alone organizations.”

The same could be said for companies or individuals with foundations.

For the past several months, the state cancer agency has been riddled with controversy despite attempts to minimize political interference with an elaborate system for reviewing grant applications.

The idea was that outof-state scientists, who are ineligible to apply for grants, would review the scientific worth of an application. Their recommendations would be presented every three months as a slate of recommendations to the agency’s 11-member oversight committee, which could only accept or reject the whole slate by a two-thirds vote.

But strains began to appear several months ago among the agency’s top executives in charge of the reviews.

Dr. Alfred Gilman, the agency’s chief science officer, and 33 outof-state scientists who review grant applications resigned because an $18 million grant for a Houston business incubator was reviewed by business experts but not a scientific panel.

There also were com- plaints about interference in the review process.

Jerry Cobb, the agency’s commercialization officer quit after it was discovered that Dallas biotech firm Peloton Therapeutics was awarded an $11 million grant without any review because of an agency mix-up.

Emails between Gilman and Cobb discussing the Peloton grant — if they existed — can’t be found, according to the agency’s compliance officer.

This week, the exodus was completed when Bill Gimson, the agency’s executive director, offered his resignation as the outside investigations began.

The foundation’s role is now coming into view.

Besides Bailes, two other members of the agency oversight committee also serve on the foundation’s board: Barbara Canales of Corpus Christi and Austin businessman Jimmy Mansour.

Mansour, who was the foundation’s original chairman when it was created, chairs the agency’s oversight committee.

He referred all questions to Bailes.

Bailes said the agency’s process of reviewing grant applications is kept separate from the foundation’s activities.

He said the out-of-state scientists who initially review grant applications don’t know who donates to the foundation. They are paid from $4,000 to $75,000 a year, depending on how much time they spend on the reviews, according to the agency. Some of the foundation’s donations helped pay that cost.

On the other hand, Bailes said would-be donors to the foundation are warned that they can’t receive state grants.

Only Mansour, Canales and Bailes, who serve on both boards, would theoretically know both foundation donors and grant applicants when it comes to a vote on awarding grants.

The other eight members of the agency oversight committee might not know.

In the future, Dallas lawyer Tom Luce, the newest member of the oversight committee, said he would want the agency’s compliance officer and the three foundation board members to affirm that there is no improper connection between donors and applicants.

“Before I vote on another grant, I would want to be assured of that,” Luce said.