In 1942, the UT Board of Regents created the John Charles Townes Foundation (JCT) to receive gifts dedicated to the Law School. JCT, sometimes referred to as an internal foundation, is not a foundation at all. It is simply the name used to identify a group of endowments benefiting the Law School and is held by UT. The endowment funds are managed by UT through UTIMCO. Funds available for expenditure from those endowments are controlled by UTIMCO policy that differs somewhat from the Foundation policy (see Investments of Foundation Assets). The resolution creating JCT was amended in 1983. Both resolutions are under UT Agreements, Section B.
At a November 10, 1951 meeting of the Board of the University of Texas Law School Association (a predecessor of the current Alumni Association), a decision was made to form an independent Foundation. A copy of the minutes of the original formation meeting can be found here: Foundation History, Section A and a copy of the original Charter is under Foundation History, Section B. According to W. Page Keeton: An Oral History Interview, there was a need to have a place where alumni could donate that would not be under the control of political influences at UT. It would also allow donors to give strictly for the benefit of the Law School as opposed to UT in general.
The Foundation was originally organized as a membership organization—one of the forms of a Not-for-Profit Organization. The founders were named as “Members for Life” and had the authority to elect other “Life Members.” There were no other members.
The Life Members could amend the Bylaws and Articles of Incorporation. Life Members named themselves as Trustees, and elected another class of Trustees known as ______. The Executive Committee was comprised of the Life Members and, traditionally, the Life Members elected others from their ranks as President and Vice President.
In 2001, the Life Members decided that the two-tiered organization was no longer appropriate and made major changes in the Articles and Bylaws. The first Board meeting under the new organization was in May 2002.
Under the new organization, all of the authority of the Life Members in the prior organization was vested in the Board of Trustees. In other words, the full Board now has control of the Bylaws and Articles and elects Trustees and officers. The reorganized Foundation is no longer a member organization.
One vestige of the old system remains. Those individuals who were previously Life Members were grandfathered as “Life Member Trustees.” This was done in the belief that this would help with continuity as the Foundation adjusted to its new system. However, the Life Member Trustees have no other special status; all Trustees have the same rights and responsibilities in governing the Foundation. The creation of Life Member Trustees is contained in Section VI of the Articles of Incorporation.
The individual Life Member Trustees can at any time decide to become Senior Trustees, a category of former Trustees. Senior Trustees are invited to attend Foundation Board meetings. However, they do not have the status of Trustees; they cannot vote and do not have the responsibilities of Trustees. Section 14 of Article III of the Bylaws covers the category of Senior Trustees.
Another major change in the new organization is the term of the Trustees. In the past, Trustees were elected for one-year terms, but could be reelected indefinitely. Now, Trustees (except for Life Member Trustees) are elected for three-year terms and can be reelected for an additional three-year term. After two consecutive terms, a Trustee may not be considered for further service on the Board until a minimum of one year has elapsed.
JCT still exists today and has an agreement with the UT Law School Foundation only in a limited sense. The 1942 resolution provided for a committee of the State Bar to advise the Dean on the expenditure of JCT funds. The 1983 amendment, among other things, substituted the UT Law School Foundation as the advisor to the Dean on expenditures. However, the Dean is not required to accept that advice, whereas in the case of endowments held by our Foundation, our Board has final control.
Most, if not all, of the JCT endowments in recent years have resulted from solicitations by the UT Law School Foundation. For various reasons, those funds went to UT rather than to the Foundation. The most common reason for funds going to the University is to obtain matching funds from UT. When UT has matching funds available, the base gift must go to the University in order for the donor to obtain matching funds for the endowment. Also, some contributing organizations must give funds directly to UT rather than to the Foundation. In some cases, part of the gift went to UT and part is held by the Foundation, resulting in a divided endowment.
In recent years, the Board of Regents has been eliminating some internal foundations created in prior years. In 2003, the UT Law School Foundation was asked whether it had any objection to eliminating the John Charles Townes Foundation. Since JCT is only a paper foundation, its elimination would only remove our Foundation’s ability to refer to JCT as a sister foundation and abolish our right to advise the Dean on expenditures. The Board felt that the ability to refer to our sister foundation added to our prestige and could help in fund raising, so UT was asked to keep the arrangement in place.
The staff has compiled a number of additional historical documents relating to the Foundation, much of which is very interesting; however, because of the volume, all of it cannot be included here. These additional historical documents have been included in a notebook entitled The University of Texas Law School Foundation: Supplemental Historical Material. A copy is available upon request.