A Record-Breaking Donation Ignites a Donor Due Diligence Firestorm
“Donor due diligence” is an absolute necessity these days, especially in the era of social media where news travels faster than a speeding bullet. Charities don’t want to scare off big donors with too many questions, but every big donor has to be vetted so that the charity doesn’t stumble into accepting a gift from a gangster or grifter. Or worse. Announcing a gift that might not even exist. There is plenty of literature online about the need for charities to really look into a donor’s closet to make sure there is nothing there that could cost more in reputational damage than the massive gift is worth.
Last weekend, at my school’s commencement ceremonies, our President announced the largest gift ever made to an historically black college or university (HBCU). The donor’s gift of non-publicly traded stock is worth nearly $240,000,000 according to the President and Board Chair. But within days, people started asking questions. You can’t go around giving out that much money and expect that people won’t want to know who you are and where you came from. And how did you get all that money? So people started asking. I even went online to find information to help me brag about the donation on this blog.
Well, you can’t hardly find hide nor hair of the donor, the company whose stock composes the donation, or the family trust through which the donor made the gift. Not anywhere on the internet, and I am pretty good at internet sleuthing. And the strange, 31 year old slightly disheveled and seemingly bored donor who wears a Covid era facemask most of the time has a murky past. I hope it turns out that he is forever accurately described as a “reclusive billionaire,” but its hard to imagine that right now.
So now, after a rather devastating social media indictment by one observer, and more questions asked by the Tallahassee Democrat, the University’s Board has called a special meeting. Apparently, only the Chairperson knew about the gift before it was announced. The Board’s vice chair — a FAMU Law grad and my former student — says there are too many unanswered questions and insisted on the special meeting. Questions arose after Jarelle Blakely from HBCU Digest wrote his indictment, promising to apologize publicly if he is proven wrong. He and his publication are HBCU cheerleaders so nobody can accuse them of a hatchet job. Here is some of what he said.
FAMU announced that Gregory Gerami, CEO of a hydroponic farming and hemp plastic company in Texas, made a record $237 million donation to FAMU from the Issac Batterson 7th Family Trust. According to HBCUGameday.com, “a video recorded at the graduation ceremony shows FAMU president Larry Robinson behind the podium as the check is revealed.
A donation of this magnitude would be the largest contribution to an HBCU EVER. It’s more than the endowment of every HBCU, save Howard and Spelman. It would be a game changer of the highest magnitude and according to the Tallahassee Democrat, “adds to the FAMU Foundation’s current endowment value of $160 million and will bring it up to nearly $400 million.”
But who is Gregory Gerami? Someone who gives a quarter of a billion dollars must be a billionaire, right? He must live in the lap of luxury and have a history of philanthropic giving? He must have a veritable track record of success in business? A few minutes on Google shows he has none of the above. According to the Tallahassee Democrat, he says he did not attend FAMU or graduate from college, but he started off his career by building a landscaping business and has also worked in property management and economic development consulting before establishing his farming company.
He ran for city council in Arlington, Texas and Saginaw, Texas, coming in last place in both races. For a would-be billionaire, his online presence is strange. There is no mention of the Issac Batterson 7th Family Trust online, anywhere, before this “contribution.” The Batterson Farms IG page has 5 posts and 74 followers. The website has a Gmail email account. He has five LinkedIn profiles, all sketchy and littered with misspellings.
Previous attempted donations to Miles College and Coastal Carolina University came to bizarre conclusions. At Coastal Carolina University, he was slated to donate $95 million. Why? Because he had “tax things” to offset, and, I kid you not, had a girlfriend who went there! An investigation by The Myrtle Beach Sun News found that he changed course because he felt disrespected by university officials, accusing them of racism, which they have denied.
A little more digging shows that Gerami served time in prison for an assault charge in 2022 and has a $1,500 judgment. He has $237 million for FAMU and can’t pay a $1500 judgement? I could go on about how Batterson Farms Corp has no searchable contracts in the state of Texas or with the federal government, or how there are no profiles of the family trust on any nonprofit database or with the IRS, or with the Comptroller of Texas.
The Miami Herald raises more questions, including why such a wealthy man would have Gofundme accounts seeking donations to help with family medical expenses. Lord knows I hope the gift is the real deal. Please don’t let this blow up in our faces. But right now, nobody is saying nothing. And that nobody on the the entire board, except the Chair, knew anything of the matter is really not a good sign. Even if everything turns out fine, somebody dropped the ball bigly. As for the teachable point, here is just a sample from one online source discussing donor due diligence:
Establishing a due diligence process to vet potential donors is critical to avoiding reputational damage and staving off financial risks to your organization. Accepting donations from unscrupulous donors can lead to wider donor fallout and associated PR/legal fees. Nonprofit organizations and educational institutions are facing heightened consequences to accepting funding that is, at best, counterintuitive to their mission. The stringent due diligence practices seen across the financial services industry to comply with regulatory standards are increasingly being adopted by nonprofit fundraising teams to protect their organization from financial and reputational threats.
Seasoned prospect researchers will recognize overt “red flags” that are barriers to accepting gifts from potential donors, such as highly publicized links to terrorism and corruption scandals. But as “red flag” categories broaden, it is becoming more subtle and difficult to spot a potential pitfall. As a result, the workflows associated with incorporating effective due diligence practices into the donor prospecting lifecycle are evolving with new complexities.
darryll k. jones