S.C. State sued by its own foundation in bitter dispute over control of donor dollars
A bitter dispute between South Carolina State University and its charitable foundation has resulted in a “complete breakdown” of their relationship that threatens to diminish donor trust and depress alumni giving at a precarious time for the 130-year-old historically Black Orangeburg institution.
The long-simmering feud, which revolves around control of the foundation’s finances, recently escalated into an exchange of legal threats and accusations of financial impropriety after the university unilaterally terminated its 55-year relationship with the charity.
The South Carolina State University Foundation, formerly known as the Educational Foundation, is an independent 501(c)3 organization that has historically worked with S.C. State’s Department of Institutional Advancement to receive, manage and distribute funds the school raises in accordance with donors’ intentions and the university’s priorities.
The nonprofit, which manages all but a small fraction of the HBCU’s $17 million endowment, has been at odds with the university since early 2023, when it rebuffed a request to provide S.C. State President Alexander Conyers a $75,000 salary supplement.
While it eventually agreed to pay Conyers the requested money, the foundation alleges that he and S.C. State board chair Douglas Gantt have subsequently sought to exert undue control over the nonprofit’s finances and pressured foundation officials to make legally and ethically dubious use of donor funds.
The university, in turn, has accused the foundation of a “persistent lack of support” for S.C. State’s priorities and said its actions had undermined the university, its mission and the community it serves.
In a cease and desist letter sent to the foundation last month, S.C. State alleged the foundation’s lack of cooperation and transparency had created a “significant barrier” to the university’s institutional governance obligations, operational needs and accreditation responsibilities.
The April 23 letter, which demands that the foundation stop using S.C. State’s name, seal and logo, and halt its solicitation of donations for the university, blames the nonprofit for precipitating a “complete breakdown in the relationship” between the parties.
The foundation countered this week by filing suit against Conyers and Gantt individually for allegedly violating the organization’s constitutional rights and against the university for breach of contract.
“This lawsuit arises from a retaliatory campaign by South Carolina State University President Alexander Conyers to turn an independent charitable foundation into a compliant source of cash for his own priorities — a campaign that began when the Foundation refused to blindly supplement his own salary,” alleges the filing, which had been in the works prior to the foundation’s receipt of the cease and desist letter. “From that point forward, what should have been a cooperative relationship between a public university and an independent charitable foundation became a sustained effort by the President, aided by the Chairman of the University’s Board of Trustees, to seize control of the Foundation’s assets, donor relationships, governance, and voice.”
The lawsuit, filed Monday in Orangeburg County Circuit Court, asks a judge to declare invalid S.C. State’s termination of its memorandum of understanding with the foundation and to enter an injunction prohibiting the university from interfering with the foundation’s fundraising and charitable operations.
It further requests the immediate return of all donor records and the repayment of all improperly retained or diverted foundation funds, as well as compensatory damages and attorneys fees.
S.C. State University did not immediately respond to a request for comment on the lawsuit.
University spokesman Sam Watson said in a statement last month that the school’s recent actions, including the board’s decision to terminate its MOU with the foundation, were part of an ongoing effort to ensure continued alignment in the roles, responsibilities and operational practices necessary to meet accreditation standards.
He said the university remained focused on maintaining the confidence of donors and stakeholders and did not anticipate any disruption to its fundraising efforts.
The suit’s filing caps a tumultuous week for the HBCU, which was roiled by student protests over its decision to invite Republican Lt. Gov. Pamela Evette to deliver the university’s commencement address.
Conyers ultimately rescinded the university’s invitation to Evette, a staunch critic of diversity, equity and inclusion initiatives, in a move that elicited swift blowback from Republican state lawmakers.
Nine House members signed a letter denouncing the lieutenant governor’s cancellation and called on the state to defund the public HBCU, while Evette, who is running for governor, seized on the situation to call for an end to liberal “indoctrination” and DEI on college campuses.
The commencement firestorm, which came on the heels of two deadly shootings that shook the S.C. State campus earlier this school year, overshadowed a decision by university trustees last week to remove five non-voting members, including the S.C. State Foundation chairman, from its board.
The controversial move, which trustees said was intended to align the board with state law, passed by a 9-3 vote.
Newly elected trustee Donald Beatty, who recently resigned from the foundation board to assume his seat on the university board, cast one of the three dissenting votes.
Beatty, the former chief justice of the S.C. Supreme Court and uncle to foundation chairman Stephen Beatty, had been forced to get a temporary restraining order three days prior in order to take his seat on the university board.
The genesis of the dispute
Unlike some charitable organizations, which are primarily concerned with fundraising, the S.C. State foundation’s priority is managing donor money and disbursing it to the university and its students.
When S.C. State’s board chair sought a $75,000 salary supplement for the university president in February 2023, the foundation advised him it did not have the unrestricted funds to pay for the supplement.
Foundation chairman Stephen Beatty explained in a letter to Gantt, the university board chair, that while he did not oppose a supplement for Conyers, he believed it was the university’s responsibility to raise the money for it.
“Why is the Foundation being asked to determine how to compensate the University President?” he wrote. “Though we are custodians and stewards of private gifts made to benefit the University, we are not responsible for compensating its employees.”
At the time, the university was embroiled in litigation with past president James Clark, who in 2022 sued the school over a salary supplement he claimed he was owed.
Beatty wrote to Gantt that, in light of the Clark case, the foundation could not agree to boost Conyers’ pay without a guarantee it would not be held liable or directly responsible for funding any such arrangement.
Additionally, Beatty suggested having a larger conversation about resource planning to ensure the university had the ability to reward Conyers and any other key employees it saw fit in the future.
“The Foundation can be a valuable part of the solution,” he wrote. “However, the Board of Trustees must drive and lead that effort.”
According to the foundation’s lawsuit, the episode marked the beginning of the university’s “sustained effort” to exert greater control over the foundation’s assets and decision-making.
The relationship deteriorates
Despite the foundation’s initial reluctance to pay Conyers, it ultimately ponied up for the president’s salary supplement “after additional discourse with and sustained pressure by the University,” the lawsuit claims.
While the parties continued working together over the next couple years, and even entered into a revised MOU in November 2024, their relationship grew increasingly strained.
The foundation’s decision to cut off Conyers’ monthly salary payments in early 2025, after it accused the university of failing to comply with procedures outlined in the MOU, marked something of a turning point for their relationship.
Afterward, the foundation’s suit claims, Conyers embarked on a smear campaign to tarnish the group with allegations of financial mismanagement.
“Under the guise of accountability,” the university president began requesting detailed financial information from the foundation that went beyond what the group was required to provide under the MOU, according to the suit.
In reality, the foundation’s lawyers allege, Conyers simply wanted information and access to the group’s funds in order to repurpose them.
The lawsuit claims that throughout the last year he and Gantt threatened to terminate the MOU if the foundation did not change its bylaws and governance structure to give the university more control over the group’s assets.
When their attempts at intimidation failed, the university board voted to reaffiliate with a different foundation it believed would be easier to control, in violation of the MOU, the suit alleges.
The conflict grew even more contentious last August after the university announced it would hold a scholarship gala — the Garnet and Blue Extravaganza — exactly one week before the foundation’s annual scholarship gala.
The foundation’s lawyers assert that Conyers and Gantt deliberately scheduled the university’s gala to undermine the foundation’s longstanding annual fundraiser.
When the nonprofit decided to hold its event anyway, against the university’s wishes, S.C. State’s general counsel sent the organization a notice of potential default under the MOU.
The foundation, which held its gala April 25 in Charleston, denied it had any obligation to cancel the event at S.C. State’s request.
The university’s posturing, the foundation’s lawyer wrote in a Feb. 2 letter obtained by The State, was “merely a pretext to terminate the MOU and make it appear the Foundation has done something wrong.”
The beginning of the end
About a month after receiving the potential default letter, the foundation discovered the university had unilaterally changed the bank account information on its online giving platform, the suit claims.
As a result, donations made through the platform, which is akin to a crowdfunding site like GoFundMe, were being diverted to a university bank account rather than flowing into the foundation’s bank account, as they had previously.
The situation presented a major control issue and created a mismatch between the foundation’s books — which showed the donations as revenue — and its bank account, which did not receive the funds.
On Jan. 9, the foundation’s chairman demanded that S.C. State return all money it had diverted from foundation-managed accounts and requested a forensic reconciliation detailing all misdirected funds with written certification of their return.
“The continued retention of these funds outside the Foundation’s custody creates serious risks not only to the Foundation, but also to the University,” the letter states. “These risks include potential audit findings related to improper custody of charitable assets, donor intent disputes, breakdowns in internal controls within delegated advancement functions, reputational and governance concerns arising from the commingling or misapplication of donor-restricted funds, and potential legal exposure.”
S.C. State later returned $23,500 it said was erroneously deposited into the university’s bank account, but has yet to reconcile additional deposits the foundation questioned or perform an audit of all potentially misdirected donor deposits, according to the foundation.
Roughly a week after returning the misdirected donor funds, the university’s general counsel notified the foundation in a letter that it was being evicted from its university-assigned office due to space constraints.
“The space presently occupied by the Foundation is required to accommodate University faculty and staff essential to the University’s core mission,” according to the letter, which gave the foundation 30 days to vacate the premises.
S.C. severs ties with its foundation
Three days after the eviction notice, S.C. State’s board of trustees held a special meeting where they voted to terminate the university’s memorandum of understanding with the foundation.
The foundation contends that the vote was invalid because Gantt, the board chair, refused to allow a trustee to speak on the matter, in an alleged violation of parliamentary procedure.
Gantt addressed the allegation during a university board meeting in February, where he said his actions were permissible because the trustee had requested discussion only after voting on the motion had begun.
“Under Roberts Rules of Order, once the chair puts forth the question and initiates the vote, the debate is closed,” he explained at the Feb. 26 meeting. “At that point, members do not have an automatic right to resume discussion.”
The foundation disputes Gantt’s interpretation.
According to the MOU termination notice, the university’s decision to part ways with the foundation was based on its determination that the agreement’s framework was no longer consistent with the school’s required oversight, control and accountability for fundraising activities.
“Despite repeated efforts to work collaboratively within the existing MOU, the University has determined that the current structure no longer provides the level of alignment and transparency required to satisfy accreditation expectations, operational accountability, and the University’s internal governance model,” the notice states.
While the MOU requires that the terminating party provide the opportunity for a meeting within 30 days of issuing a termination notice, the foundation alleges the university failed to make a good faith effort to provide such a meeting.
On Feb. 2, an attorney for the foundation sent the university a 15-page response to the termination notice in which he denied the organization had breached the MOU and made a series of requests, including 1) that the university board hold a “valid legal vote” to terminate the MOU; 2) that the university return to the foundation the custody and control of its confidential and proprietary donor data; and 3) that the university audit all donor deposit transactions from the time it removed the foundation’s bank account from its online giving platform.
Failure to do so, the letter warned, would give the organization no choice but to pursue legal action.
“The Foundation does not seek to sever its relationship with the University,” its attorney Ed White wrote. “It seeks only respect for its independent legal status, protection of donor intent, and compliance with the governing law; including its tax-exemption standards.”
The university did not comply with any of the foundation’s demands, and on April 23, sent the nonprofit a cease and desist letter rejecting the demands and accusing the foundation of ignoring the university’s clear directions, refusing to adhere to the MOU’s framework for fundraising and failing to provide it an accounting of expenditures related to past annual galas.
The letter directs the foundation to discontinue its use of the university’s name, seal and logos; to stop requesting donor information from the university and cease solicitation on behalf of the university; and to provide the university an accounting of its donor funds and send those funds to the university or a designee.
The foundation filed suit against the university less than two weeks later.
“The Foundation is not the Defendants’ piggy bank,“ its lawyers wrote in their complaint, which seeks an injunction to prevent termination of the MOU, the return of donor data and the restitution of all foundation funds improperly diverted by the university.
This story was originally published May 5, 2026 at 9:37 AM with the headline "S.C. State sued by its own foundation in bitter dispute over control of donor dollars."