Two years ago, it appeared that the University of Illinois at Urbana-Champaign had resolved a conflict with faculty leaders over the Academy on Capitalism and Limited Government. 
The academy, whose organizers at various points talked about creating a Hoover Institution for the Midwest,  was devoted to infusing capitalist ideas into the curriculum. Faculty members said that they didn't object to professors teaching about capitalism, but that research centers at universities shouldn't be devoted to any one ideology and that donors shouldn't be able to pick the ideological views of work to be supported. The solution -- generally praised by those on all sides  -- was for the the academy to sever its ties to the university. It could still support faculty members at the university and sponsor programs on the campus, but as a price of keeping control of the use of funds (and a political perspective), the academy couldn't be part of the University of Illinois.
There's just one problem: the ties were never cut, and a new agreement kept the academy as an affiliate of the university's foundation.
The Faculty Senate has just completed a report  on what actually happened, describing an agreement "negotiated in secret" that has maintained the ties to the foundation that the university had pledged to sever. This deal was signed without faculty involvement -- and the lack of faculty oversight, the Senate report alleges, has led to the funds for the academy going to support the faculty members who are on its advisory board, raising questions about conflict of interest. A resolution adopted by the leaders of the Senate calls for the university to do what it told faculty members it was doing two years ago: sever ties to the institute.
"[T]he implied affiliation of the university with an enterprise committed to an unalterable advocacy mission damages the reputation of the University of Illinois as an autonomous and nonpartisan center of scholarly inquiry," the resolution says.
Officials of the University of Illinois Foundation, while not commenting on why the ties to the academy were never severed, confirm that that is the case and that funds for the academy flow through the university foundation, but are controlled by the academy, without oversight from the university or the faculty.
The Illinois academy is one of a series of centers that have been created (some as part of universities and some independently) with the idea of promoting certain ideas -- related to American history, free market capitalism, and other topics -- in higher education. The idea has been to create freestanding centers (within a university or not) so that scholars interested in these issues would not fear having their priorities gradually eroded, as donors fear might be the case were money simply to be given to a traditional history or political science department.
While many of the programs raised eyebrows when they were created, some have become respected parts of their campuses. Many scholars from a variety of political perspectives, for example, praise the the James Madison Program in American Ideals and Institutions,  at Princeton University, as promoting the study of certain subjects without requiring a party line. At Hamilton College, a proposal to create the Alexander Hamilton Institute as part of the college fell apart  when faculty members objected to provisions that would deny faculty a traditional oversight role. The institute operates independently now, much as Illinois officials thought would be the case for the academy there. And the independent operation at Hamilton offers a full range of programs  -- this month including Ayn Rand Night, a meeting of the F.A. Hayek Club, and lectures on such topics as the Tea Party movement and "American scripture."
At institutions where these institutes have become controversial, including Illinois, the debate tends to play out this way: critics say that colleges should welcome all ideas, and that donors are welcome to support general fields of study, including American history or economic history. But when those donors want to focus on programs for which funds can only go to those with certain ideas (say that free market economics is the best approach), or to control the way funds are used, that intrudes on academic independence, the critics say.
In response, those who propose creating the centers tend to argue that the academy has failed in its traditional departments to hire those who revere the Founding Fathers or free market economics -- and that these centers add to campus ideological diversity by bringing in conservative thinkers. Many defenders of these centers say that the opposition isn't based on academic principle, but on a dislike of the politics of those giving the money and the scholars they want to support.
At Illinois, the deal with the Academy on Capitalism was questioned by many faculty members from the start. They noted their lack of a role in the negotiations (a role that is standard for new academic programs). Further, statements by the donors about the way the program was being set up led many to believe that only scholars with certain political views would be permitted to participate. One of the donors told Inside Higher Ed in 2007 that the program would support only a certain kind of of economics research, based on thinkers like Milton Friedman, Ayn Rand, Ludwig von Mises and Friedrich Hayek. While the donor said that the center would welcome the support of university faculty in teaching these thinkers, he said that if they took a pass, the center would hire adjuncts who wanted to do so.
Given the 2008 pledge that the center would continue only as an independent entity, faculty leaders said that they were frustrated to find otherwise, which is why they produced their report. Their study notes that despite promises that the academy would be separated from the university, its funds flow through the university foundation, its e-mail address is the foundation's e-mail address, the foundation helps it raise money, and there is overlap between foundation personnel and the institute's personnel.
While the foundation's website states specifically that it is not "a unit" of the university, it describes itself as very closely tied to it. The home page of the academy defines its purpose this way:  "The Academy on Capitalism and Limited Government Foundation encourages and enables visionary friends of the University of Illinois to endow chairs, professorships, scholarships and fellowships and to support lectures and symposia, curricular development, research activities and publication of findings through private gifts. The ACLG Foundation is overseen by a board of directors providing grants for programs, research and activities on the University of Illinois campus in response to proposals submitted by faculty."
According to the Senate report, the academy is thus raising money with both direct support (the help of the foundation) and indirect support (the implication that it's affiliated) from the university -- all contrary to what administrators promised the faculty in 2008. Further, the tax status of the academy is as a "supporting organization" of the university -- not an independent body, the report notes.
Supporters of the academy have pointed to the presence of university faculty members on the board of the academy and on its advisory board. While this doesn't satisfy the Faculty Senate -- which notes that official faculty committee members go through standard processes for appointment -- the report also notes a pattern in which those on the boards are also receiving support from the academy.
"[W]e learned that a large percentage of funded [academy] projects were going to members of their own Advisory Council," the report says. "This appears to be in violation of university ethics rules that prohibit this kind of conflict of interest. Moreover there was no open call for proposals or formal submission process ... but rather a pattern of soliciting proposals from targeted faculty."
According to information on the academy's website, two of the three Illinois faculty members on the advisory council and the only faculty member on the board of the academy have received financial support.
The report concludes by noting that the Senate has never objected to independent foundations supporting conservative or libertarian principles on campus, but it adds that this is not the concern. "What fundamentally remains at issue is an entity that refuses to be held to accepted norms of institutional neutrality and autonomy; that holds and espouses unchangeable doctrinal views about society; that suggests a special relationship with the University of Illinois to advance one particular set of perspectives about those matters; and that uses this relationship to promote its public visibility, credibility, and fund-raising advantages," it says.
The academy sent a letter to the Senate  as it was preparing its report. In the letter, the academy states that it is "an independent charitable organization," and says that "private support, whether from the Heritage Foundation, the Ford Foundation or [the academy] is something to be welcomed and encouraged." Further, it states that the donors to the academy "have never sought to fund anything other than academically legitimate projects," consistent with the way other outside groups support the university. On the conflict of interest issue, the letter states that the academy is "in the process of finalizing the operation of a proposal review panel" and that any faculty members who serve on the panel will not be eligible for support.
The letter concludes by saying that "there never has been nor could there be any threat to university governance because donors cannot create programs or make academic decisions."
Matthew Brown, the new CEO of the academy, made similar arguments in an interview. He said that the academy is "a separate, independent organization" so he doesn't know why faculty leaders are upset. He acknowledged that money for the academy flows through the university foundation and that the academy exists solely to support university programs and can't do anything else under its mission. But he said these factors do not change that "it is not a part of the university."
He said it was unfair to view the academy as "an advocacy group" and said that the work at the university that it has supported is of high quality and of true scholarly value. Told that the faculty objections aren't to that work, but to a university-affiliated center having a particular point of view, he said that the center had no influence on university policies. And he said that if there is a rule against university-affiliated centers having ideological points of view, "numerous ones" at the institution are violating that rule. (He didn't name any.)
The local newspaper is also backing this point of view. An editorial in The News-Gazette  said that a group of professors "opposed to the academy is indirectly attacking other UI faculty members who support it by waging a guerilla [sic] war on nebulous grounds."
A spokesman for the Urbana-Champaign campus referred all questions to the university system office, and a spokesman there said that its new president, Michael Hogan, "wants to review the lengthy document produced by the faculty group and to personally talk with those representing all sides of the issue before he responds."
Joyce Tolliver, chair of the Faculty Senate Executive Committee and associate professor of Spanish and gender and women's studies, said that it is vital that the academy's relationship with the university be severed, particularly given the history documented in the Senate's report. She said that some professors worry that there may be other agreements out there that no faculty body has ever approved. As to the question of how this agreement survived a specific pledge to end it, she said, "that's a good question."