Florida A&M’s Large Donation Draws Concerns Over Legitimacy
In Tallahassee, Florida, officials at Florida A&M University (FAMU) are facing scrutiny after a substantial donation of $237 million was announced. The contribution, reportedly the largest ever pledged to a historically Black college or university, has come under question for its legitimacy and the rigorousness of the vetting process prior to its public unveiling.
Who Is Behind the Donation?
The donation was introduced by Gregory Gerami, a 30-year-old CEO of a Texas-based hemp farming company, during FAMU’s graduation ceremony on May 4. Gerami presented a ceremonial check and claimed that the funds were securely in his bank. However, concerns have emerged regarding the nature of the donation, primarily because it consists of privately-held stocks in Gerami’s business, Batterson Farms Corp, believed to be worth over $237 million.
What Has Happened So Far?
Quickly after the announcement of the donation, skepticism arose. Experts in finance and higher education have voiced doubts, suggesting that it is improbable the university will receive the full promised amount. Financial analyst C. Zachary Meyers indicated that “nothing about this smells good,” pointing out that the reality of the gift may not align with the flashy announcement.
Where Do We Stand Now?
As FAMU’s governing board prepares to meet to discuss the donation, university officials have temporarily halted the processing of the funds. This pause came after it was acknowledged that the stocks could potentially be worthless. Furthermore, a social media campaign celebrating the gift has been tacitly reversed, with posts being deleted.
Why Is This Donation in Question?
A core concern is the lack of thorough vetting before the gift was made public. Audit experts like Aaron Conley emphasized that traditionally, such large non-cash gifts are reviewed by an audit committee to accurately assess the valuation and legitimacy of the donation. Alarmingly, the FAMU administrators failed to engage the board of trustees until after the public announcement, leaving many stakeholders questioning the university’s due diligence in this high-stakes matter.
Insights Into the Donation’s Valuation
FAMU officials noted that the stocks’ valuation was estimated at $15.85 per share based on financial statements provided by Gerami’s bank. However, financial experts explain that private stocks come with inherent difficulties when it comes to selling them, often necessitating a significant discount on their reported market value. Analysts believe the true market could reflect a discount of as much as 20 to 40%.
Pending Actions and Future Steps
Compounding these issues, Gerami is currently in the process of hiring a qualified appraiser to provide a formal assessment of the stock’s value. This information is crucial for obtaining future tax deductions related to the donation. However, the University’s leaders recognize that simply acquiring the stocks does not guarantee accessible funding. Experts suggest that FAMU should invest in a professional appraisal to fully understand the conversion of these stocks into cash, which they have yet to accomplish.
As FAMU’s leadership navigates this complex situation, stakeholders and the community will be closely watching how the discussions unfold during the upcoming board meeting, given the significant implications for the university’s financial future.
