ADA News

Dr. Dugoni

KPMG, a well-regarded firm of financial and tax advisors, recently completed an independent Tax and Financial Review of the ADA Foundation. KPMG's report includes a number of recommendations pertaining to the Foundation's governance, operation and financial reporting.

KPMG was retained by the ADA Audit Committee at the call of the 2009 House of Delegates. ADAF is the Association's philanthropic and charitable organization.

Dr. Arthur A. Dugoni is president of the Foundation, a past president of the ADA and the dean emeritus of the dental school that bears his name at the University of the Pacific, San Francisco.

What follows is a question-and-answer interview with Dr. Dugoni on the KPMG report.

ADA News: What prompted the preparation of the KPMG report?
Dr. Dugoni: For more than a year, the Association had been looking closely at the business and financial operations of both the ADA and its subsidiaries. During the meeting of the 2009 House of Delegates, I announced to the delegates that the ADAF would welcome a thorough review of the Foundation. The Audit Committee then retained KPMG, and the report completed in May is the result of KPMG's analysis.

ADA News: What did KPMG find?
Dr. Dugoni: KPMG identified certain areas of concern within the Foundation, including issues in governance, operations and finances. The report forms the basis of a Corrective Action Plan being developed by the ADAF. The Corrective Action Plan will strengthen the Foundation in terms of best practices in areas of governance, finance, operations and organization, including improving the efficiency and effectiveness of our fundraising activities. The ADA will also be preparing its own Corrective Action Plan.

ADA News: What is the relationship between the ADA and the ADA Foundation?
Dr. Dugoni: The ADAF is the 501(c)(3) charitable arm of the Association, which is a 501(c)(6) organization. Each organization is overseen by a separate board. Also, the Audit Committee of the ADA Board is responsible for auditing the ADA, its affiliates and subsidiaries, including the ADA Foundation.

ADA News: How will implementation of the KPMG recommendations proceed?
Dr. Dugoni: As noted earlier, the ADAF will prepare and implement a Corrective Action Plan to address issues raised in the KPMG report relating to ADAF. The ADAF Corrective Action Plan, when completed, will be approved by the ADAF Board. The plan will include timelines for completing various tasks. The ADAF Board will provide quarterly progress reports on its action plan to the ADA Board. In addition, all plans and timelines will be communicated to the ADA House.

Governance and bylaws issues are the first priority, and are being addressed.

Dr. Ron Tankersley (ADA president) has appointed a five-member task force to oversee the process of revising the ADAF Bylaws. Dr. R. Wayne Thompson, the ADA's 12th District trustee and a member of the Foundation Board of Directors, is chair of the task force. Members include Dr. Charles Norman, ADA 16th District trustee; Dr. A. J. Smith, ADA second vice president; Robert C. Henderson, Ed.D., a member of the Foundation board; and Michael Sudzina, ADAF vice president.

ADA News: Can you touch on any specific changes anticipated?
Dr. Dugoni: In the area of governance, the current ADAF bylaws call for the ADA executive director to serve as secretary and executive head of the ADAF. However, recognizing the separateness of the two organizations, the ADA treasurer and executive director have resigned their respective positions with the ADAF. To further separate and delineate the management of the organizations, the ADA Board urged the ADAF to hire an interim senior executive for this position to provide management oversight and to facilitate development and timely implementation of the ADAF Corrective Action Plan. To this end, the ADAF Board has retained the services of two experienced professionals: Jeffery Beutler, who will serve as interim chief executive officer of the Foundation; and Emmett P. Murphy, CPA, the Foundation's interim chief financial officer. Mr. Beutler has broad experience in for-profit and not-for-profit organizations, including service as the executive director of the American Association of Nurse Anesthetists. Mr. Murphy specializes in financial and administrative consulting for clients that include the American Student Dental Association and the American Academy of Orthopaedic Surgeons.

ADA News: We understand that some operational improvements were already in progress at the Foundation before the KPMG report arrived.
Dr. Dugoni: That's correct. Starting in January 2010, the ADA began changing many of the operational practices performed on behalf of the ADAF and instituted a number of new policies and processes, including improved financial reporting and accounting procedures. Also, an Administrative Services Agreement will soon be finalized to reflect the administrative services that the ADA provides to the ADAF.

ADA News: Will the Foundation be able to continue its charitable work?
Dr. Dugoni: I certainly believe so. However, we have temporarily suspended fundraising activities as improved financial controls and organizational changes are put in place. Also, it saddens me to report that we have made the difficult decision to end the Campaign for Innovation in dental education. This was done in light of the current economy and the broader fundraising environment, and in response to feedback from volunteers, donors and the dental schools. Discontinuing the campaign meant that the ADAF Board had no choice but to eliminate the positions of some staff members whose primary responsibilities were to support the campaign. We are grateful for the contributions of those staff members. We applaud their professionalism, and we wish them the very best in future endeavors. Also, we are in the process of informing donors of the decision to end the Campaign for Innovation and offering them several options regarding their generous contributions. Although the ADA Foundation will no longer raise funds for the Campaign for Innovation, the ADAF will continue to participate in and support the principles and goals of the awareness-raising initiative, Dental Education: Our Legacy—Our Future. The Foundation takes pride in this awareness and marketing campaign, noting that 55 percent of the nation's dental schools report having received either pledges or donations amounting to $550 million to be used in support of dental education across the country. I want to emphasize here that the Foundation remains strongly committed to innovation in dental education. Although our own fundraising for innovation has ceased, our support of Our Legacy—Our Future continues unaltered. We look forward to innovative improvements in the dental educational system in the years ahead. The ADAF is the Association’s philanthropic and charitable organization, a catalyst for uniting people and organizations to make a difference through better oral health. That has been its mission from the very beginning, and it will continue to be its mission in the decades to come.