The Obama Presidential Center’s endowment remains at $1M of the $470M goal as costs increase

Concerns are growing that taxpayers could be left holding the bag if the Obama Presidential Center suffers a financial crisis, as its foundation has yet to match a promised $470 million in public bailout funding.

The scrutiny comes as a Fox News Digital investigation found dozens of contractors and subcontractors claiming losses ranging from hundreds of thousands of dollars to millions on the project, with some saying they are still locked in payment disputes and facing a financial crisis just days before the facility’s grand opening.

Under its agreement with the city, the Obama Foundation promised to create the fund, known as an endowment, as part of its 99-year agreement to manage the 19.3-acre publicly owned portion of Jackson Park for a one-time payment of $10.

Fox News Digital previously reported that the foundation had only put $1 million into the end fund in 2021 and that the balance remained unchanged in its latest publicly available filing.

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Concerns about the facility’s financial condition persisted for years, especially as construction delays and costs rose from an original estimate of about $330 million to at least $850 million based on 2021 estimates. The revised final cost has not been made public.

Endowment Concerns

“One of their key promises was that they had to make the endowment an insurance policy so that taxpayers wouldn’t get stuck with this bill,” Illinois GOP Chairman Robert Grogan told Fox News Digital outside the facility last week as staff cars drove in and out of the facility.

“They promised hundreds of millions of dollars for it, it is still sitting at $1 million [where it stood] when they open it. So I don’t believe they kept that promise.”

The contractor disputes have renewed concerns about the endowment because critics say the fund was meant to serve as a backup if the project ever ran into financial problems. The Obama Foundation opposes suggestions that taxpayers should cover the exposure and said the project is funded by private donations.

Grogan said reports that contractors and subcontractors are still locked in payment disputes make the underfunded reserve even more of a problem.

“The fact that they’ve created this unmanageable structure can be a disgrace and then, at the end of the day, if it goes under, who’s going to end up with the bill? It’s the taxpayers of the city, the citizens of Chicago and the state of Illinois.”

A “Bring Change Home” banner is displayed outside the Obama Presidential Center in Chicago. (Michael Dorgan/Fox News Digital)

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Richard Epstein, a law professor at New York University who has spent years challenging the project in court, said the savings fund was meant to protect against this kind of uncertainty.

“The whole point of the gift is to fund future expenses,” Epstein told Fox News Digital, adding that the fund serves as a financial backup if future fundraising falls short.

“If the gift is not filled, the structure [could] it falls into neglect, becomes a safety hazard, and it turns out that nobody is going to pay the bill,” Epstein said. “So, the city is going to have to take on more responsibilities to make sure that thing is maintained.”

Grogan said reports that contractors have not been paid reinforces the need for more scrutiny and called for an investigation if allegations that subcontractors have been left holding the bag prove to be true.

Subcontractor disputes raise new questions

A Fox News Digital investigation has identified several construction companies claiming losses ranging from hundreds of thousands of dollars to tens of millions.

Outside the facility last week, Adamson Plumbing President Mike Owen provided the company’s spreadsheets to Fox News Digital, which he said showed his company was nearly $4 million in the red. He said unnecessary rework, delays and more than 100 change order requests left his company incurring millions of dollars in additional costs.

In addition, Omar Shareef, president of the African American Contractors Association, told Fox News Digital outside the facility last Saturday that several black-owned contractors are also in financial trouble because of the project.

Mike Owen, president and owner of Adamson Plumbing, stands outside the Obama Presidential Center in Chicago. (Michael Dorgan/Fox News Digital)

These claims raise new concerns about the institution’s long-term financial sustainability because the endowment is intended to provide a permanent source of income that can help fund future operations and prevent financial stress. Donations are often invested, with a portion of the profits used to support the institution over time.

The Obama Foundation told Fox News Digital that it is in compliance with its agreement with the city, noting that the agreement calls for the creation of a gift but did not specify a dollar target.

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The foundation said the Obama Presidential Center is “fully funded” and plans to make “substantial gains” in giving in the coming years.

“On the eve of our Grand Opening celebration, we are pleased to reiterate that the Obama Presidential Center is fully funded by private donations,” the Obama Foundation said in a statement.

The $470 million figure emerged during public discussions surrounding the project and was later cited in the Obama Foundation’s 2020 annual report, which included a fundraising chart:

“$470M of our fundraising goal will advance the work of the Obama Foundation and the work of the OPC for generations to come.”

The foundation previously estimated that annual operating costs would reach about $40 million.

Illinois GOP Chairman Robert Grogan stands outside the Obama Presidential Center in Chicago. Grogan criticized the Obama Foundation’s handling of the agency’s money and raised concerns about taxpayer exposure if the project runs into future financial problems. (Michael Dorgan/Fox News Digital)

Non-profit endowments are typically structured so that only a small percentage of the endowment – typically 4% to 5% annually – is spent each year while the principal remains invested. The goal is to generate investment income that can help support operations in the long term without relying entirely on future fundraising. The Obama Presidential Center has a museum tower, a digital library, sports facilities, conference space and the offices of the Obama Foundation on the South Side of Chicago. The Obama Foundation oversaw its creation and will run its day-to-day operations going forward.

Epstein disputed the foundation’s interpretation, saying that an endowment is intended to provide reasonable financial security and that a promise to raise money in the future is not the same as having a sponsored endowment.

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“In their view, putting a penny in an endowment fund involves all the risks,” Epstein said.

“There has to be a lot of money to fund any particular process and ensure some kind of resilience against big changes in the market.”