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When giving goes wrong
If you are following the higher ed news--or if you are just reading the major papers--you'll know that in a time of increasingly divisive debates about the direction of higher ed, alumni who care about the future direction of their school need to do more than make financial contributions. They need to donate in such a way that they can ensure their dollars are used for projects they believe in.
It's excruciating for alumni--and costly for everyone--when colleges and universities renege on the trust bestowed by alumni when they send their donations. A lawsuit involving Princeton University makes this point in dramatic and instructive terms--and has spurred a lively discussion about the interplay of philanthropists who want to control how their funds are used and schools that wish to limit the restrictions donors can place on them.
From the Financial Times:
An upcoming ruling in a protracted legal battle between Princeton University and an alumnus who claims the school misused the funds his family left it nearly 50 years ago could have repercussions for the way US colleges and other charitable groups raise and spend money from donors.
The case centres on a $35 [million] donation made in 1961 by Charles and Marie Robertson, heirs to the A&P grocery fortune, to establish an eponymous foundation. William Robertson, the couple's son, filed a suit against the university in 2002 claiming that Princeton has failed to hold up its end of the deal since the money was given specifically to train students to work for the US government. Mr Robertson wants to be able to spend the foundation's money somewhere else.
Princeton contends the foundation was created to support the Woodrow Wilson School of Public and International Affairs, which trains students not only for careers in the US government, but for a variety of other policy-related jobs. Princeton further argues that the initial agreement with the donors gave it final say over how the money is spent.
The judge in the case has not issued any decisions yet, but people close to the case say a ruling is imminent.
The Times notes that the case has moved a growing number of donors to draw up contracts outlining how their funds are to be used and clarifying consequences in the event of breach of contract. The Princeton case will be a watershed moment for both alumni and higher ed institutions, as it will help set the bar for the extent of schools' fiduciary responsibilities to donors, as well as for whether courts can compel schools to return misused donations.
At the heart of the suit lies the issue of institutional accountability, especially as it intersects with the delicate issue of donor intent. As ACTA president Anne D. Neal told the Times, "Too many alumni donors in the past have given on the basis of a smile and a handshake. This case makes clear that donors must trust, but verify." And as such, the Princeton dispute is yet another in a growing number of cases that document the pressing need for better accountability and transparency in higher education.
Posted by acta online at September 14, 2007 02:52 PM
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Comments
This is ridiculous. The idea that alumni, by virtue of their bling, should get to dictate the pedagogical direction of a university is sickening and dangerous.
Case in point: the University of Pennsylvania's "Mark's Cafe." Here's some alum who gave money for the idiotic cause of building a cafe in the basement of Penn's Van Pelt Library. Students, researchers, and staff were inconveniences as this monstrosity was built. Even worse, the money could have funded much needed areas of growth in the academic life of the library. It's an ugly library that could use some new design. The computer database area is small and cramped, especially compared to similar areas at much smaller public universities. There's also the notorious problem of book theft and misplacement: books listed as "on stacks" that are never actually there.
As long as we equate money with knowledge about education, alumni money runs the risk of funding useless projects simply to feed the pride of the wealthy.
Posted by: Matt Merlino at September 15, 2007 07:11 AM
"This is ridiculous. The idea that alumni, by virtue of their bling, should get to dictate the pedagogical direction of a university is sickening and dangerous."
The donor's intent commonly controls how gifts, including trusts, are used. So what? Schools are perfectly free to refuse the money to begin with. The problem is when school accept the money according to the donor's intent, and then misuse the funds in a way the donor never anticipated or accepted. That's fraudulent conduct, and there is nothing "ridiculous" about revoking intentionally misused funds.
Posted by: Federal Dog at September 16, 2007 09:03 AM
As a donor I refuse to give money to my undergraduate and graduate schools without iron clad guarantees that MY MONEY is spent the way I desire.
The schools can always refuse to accept donations they find onerous.
Posted by: The Dude Abides at September 18, 2007 03:05 PM
The real problem is that donors don't come up with intentions until after they've parted with their gifts. If donors set conditions, they often are (or have been) relatively generic -- and then their children spot a chance to get the money back by pointing out some failure of compliance.
Posted by: This is what happens... at September 24, 2007 02:25 PM