The NonProfit Times - October 1, 2008 - (Page 10)

DONOR INTENT Continued from page 9 that they have similar situations. Some have even said they would not have accepted certain money if they had foreseen the problems that would be associated with it. “We were making very long-term commitments, and we couldn’t do that if the university and the president at the time were not confident that we would continue to have these funds so we could make these commitments,” Durkee added. “Other organizations have said the same.” Philanthropies around the country are nervously awaiting disposition of the case. “The publicity over this case and others in the past five years or so is unfortunately undermining people’s belief in philanthropies because it (philanthropic giving) is based on trust,” said Ronald Malone, an attorney in San Francisco who represents the Robertson family. “People believe in causes.And when you see this kind of publicity about august institutions like Princeton accused of lying or cheating, it undermines their trust and (donors) don’t give or give with restrictions in such a way that is probably not good for philanthropy. I believe most charities are honest and conscientious and want to do good and want to honor a donor’s restrictions. And the prominent (cases) hurt everyone.” The blow that could be dealt to the nonprofit sector is on many minds, not just for the money but for other repercussions as well. Crompton said that the world in general, and especially the world of philanthropic giving, changed during the past half-century or so. “At one time a donor would make a donation and that was the end of it,”she said. “It is not that way today. Families want a much heavier degree of involvement. Donations are looking more like investments,” she said. “They want accountability, not having money spent on things they don’t agree with. They want much more accountability and involvement.There is a huge difference between the 60s and today, a huge difference,” said Crompton. It is because of that changed atmosphere, Crompton said, that even having processes and structures in place probably would not be of much help in the Robertson case. She added that in addition to documenting as much as possible the original intent of a donation, there must be some kind of decision-making process, recognizing that things will change. It is possible that the public will view the case as a little guy fighting a giant, so that if Princeton loses, its loss will be construed in terms of a corporate behemoth being brought to its knees. “One of the things I see in both the forprofit and nonprofit worlds is that with all the corporate debacles and high-profile abuses and all the revelations of nonprofit scandals there is this pervading suspicion Donor Intent, page 10 Donor Intent Cases In Higher Education THE CASE: University of South Dakota Foundation v. Larry Long and Lucy Buhler, 2007. THE ISSUE: University of South Dakota alumnus Walter Buhler left more than $7 million to the university upon his death in 1998. Of the gift, $5.7 million was to go to scholarships for business school students and $1.7 million for a new business school building.The foundation agreed that the $1.7 million guaranteed the new building would be named after Buhler. His widow Lucy contended that both the building and the school of business were to be named after him. She asked for the $1.7 million back. The foundation refused to return the money and sued her. Lucy Buhler filed a countersuit.The $5.7 million for scholarships was not under dispute. THE RESULT: The parties resolved their dispute in mediation before U.S. Magistrate Judge John E. Simko in U.S. District Court in South Dakota on July 30, 2008.The result is sealed. THE CASE: Jenna Dodge et al v.Trustees of Randolph-Macon Woman’s College, 2006. THE ISSUE: The trustees of RandolphMacon Woman’s College (RMWC), in Lynchburg,Va., voted in 2006 to make the college co-educational and rename it Randolph College. A group of students, alumnae and donors sued under charitable trust law claiming that $100 million raised under a recent capital campaign, as well as other funds and assets, could not be used for a purpose contrary to the college’s original purpose, educating women. THE RESULT: The name change to Randolph College became official on July 1, 2007. In June of 2008, the Virginia State Supreme Court affirmed an earlier circuit court judgment allowing the trustees to go ahead with the co-education plan, saying that the law cited by the plaintiffs did not impose any duties upon a nonstock charitable corporation.The high court also held that the college is not subject to the Uniform Trust Code. Randolph-Macon College in Ashland, Va., originally an all-male college from which RMWC was created, still exists and is a co-educational college. THE CASE: Howard v.Tulane University, 2006. THE ISSUE: As part of a major overhaul, identified as a renewal, after Hurricane Katrina, Tulane University dissolved Newcomb College, founded in 1887 as a women’s coordinating college (a female counterpart to what was then an all-male college), and folded it into the overall university, then establishing the H. Sophie Newcomb Memorial College Institute, supported by the Newcomb endowment money. Descendants of Josephine Louise Newcomb sued to stop the move. THE RESULT: In October of 2007 the Fourth Circuit of Appeal upheld a civil district court ruling that denied the plaintiffs’ request for a preliminary injunction to block the closing of Newcomb College. In July 2008 the Louisiana Supreme Court ruled that the would-be heirs can go to court to enforce conditions of a will, but it also upheld the lower court ruling that the plaintiffs cannot sue Tulane because they have not proved they are Newcomb’s heirs.The high court sent the case back to civil district court to allow the plaintiffs to amend their lawsuit, but at this time Newcomb College does not exist as a separate institution. The endowment, however, will remain separate. THE CASE: L.B. Research and Education Foundation v. UCLA Foundation, 2005 THE ISSUE: The donor alleged that the university failed to employ a doctor of cardiothoracic surgery as part of a $1-million gift to the UCLA School of Medicine and that the gift should be withdrawn and given to another university. THE RESULT: The state Court of Appeals overturned an earlier ruling in favor of UCLA and ruled that a contribution accepted along with the conditions imposed is a contract subject to a condition subsequent, not a charitable trust, and the donor has standing to sue to enforce the terms of the gift.The Court of Appeals noted that a gift may have a charitable trust and yet not constitute a charitable trust. THE CASE: Jane Fonda and Harvard University, 2003 (no court case) THE ISSUE: In 2001, Fonda pledged $12.5 million to Harvard’s Graduate School of Education to establish the Harvard Center on Gender and Education. In 2003, Fonda retracted the $6 million she had not yet given out of the initial pledge and requested the return of all the money that remained unspent from the first part of her gift because the university had abandoned plans to create the gender studies center. THE RESULT: The money that Fonda requested was returned. THE CASE: Lee Bass and Yale University, 1995 (no court case). THE ISSUE: Alumnus Lee Bass gave $20 million to Yale on the condition that it establish a school of Western Civilization for which he would have authority over faculty hiring. Critics said it was simply an attempt to establish a school of Dead White European Males Studies, and administrators balked at Bass’s conditions. It is possible that the public will view the case as a little guy fighting a giant “When we talk about ‘donor rights’ people get confused,”said Linda C. Crompton, president and CEO of BoardSource, a nonprofit that offers consulting and other resources to help improve nonprofit governance.“It is not a piece of legislation. If we talk about a Donor Bill of Rights, it is a set of principles, or concepts to provide guidance to boards. “People talk about ‘donor rights’ as if it is some kind of law, and it is not.” Crompton also pointed out that even passage of a law would not mean that there could be no misunderstandings or disagreements. “We provide consulting, for example, and everybody wants ‘The Rule – What is the rule I need to abide by?’The reality is that these situations are far more complex than that,” she said.“There is not one thing you can point to and say, ‘If you do this, you will never run into problems.’” OCTOBER 1, 2008 THE NONPROFIT TIMES www.nptimes.com http://www.nptimes.com

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The NonProfit Times - October 1, 2008 Near Miss & Direct Hit Donor Intent The Focus Of Suit North Dakota AG Investigating The Grant Institute Contents Who...When...Where...How...What? Calendar Kumbaya Tying The Knot Filing Changes Philanthropy Caucus Big Bucks For Capital Campaigns 5 Things NOT To Do In A Capital Campaign Acquisition: Staying The Course ServiceNation Summit Fundraising Guide NPT Jobs Resource Directory

The NonProfit Times - October 1, 2008

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