December 07, 2007
Colleges Urged to Do More to Reassure Donors
By Anne Howard
Washington
Colleges and universities need to take new steps to assure donors that their money is being used as intended, said several active alumni and other higher-education and legal experts at a conference in Washington on Thursday.
The conference, organized by the Center for Excellence in Higher Education, people with backgrounds in law, fund raising, higher education, and consulting. The center was established in January to help donors structure their charitable gifts to ensure the money is used for specific purposes. It comes at a time when disputed over the use of big gifts have grown more public and have at times landed in court.
That trends will continue, said the conference organization.
“Donors, I believe, will increasingly direct their philanthropy toward institutions that are responsive to their reasonable requests for accountability,” said Frederic J. Fransen, executive director of the center, told conference participants. “If higher education plans to continue to benefit from their generosity, it will need to change its way of doing things, and it had better do so soon.
“Colleges and universities are mistaken if they believe they can circle the wagons and hide beyond mistaken and outdated notions of institutional autonomy when they violate legally binding agreements surrounded the uses of a gift,” he added.
He said his organization could help “establish new ground rules that can serve as a model for all philanthropists and nonprofits.”
The ground rules would require donors taking new types of action, not just nonprofit institutions, said speakers.
Ronald Malone, a lawyer for the Robertson family, which is battling Princeton University in court over a gift that is now worth more than $800-million, said that major donors to colleges and universities must be very specific about what they want their money used for.
“You’re dealing with people who are very smart, very determined. They’re used to defining the issue themselves,” he said.
Not all donors have the resources and the will to pursue lawsuits, he said, but most universities are willing to fight to protect their interests. “They have huge war chests and all the time in the world.” (Princeton has said it is fighting the Robertson lawsuit because it believes it has carried out the intentions of the donors.)
William Josephson, former assistant attorney general in charge of the New York State’s Charities Bureau, echoed the call for donors to be clear about how their want their money used. He said that because the state of the law regarding donors’ rights is “in flux,” philanthropists need to spell out specific requests in a legal agreement with a beneficiary to assure that a gift is properly handled.
Keith Whitaker, a research fellow at Boston College and director of family dynamics for Calibre, a division of Wachovia Wealth Management, urged donors and charities to think about their relationships in the same way they think about friendships. He said the fierce disputes between institutions and donors and their heirs often arise because they are like a friendship gone sour, with “people feeling that they’ve been had, that they were betrayed in these relationships,” Mr. Whitaker said.
Building a solid relationship between donors and charities requires several elements, he said: flexibility, accountability, reciprocity, consideration of how the relationship may change over time, and even an exit strategy in case the relationship isn’t working out. Mr. Whitaker said it is vital that everyone is very honest about what the goals of the relationship are, whether that means establishing a legacy, expressing gratitude, helping others, or getting tax write-offs.
He said part of the conflict between the Robertsons and Princeton may be that each considers the other just an “instrument” for their own goals. “Friendship is opposed not to enmity but to slavery, where someone treats another as a nonperson or a tool,” he said. “The question I would pose from there is ‘How can I seek in my giving to avoid setting up, allowing, or promoting the instrumental relationship?”
Disclosure is another key issue for colleges, alumni, and donors, said several of the speakers.
Renee Seblatnigg, president of the Future of Newcomb College — a group battling Tulane University — and Anne Yastremski, executive director of Preserve Educational Choice — an organization engaged in a dispute with Randolph College — both said they were concerned that the boards of the
institutions had made key decisions too quietly and were unwilling to answer questions or discuss other options.
Ms. Seblatnigg, an alumna of Newcomb College, talked about her concern when Tulane University voted to merge the woman’s college with its main, coeducational institution after Hurricane Katrina. She said that Josephine Louise Newcomb’s founding donation, in 1886, was clearly meant to create an all-female college that would remain separate from Tulane.
Two heirs of Ms. Newcomb sued Tulane last year, arguing that the university had breached the original donation agreement. Last month a Louisiana court of appeals ruled that Tulane was within its rights in dissolving Newcomb, but Ms. Seblatnigg said she hopes to see the suit head to the Louisiana Supreme Court.
“People really didn’t realize what had been done,” Ms. Seblatnigg said. “We were never allowed to get to the board.”
Ms. Yastremski’s organization is helping to support a lawsuit against Randolph College — another former women’s institution, formerly known as Randolph-Macon Women’s College. Randolph’s Board of Trustees voted last year to begin accepting men in 2007.
The bad blood that the decision at Randolph has caused was evident when Jewelle Bickford, a trustee of Randolph College who attended the conference, disputed several aspects of Ms. Yastremski’s presentation during the question-and-answer session. “The presentation Anne made had very little reality to it,” she said. “Everything you say is incorrect,” she added after Ms. Yastremski responded to the points in question.
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