Respecting a Giver's Intent

Should donors to a charity or institution be able to get back their money if it isn't being spent as they specified?

That's the big question in a lawsuit against Princeton University. The outcome could have implications for anyone thinking of giving away money with strings attached, and for philanthropy in general. (Americans gave away an estimated $241 billion in 2002.)

First the details: In 1961 Charles and Marie Robertson of A&P grocery fame gave Princeton $35 million "to establish ... a graduate school where men and women dedicated to public service may prepare themselves for careers in federal government." Further, the gift stipulated "... careers in those areas of federal government concerned with international relations." Over the years, through sound investments, the $35 million gift has grown to some $525 million. While Princeton has used $200 million to fund its Wilson School program, the Robertson family claims the school made only a half-hearted effort to steer people toward the federal service: Fewer than 12 percent of the graduates (whose tuition was paid for with Robertson money) have gone into government work.

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The family now wants control of the money, even though it originally gave majority control of the foundation to Princeton trustees. This week, Princeton voted to move the Robertson Foundation money into its own investment company, over the unanimous objection of family members.

For its part, Princeton argues a broader definition of public service - one that can include work in the public sector at large - at a think tank or other public-policy job, such as a nongovernmental organization. It says one-third of the program's graduates fit that definition. Further, Princeton argues that efforts to get students to go into government were an "aspirational" goal, not one that included a fixed number of students. It even argues that "alleged expressions of donative intent are legally insignificant."

The courts will need to rule on that last assertion if targeted philanthropy is to be sustained in the United States.

Most people, from rich to poor, give money to various causes with no strings attached. But increasingly donors are demanding their money be returned, and it would not be surprising to see the Robertsons regain at least some control. Today, a "donor's bill of rights" is often cited in the philanthropic community. It states, in part, that donors should "be assured their gifts will be used for the purposes for which they were given."

A new body of case law is cropping up that specifically deals with how bequests and gifts are drawn up. The intent is to prevent the recipient from wiggling out of commitments or playing games with the money.

Donors must be as explicit as possible in gifts that they make. Princeton and the Robertson family now have an opportunity through mediation to better define their terms - and improve accountability in philanthropy at the same time - before they spend more time and money in a protracted court battle.

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