FOR IMMEDIATE RELEASE
CONTACT: Jennifer Berkowitz
(828) 687-2633
DONOR INTENT CONTROVERSIES SHOW NEED FOR MORE TRANSPARENCY AND ACCOUNTABILITY IN NONPROFIT FUNDRAISING & FINANCE, EXPERT SAYS
WASHINGTON, Dec. 6, 2007 – Individuals considering significant charitable gifts to colleges, universities or other nonprofit organizations need to assume that the recipient of their gift may not care as much about the purpose of the gift as they do. That’s why they need to take all necessary and appropriate steps before writing out the gift check to see that their intent is respected, the head of a higher education philanthropy organization said today.
Speaking at a conference here on donor intent, Frederic J. Fransen, executive director of the Indianapolis-based Center for Excellence in Higher Education (CEHE), said donor intent affects all Americans and all of America’s 1.4 million nonprofit organizations. But “it is in the area of higher education where most of the problems seem to be arising,” he stressed.
“Perhaps this is because many of our colleges and universities either have too much money – or too little. Either way, we see a pattern where colleges and universities accept gifts for specific purposes and over time either lose sight of that purpose or deliberately ignore it.”
The solution, he said, is for donors and prospective recipient institutions to engage “in more open and substantive discussions about their gifts” and for the philanthropic and nonprofit communities to “develop new models of giving that will introduce competition, transparency and accountability” into the relationship.
Fransen, whose organization assists donors who want to use philanthropy to promote excellence in higher education, identified several areas where donors and recipient institutions need to focus more attention:
> Time. “Perpetuity is a very long time,” he said. “Donors and recipients need to be clear about the time horizon of a gift. Where the time horizon is long, more attention needs to be paid to the specific intent of the donor, not less.” Many donors, he said, will accept clauses in a gift agreement that widen the scope of the gift after a certain amount
of time. If so, they need to make it specific. If not, he said, they need to consider alternatives, such as “sunsetting” the gift: that is, paying out all of the money during their expected lifetime, or during a fixed period of time, so its use can be carefully monitored.
> Oversight. “Donors need to demand appropriate reporting on their gifts from the institutions administering them.” In some instances, he said, “the body receiving the reports can be given standing to intervene if the recipient institution is violating grant agreements.”
> Accountability. “Donors,” he said, “will increasingly direct their philanthropy toward institutions that are responsive to their reasonable requests for accountability.” The nonprofit world needs to expect more of this, not less.
Speaking directly to higher education, Fransen warned that “colleges and universities are mistaken if they believe they can circle the wagons and hide behind mistaken and outdated notions of institutional autonomy when they violate legally binding agreements surrounding the uses of a gift.
“The ivory tower is neither about nor outside the law. There may be many things donors would like to do that a college or university does not see as part of its mission. That’s fine. As with any other charity, all it needs to do is walk away. Indeed, it should walk away.
“When any nonprofit organization enters into an agreement and takes a donor’s money, however,” he said, “it is bound to the gift’s terms … and should expect that donor will hold them to it, resorting to the legal system if necessary.”
The conference, sponsored by CEHE, featured presentations by the plaintiffs, or plaintiffs’ representatives, in three prominent “donor intent” lawsuits now in state courts: Robertson v. Princeton (New Jersey), in which the children of philanthropists Charles and Marie Robertson charge that the Ivy League university has misused their parents 1961 gift, intended to prepare Princeton graduate students for foreign policy careers in the federal government; Howard v. Tulane (Louisiana), in which the descendants of philanthropist Josephine Louise Newcomb, who endowed Tulane University’s H. Sophie Newcomb Memorial College, charge that the university improperly dissolved the college following hurricane Katrina and took the college’s endowment; and Jenna Dodge v. The Trustees of Randolph-Macon Woman’s College (Virginia), in which alumnae, donors, and students of the former woman’s liberal arts college, charge that the school, which now calls itself Randolph College, improperly changed its mission and is now jeopardizing the college’s valued art collection, much of which was donated to support the college’s educational and cultural mission