There is only one donor behavior that universities and other non-profits disdain more than reneging on a pledge – asking that endowed contributions be refunded.
Today’s The Wall Street Journal is reporting that Princeton University has agreed to settle a so-called ‘donor-intent’ lawsuit for a whopping $100 million. News of the settlement will no doubt come as a shock – and a warning – to charitable recipients who’ve become lackadaisical in applying donated funds strictly according to their intended purpose.
In Princeton’s instance, the university was sued by heirs to the A&P supermarket chain. Back in 1961, Charles and Marie Robertson, now deceased, gifted $35 million to the school to train graduates students to serve in the federal government.
With the passage of time, the Robertson endowment has ballooned to between $700 million and $900 million. The family sued Princeton in the hope of extracting those funds – roughly 6% of Princeton’s entire $16.3 billion endowment, and distributing the monies to other schools.
“A university should think twice before they deceive a donor, particularly a donor who can fight back, William Robertson, the son of Charles and Marie, told the Journal.
Indeed, at the time the paper first reported on Robertson v. Princeton in a February 2006 front page feature, the Robertsons had already spent years and more than $10 million pursuing their fight.
Court documents, which came to number almost half a million pages, did force Princeton to return nearly $800,000 in 2007. The actual trial was slated to begin next month.
Now Princeton has agreed to settle the lawsuit by yanking $50 million out of the Robertson endowment (to be used at other universities) and picking up interest and legal fees likely to total an additional $50 million.
By comparison, Yale University’s 1995 refund of a $20 million donation to Lee Bass, a Texas business executive, seems like a slap on the wrist.
Officially, Shirley M. Tilghman, president of Princeton University, said her institution is glad to finally wash its hands of the matter and stop piling up fresh legal fees, which she said could be better spent on education.
The Robertsons have indicated they will take their refund, to be paid out over three years, and put it to its intended purpose, likely at Tufts University, Texas A&M, University of Maryland and Syracuse University.
Although the settlement forestalls an actual trial, Robertson v. Princeton is certain to become a landmark case study for those who make or receive large charitable donations.