Carolina Journal News Reports

Friday Interview: Report Documents Colleges Straying From Donors’ Intent

Pope Center expert outlines key finding from recently published research

Mar. 16th, 2012
More |

Story photo

George Leef

RALEIGH — It’s not uncommon for university boosters to donate money or property to the alma mater. It would be wrong to assume that the schools always honor the donors’ wishes. George Leef, director of research for the John W. Pope Center for Higher Education Policy, discussed the issue with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

Martinez: The subject — this is a bad one, George. It is such a problem that there is a new paper written about this. And you, too, have been writing about it. What’s going on?

Leef: Well, the Pope Center published a paper written by Martin Morse Wooster, who’s an independent historian who has made quite a study of bad philanthropy. He’s written a couple of books on it.

Martinez: The phrase alone should scare people — bad philanthropy.

Leef: Yes. For example, did you know that Henry Ford wished he could undo the Ford Foundation, and he found out that, legally, he’d fried the egg and it couldn’t be undone?

Martinez: I did not know that.

Leef: Yes, and I got in touch with Martin Wooster after reading his books and said: How about [researching and writing] a paper on problems of this sort in higher education, where people have donated money or maybe artwork or land or something, with the expectation that the university would use the property in certain ways as he intended it to be used? The trouble is that, oftentimes, university officials will happily take the money, and then, as soon as they can, they’ll divert the money or the stream of revenues from the property into their own agendas, rather than what the donor wanted it to be used for.

Martinez: That sounds unethical.

Leef: Yes, it is.

Martinez: And why would they be engaging in unethical behavior?

Leef: Because they can get away with it, although they don’t always get away with it. And when someone blows the whistle — and this probably happens rather infrequently, that people find out about it and actually do something about it — but Martin tracked down a lot of cases where this has happened. The most famous of them [was] the Robertson v. Princeton case.

Martinez: Ah, yes. Princeton University.

Leef: Princeton University. The Robertson family had given a lot of money. It amounted to a not insubstantial chunk of Princeton’s endowment, but with a specific intention that the money be used for the training of students who would eventually go into foreign service work. And toward that, to the objective, they had put up a lot of money to fund the Woodrow Wilson School for Foreign Service.

Princeton, over the years, found that it didn’t really have that much call to spend money on that and, instead of working things out with the family, just started diverting the funds toward whatever else Princeton wanted to use them for. Eventually, this came to light. One of Robertson’s children started investigating and found that there was evidence that Princeton was, in fact, not honoring his dad’s wishes. Eventually, they brought suit, and once they got into legal discovery, they unearthed lots and lots of documents proving their point.

The case dragged on for years in the courts. Finally, it was settled. Princeton didn’t exactly admit wrongdoing but gave the Robertsons quite a bit of money back. And they also established a new office in Princeton to make sure that they don’t do that again — that donors, in fact, do have their wishes honored.

Martinez: Is it, George, that there are no written or legal documents associated with these donations? I would presume there are, but are they just being ignored?

Leef: Sure. Oh, there are, and oftentimes they’re ignored. There was a case that Martin included where a man out in Iowa who had made a lot of money and owned a farm wanted to leave the farm to Iowa State University, but with the proviso that the university continued to maintain the farm and use it for teaching purposes. Well, he died, and university officials thought, “Hmm, you know, I think we can sell the farm and pocket the money and use it the way we want to.” Well, one of his descendants found out about this, took them to court, and got a judgment against the university, which had to admit, “Oh, gee, we’re really sorry. We shouldn’t have done that.”

Martinez: Oh, my goodness. Do we know if there are any examples of this type of diversion at North Carolina universities — public or private?

Leef: No. Martin found no cases, or included no cases, about North Carolina. I think if he had found some, he would have put them in. But there could be diversions going on, and the donors simply [do] not know about it.

Martinez: How would they find out?

Leef: Well, they might not find out. Oftentimes, they don’t. There are no announcements to this effect saying, “Oh, by the way, the money donated by Person X, who graduated in 1953, is now going to be diverted into something he didn’t want.”

Martinez: Is there any ideology behind some of these diversions?

Leef: Not necessarily. It’s not necessarily a matter of ideology. Oftentimes, it’s simply: “We want the money for our own purposes,” which run the gamut from hiring people to fixing the boiler. For instance, there were a number of cases involving artwork, where the donors wanted the university or college to have this artwork in perpetuity, to keep it on display for the public. Well, sometimes the officials say, “You know, we need money to fix buildings that we’ve neglected,” or something else, and they say, “Couldn’t we just get away with selling some of the art?” And that has led to some interesting cases as well.

Martinez: You mentioned earlier Henry Ford and the Ford Foundation. I think everyone, no matter how little we might be involved in philanthropy personally, has heard of the Ford Foundation. What was it that Henry Ford wanted done, and what happened?

Leef: Well, the Ford Foundation was taken over by philanthropy professionals who had very left-wing ideas about how Ford Foundation resources ought to be used. Henry Ford didn’t like any of them, but when he approached his attorney in about the mid-1930s, I believe, and asked, “Can we get out of this, can we undo this somehow?” he was told, “Sorry, too late. You can’t.”

Martinez: Oh, my gosh. That would be so discouraging. You think you’re doing one thing ...

Leef: It would be discouraging, and that’s the message of the paper [by Martin Morse Wooster]. If you want to endow a chair, for example, you’ve got to be very careful because you might get someone in that chair teaching beliefs that you find abhorrent, eventually. But, unless you’re really, really careful, that can happen.

Martinez: So what is the cautionary tale here, not only for very wealthy donors, but for those of us who may make much smaller donations but want to make sure that we’re giving this money for a specific purpose?

Leef: Well, it’s not easy to do. If you just write a check to the university’s general fund, well, they’ll use that according to their own purposes, of course. Even if you have enough money — let’s say $1 million — to set up an endowed chair, those don’t always turn out very well. In fact, Martin gives us a funny case involving the [late] columnist Robert Novak, who thought he was setting up a chair to support the teaching of Western civilization at the University of Illinois. The person who wound up in that chair, you might think, has his own version of what’s important in Western civilization. One of his books is on the importance of comic books. Well, [that’s] probably not what Novak had in mind.

Martinez: Probably not. George, do we have any evidence that any of this diversion of money is leading to fewer donations to these universities?

Leef: We don’t have evidence that that’s the case. It wouldn’t surprise me, though, if people have found out about the Robertson case and other cases like it and have decided, “You know, I’m going to put my money someplace else.”