In 2023, following passage of the Donor Intent Protection Act in Kansas, Philanthropy Roundtable launched a monthly series on donor intent developments and controversies nationwide to better inform you about this important topic. The Donor Intent Protection Act has now passed in Kentucky, Georgia and Montana, and efforts on behalf of this legislation will continue in additional states in 2026.
We encourage donors to contact us with any questions about our featured items and consult additional resources on donor intent at the Roundtable’s Donor Intent Hub. We also welcome any news about donor intent we may have missed.
We are again in court this month, as the Donor Intent Watch focuses first on an endowed gift conflict arising from the closure of a Lutheran university in Ann Arbor, Michigan. This is followed by a short piece describing a court petition filed by NYU Langone Health to remove the names of two deceased donors from one of its buildings. We will adjourn after an update on one recent donor intent dispute.
Reclaiming Endowment Gifts When Colleges Close Their Doors
Last month’s Donor Intent Watch discussed the closing of Philadelphia’s University of the Arts, and the confused legal situation regarding the use of the university’s $60-plus million endowment. This month, the focus is on Ann Arbor, Michigan.
Concordia University Ann Arbor has been part of the Concordia University System (CUS) since the system’s founding in 1992. At its peak, the system included 14 institutions. But following campus closings beginning in 2018, the system now includes only five. Concordia University Ann Arbor, a branch campus of Concordia University Wisconsin since 2013, shut down its physical campus in Ann Arbor in 2024. It now operates in a different location with a significantly reduced student body.
While there is considerable acrimony and skepticism about the closing of the Ann Arbor campus, there is also the matter of moving the endowment of that campus into the endowment of Concordia University Wisconsin. The shared endowment of $126 million includes approximately $27 million contributed by Concordia Ann Arbor donors. One gift, made before the shutdown, has captured considerable attention because it has resulted in a lawsuit.
In 2021, the late Keturah Thunder-Haab pledged a gift of $1.5 million to the combined Concordia University Wisconsin and Ann Arbor for a new fitness center on the Ann Arbor campus. Nearly a third of that pledge was paid to Concordia before Thunder-Haab’s death, and her successor trustee paid the balance in December 2023.
With the closing of the Ann Arbor campus (and the likelihood that it would be sold), the Keturah Thunder-Haab Estate began a legal battle to recoup the fitness center payment and also block the additional 13% of Thunder-Haab’s trust designated for Concordia Ann Arbor from going to the combined Wisconsin-Ann Arbor institution.
As MLive.com reported, “Concordia’s attorneys argue the trust language is ambiguous and that Thunder-Haab would have understood the university’s campus structure before her passing. The lawyers for the Thunder-Haab Estate maintain the trust’s intent is clear and insist Thunder-Haab would not have continued directing money to the school after the Ann Arbor campus was downsized in 2024.
In April of this year, Washtenaw County Probate Court Judge Darlene O’Brien ruled in favor of Concordia. This allowed Concordia University’s Wisconsin branch to keep roughly $3 million in donations – $1.5 million from the fitness center payment, and the 13% of Thunder-Haab’s trust designated for Concordia Ann Arbor. She was clear Concordia was to use the money from the trust for its Ann Arbor campus and required the construction of a fitness center in Thunder-Haab’s name or the money would revert to the trust.
Finally, O’Brien ruled the eight entities not involved in the litigation – including Concordia University Chicago, St. Paul Lutheran Church and School and others – would immediately receive their trust allocations.
Critics of the ruling are wondering how Concordia will use the funds at the severely downsized campus, and how a fitness center designed to operate with an athletic program will function when Concordia eliminated its Ann Arbor athletic program in 2024. Thunder-Haab intended that the fitness center be built on a piece of Concordia property now likely to be sold to the University of Michigan and named for a former athletics director.
“None of this is what (she) would have wanted,” commented Mary Kay Salminen, president of The Oscar & Keturah Haab Foundation. The Thunder-Haab Estate plans to appeal the ruling. What also remains unclear is the status of smaller donors to Concordia Ann Arbor’s endowment – those who may have made $25,000 or $50,000 gifts for specific purposes on a specific campus which no longer exists. What is certain is an increasing number of legal disputes regarding endowment gifts as the nation’s smaller colleges close because of increased costs and declining enrollment.
Naming Rights: Forever is a Long, Long Time
Our Town is reporting about a court petition filed by NYU Langone Health to remove the name of deceased donors from one of its buildings despite the donors’ expectation – and condition – of perpetuity. In a recent article the publication notes NYU Langone’s intention to free up naming rights issued in 1979 to Arnold and Marie Schwartz for donors who give to a planned $250 million makeover.
NYU Langone’s attorneys are not shy about their reasoning, arguing, “Consistent with current practices around charitable giving and fundraising, donors prepared to make a major donation to NYU Langone Health for the Schwartz Center renovations expect to receive naming rights over the renovated Schwartz Center in recognition of their generosity.”
NYU Langone is also arguing that couple’s support derived from the former mission of the Schwartz Center to provide Cooperative Care. That is no longer the model of inpatient care, and the center has already undergone significant physical alterations from its original configuration.
Nonetheless, Our Town concludes, “The topline figure that the petition is centered around, however, is the aforementioned (projected) total cost of renovations at the center: $250 million.” Although the couple’s daughter has expressed discomfort with the change, it is not clear if she would have legal standing to object to the petition.
NYU Langone officials are hardly alone in seeking opportunities to raise funds by renaming facilities, and their honesty, though blunt, is refreshing. Donors who choose to include naming opportunities in their philanthropy might take a lesson from the late David Koch. In 2008, Koch made a $100 million gift to Lincoln Center for renovation and modernization of the then-named New York State Theater. The theater was renamed the David H. Koch Theater, but Koch limited his right to the name to 50 years.
In a 2010 interview with The Wall Street Journal, Koch explained his decision. “I’ve strongly requested in my remarks on a couple of occasions to the audience at the theater that they, too, should consider letting their name expire in 50 years on whatever they choose to give to, so that the trustees can then use that aspect to raise money.”
Update
The March Donor Intent Watch reported on a dispute between a successor donor-advisor and the sponsoring organization of his donor-advised fund. Philip Peterson is suing the Christian Community Foundation, dba WaterStone, claiming his access to the DAF in question has been terminated and he is unable to ensure the $21 million in the fund is used as his father intended.
WaterStone has filed suit to dismiss Peterson’s claims, arguing IRS rules do not require DAF sponsors “to honor grant recommendations, provide accountings, follow particular guidelines, have particular controls, or engage in particular communications. To the contrary, the terms provide only that the donor’s ‘gift is irrevocable’ and that ‘ownership and custody … will be fully relinquished to the Christian Community Foundation.”
As noted earlier, “Starting with the basic question of legal standing, this case has the potential to alter significantly the relationship between donor-advisors and sponsoring organizations. At present, sponsoring organizations typically honor donor recommendations because they recognize the benefits in doing so. What value would donors see in DAFs if their recommendations were regularly refused?”
