One of our core principles at The Philanthropy Roundtable is that “a respect for donor intent is essential for philanthropic integrity.” Among our services, we help donors to structure their giving instruments in line with their charitable objectives and to avoid the fate of so many philanthropic leaders: creating foundations that violate the cherished values of the original donors.
And so we have watched with great interest one of the new century’s most important legal disputes over donor intent. In 1961 Charles and Marie Robertson gave $35 million to a foundation intended to support Princeton University. At the time, the contribution was the largest in the university’s history. The explicit purpose of the Robertson Foundation was to create at Princeton a graduate school to prepare students “for careers in government service (particularly federal government service in areas concerned with international relations and affairs).” However, in 2002, heirs of the Robertsons sued Princeton, contending that the university was neglecting Charles and Marie’s stated objective for their gift.
In December 2008, Princeton and the Robertson family settled their dispute. By then the assets of the Robertson Fund had grown to about $700 million, after reaching a pre-market-crash peak of $900 million in mid-2008.
There are three important figures to remember in the Princeton-Robertson settlement.
14 percent is the proportion of Masters in Public Affairs alumni of Princeton’s Woodrow Wilson School between 1973 and 2006 who took jobs upon graduation who went to work for the federal government in international affairs. (Another 11 percent went to work for the federal government overall, and another 17 percent for state, local, and foreign governments.) The Wilson School’s graduate program is an outstanding academic institution, and its distinguished alumni include the likes of General David Petraeus and President Clinton’s National Security Adviser Anthony Lake. But if Princeton had focused more of the Robertsons’ gift on its primary purpose, as the university began to do during the course of the litigation, the Robertson heirs would never have launched this costly lawsuit.
$100 million is the approximate total that Princeton will pay to settle the lawsuit—$40 million to reimburse the plaintiffs’ family foundation for the costs of litigation, and $50 million plus interest to establish a new foundation to achieve the donors’ original purpose. This astonishingly high sum is a significant partial victory for the Robertsons and for the cause of donor intent. Princeton can also declare partial victory. The university will now legally enjoy unrestricted access to most of the Robertson funds—currently totaling about $700 million—to spend as it wishes. But the magnitude of the settlement is a recognition that there was sufficient merit in the Robertsons’ charges to bring the case to trial. As a result, universities and other grantees in the future will pay more attention to understanding, clarifying, and at least initially adhering to the intentions of their donors.
$40 million was the cost of the litigation for the Robertsons. Donors throughout America owe a great debt of gratitude to the Robertson family. They fought like tigers to honor Charles and Marie’s philanthropic intentions, and to publicize the violations of donor intent that sometimes occur in university giving. But the enormous cost of such litigation will be prohibitively high for most donor families, and suggests that lawsuits will be used only as a rare recourse in conflicts over donor intent, at least in cases with deep-pocket defendants such as Princeton.
For donors, the Robertson case is a reminder of three lessons.
Be wary of perpetual gifts. Endowment giving for universities and other institutions should be approached with great caution. In particular, donors should be aware that grantee organizations can dramatically change their world views in future generations.
Consider intermediaries. Donors who do want to leave endowment-like legacies should consider giving to intermediary institutions that can disburse funds according to whether the ultimate grantee is fulfilling the purposes of the gift. The supporting organization structure that was used by the Robertson Foundation (the board included Robertson family members but was controlled by Princeton) is usually not an effective protection for carrying out philanthropic intent after the donors’ death.
Write it down. One reason the Robertson family was able to proceed as far as it did with its case against Princeton is that Charles and Marie Robertson wrote down clearly the purposes of the graduate school they established.
President’s Note from Winter 2009 issue of Philanthropy magazine