Donor intent showdown finally underway

Oral arguments have begun in the potentially-landmark case Robertson vs. Princeton in New Jersey state court, more than four years after the suit was first filed. The heirs of a huge 1961 gift to the university have been publicly arguing for several years now that Princeton has serially violated the donor's intent; that gift has now grown into $650 million. In addition to the separation of those funds from the university's endowment, the plaintiffs are seeking restitution for endowment proceeds which they say were spent contrary to the donor's restriction and which could total hundreds of millions more.

Of all the web-accessible news coverage describing the facts of the case, that Pittsburg Post-Gazette article linked above seems the best. The Robertson plaintiffs have established a robust website for their case which of course includes only the op-ed pieces that favor their version of the situation.

Princeton's public defense, at least, was seriously damaged early this year when the Wall Street Journal went through thousands of pages of documents released as part of the court's discovery process. The reporters found memos and emails in which Princeton officials wrote frankly of hiding fund disbursements from the Robertsons, and also found evidence of two smaller gifts which appear to have been used for purposes other than those specified by the donors. The university argues that the memos were wrong and that the officials who wrote them didn't have authority over the matter. The Journal's front-page story is not web-accessible unless you're a subscriber; if you are, it ran on February 7th and was headlined "Poisoned Ivy".

The case could have a huge legal impact on philanthropy but also might not, because Princeton's legal strategy seems to open the door to a ruling that's based on any number of things. Their approach appears to be "leave no argument unturned": they dispute the plaintiffs' standing to sue, and deny that they misused the funds, and say that anyway even if they did the original bequest was implausible (then why did they accept the gift?), and argue that in any case the public interest is better served by their version of it than the family's, and they belatedly filed a countersuit claiming that actually the Robertson endowment somehow owes Princeton $235 million, and they dispute the plaintiffs' right to a jury trial on technical grounds, and in February they announced a new fellowship named for the original Robertson donors while denying that its creation had anything to do with the Robertson endowment fallout.

Uh huh....Well I'm no lawyer and I'm not at all sure that the Robertson heirs are entirely right ethically or legally, but at a minimum Princeton has been quite careless over the years and their behavior now leaves a sour odor. Whichever way the case turns out (years from now, after several well-funded appeals) its ultimate impact should be to make both donors and non-profits take the terms of restricted gifts more seriously. Follow Yale's 1995 example with the $20 million Lee Bass gift: if the donor's restrictions are too onerous and discussion doesn't yield a workable compromise, then you gotta give back the money!