Safeguarding Donor Intent



How to align a donor’s desire, the capabilities of the charity, and reasonable periods of time.

“Good Giving from the Grave”
Written by Doug White in the Spring 2017 issue of Philanthropy magazine

 

Though “giving while living” is a growing trend in the United States, many donors still extend their philanthropy beyond the time of their deaths. And charities that intend to be in business far into the future often secure present-day gift commitments that won’t be realized for many years. Givers and receivers alike must take measures to ensure that these time-release contributions are executed in ways that respect the donor’s values and the charity’s needs.

Many legal battles illustrate the risks of ignoring the original terms of a gift. Earlier in this issue (see “What’s in a Name?”) we read about the misfire of a proposed $20 million gift to Paul Smith’s College from Joan Weill due to a failure to recognize that the original benefaction to the college would not allow a renaming. A judge ruled that “Mrs. Weill’s money did not give the college license to violate a provision in its founder’s will that enshrined his father’s name on the college in perpetuity.”

Different donor language produced a different outcome in the related case of Newcomb College. The will of Josephine Newcomb established Sophie Newcomb College in honor of her daughter, and to elevate women’s education. Amid financial difficulties and damage after Hurricane Katrina, the board of directors voted to establish a new, co-educational entity, Newcomb-Tulane College. Family descendants claimed that this would violate Josephine’s will, but the college countered that the language of Newcomb’s gift did not forbid them from making this change. After a contentious battle, the Louisiana Supreme Court agreed with the university in 2011.

In both cases, the donors established bequests. Because the charities accepted the money, they also accepted the terms of the gifts.

If a charity makes a promise when accepting a gift, the courts and public opinion take it seriously. If there is something important that is not spelled out, however, future adjudicators will decide as they wish. Any long-term contribution that has specific aims should have those goals, and any necessary restrictions, made clear.

The celebratory feeling after a large charitable gift has been made is special. The donor receives the satisfaction of investing in a cause close to his or her heart. The charity’s staff feels ratified and reinforced in its work to make the world a better place.

But it doesn’t end there. Too many organizations learn belatedly that the real work begins the moment the gift is made. Stewarding a gift is far more important than cultivating one. Staff and board members at charities need to realize that when an organization enters into a gift agreement, an obligation that extends into the future—sometimes far beyond current lifetimes—is being accepted.

The phrase “in perpetuity,” all too common in charitable agreements, often presents unanticipated challenges and should generally be avoided, as neither donors nor charities can predict the future. But even where the snare of “forever” is avoided, gift agreements need to carefully align donor desires, the ability of the charity to honor commitments, and reasonable periods of time.

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