Exacting Donors Reshape College Giving

By Susan Kinzie
Washington Post Staff Writer
Tuesday, September 4, 2007

Geri Cecil loved Randolph-Macon Woman's College from the moment she met people on the Lynchburg campus, and every year after she graduated in 1968 she gave the school money. She believed in its system of education, made lifelong friends, even served on the board of trustees for several years.

That's all over now.

Last year, Cecil felt blindsided by a major change at the college: plans to admit men. She said she didn't hear of the proposal until shortly before it was approved and saw alumnae such as herself stonewalled when they objected. So she stopped donating -- forever, she said.

When she drives by campus, Cecil, a boarding-school teacher who still lives in Lynchburg, tries not to look. It feels like she has lost a close friend, she said.

"I certainly have learned one thing," Cecil said. "I will never make an unrestricted pledge to anyone, ever again."

Cecil is part of a new generation of college donors -- savvy, activist and willing to stop giving if they don't like the way their money is being used.

Donating "has become a much more engaged process," said Stephen Joel Trachtenberg, who just stepped down from his long presidency at George Washington University. "Increasingly, people have points of view. The put-the-money-on-the-stump-and-run benefactors of earlier days are diminishing."

Alumni now are far more likely to give to specific projects rather than the operating funds that keep universities running and to expect detailed reports on how the money is spent. Some ask to meet the students who win the scholarships, select the professors who get the chair, scrutinize financial reports, weigh competing construction bids, choose the paintings for the gallery walls.

And if the donors are dead, their heirs are intervening in how the money is spent, said Joe Bull, who recently stepped down as director of planned giving at Ohio State University. "That's a wave that is coming and coming fast. I think in general we're a much more distrusting society than we used to be -- and some of these gifts are so large, they should be scrutinized."

Eyes on Princeton

One closely watched case that sends chills down administrators' spines is playing out at Princeton University, where school officials have spent years tussling with donors' heirs over a fund that has grown to more than $840 million.

The Robertson Foundation started in 1961 with $35 million of stock in the A&P supermarket company given to the Woodrow Wilson School of Public and International Affairs -- at the time, one of the largest gifts ever to higher education.

Marie Robertson was clear about her intent: "to establish . . . a Graduate School, where men and women dedicated to public service may prepare themselves for careers in government service," particularly international relations. They set up a foundation to administer the gift and gave three of seven seats on the board to family members.

Five years ago, several Robertson family members filed suit, pointing out that very few Wilson graduates were going into government service, and seeking to sever the foundation's relationship with Princeton. Over the years of the lawsuit, they have claimed that Princeton has improperly spent more than $207 million and has hidden spending from family members and that between 1990 and 2003, only about 10 percent of the graduates funded by the foundation went into international affairs jobs with the federal government.

The Robertsons say the money should go to other institutions that do a better job of sending people into government.

Princeton has so far failed to get the suit dismissed, and this spring it repaid nearly $800,000 to the foundation, money it said had been used for graduate students in departments related to, but outside of, the Wilson school.

The university has portrayed the battle as being about academic freedom, arguing that the plaintiffs want to limit the Wilson school to a kind of vocational program for a few federal agencies.

As years have passed and legal fees have mounted, unusually sharp language has erupted on both sides. "This case is about the descendants of a donor trying, 46 years after a gift was made, to seize control of funds that their parents chose to give to Princeton and not to them," said Princeton spokeswoman Cass Cliatt.

Meanwhile, family spokesman Bill Robertson, a Princeton graduate like his father, described administrators of his alma mater as "really no better than your typical con artist." He says evidence shows Princeton "intended to disregard my parents' wishes all along."

Cliatt said Princeton has a long history of honoring donors' wishes. Yet some of the arguments made by its attorneys have drawn attention.

The Robertson case "is being watched by institutions with grave concern," said Sheldon Steinbach, a lawyer specializing in higher education. "An adverse determination could lead to litigation by a variety of donors across the nation."

It's also being watched by prospective donors.

Donation Explosion

For college administrators, there's never been a better time to raise money. Donations have been doubling every decade, reaching historic highs -- $28 billion in 2006, according to the Council for Aid to Education.

But the baby boomers who are giving are well aware of scandals at charities and want to be sure their money isn't fattening administrators' salaries or slipping through cracks, several financial planners said.

Take Bruce Young, a Charlotte banker who had given about $10,000 annually in recent years to the College of William and Mary in Williamsburg. He said he was concerned "that the current administration wouldn't be a good steward" of his money. So this year, he specified that his money go to the business school, rather than the unrestricted annual fund.

The school exceeded a $500 million fundraising goal this summer, with more than 60,000 donors. But many alumni were angry with the school's new president, Gene R. Nichol -- he removed the cross from the historic chapel on campus last year, among other things -- and hundreds complained to the development office. Some stopped giving. This winter, one supporter yanked back a pledge of $12 million.

Another, Jean Zettler, stopped sending her annual gift of thousands of dollars. When she gets envelopes from her alma mater, she sends them back empty.

"I have been so frustrated, blown off by so many people on campus," she said. "The only way I can talk is by withholding money."

"It's a very intimate relationship that people have with their charitable gifts," said Patricia McGuire, president of Trinity University in Washington. "They feel like shareholders in the institution. . . . It is sometimes a delicate balance between honoring the donor and having a demand placed that is onerous."

Financial planners often need to counsel clients to avoid micromanaging. There are limits on how restrictive a gift can be and still be considered a charitable donation under tax law, said Irene Estrada, a senior wealth planner for PNC Wealth Management in Washington.

McGuire said that in her career at various institutions, she has known donors to offer money for scholarships whose first beneficiaries will be their children and grandchildren. Money to endow a chair to be filled by a certain professor. Money to be used only to buy antique books from the donor's business. And millions of dollars to establish an academic program that would offset a perceived ideological slant in the school's curriculum. Those gifts were all declined, she said, for reasons ranging from academic freedom to a distaste for a business contract masquerading as a charitable gift.

"The new philanthropy is more like an investment than a gift," McGuire said. "It's a business transaction in a way it wasn't even a few years ago."

The donors say there's a good reason for that. Steinbach, the education lawyer, said the intent of the giver is sometimes ignored. Although "the institutions take them with the full intent of fulfilling the donor's wishes," he said, time goes by, details get forgotten, priorities change.

"It definitely happens," said Robert Sweeney, senior vice president for development and public affairs at the University of Virginia. The original intent can get clouded over the years. The essential thing, Sweeney and other development officers said, is to craft a thorough gift agreement in advance, putting contingencies in a legal document.

Universities can go to court to ask for permission to redirect the money.

At Randolph College -- the name Randolph-Macon Woman's College took after it started admitting men -- an alumnae group has claimed that going coeducational, in effect, violates donor intent because the donations were made to a women's college.

Ed Fuhr, an attorney for Randolph, said, "The court that heard the lawsuit dismissed it almost immediately as having no merit."

The plaintiffs have appealed to the Virginia Supreme Court.

For gifts that came with strings, Fuhr said the school has been asking donors or a court to lift them. Last month, Randolph College asked for permission to change the restrictions on a 1928 bequest from an art professor, Louise Jordan Smith, who gave money for a permanent art collection; the school is considering selling or sharing a portion of the art. There's a lot at stake: The collection's value exceeds the school's endowment.

Staff researcher Karl Evanzz contributed to this report.