Princeton Settles With Heirs of Contributor

Princeton University will pay out nearly $100 million but maintain control of a much larger endowment that supports its prestigious school of public affairs, under a settlement announced Tuesday between the university and the disgruntled heirs of a major donor.

The six-year legal saga was closely followed by nonprofit organizations nationwide as a cautionary tale of what can go wrong when a donor's family and the gift's recipient disagree over how it should be spent.

The case pitted heirs of Charles and Marie Robertson, who held the A&P grocery fortune, against the university, and it has cost each side more than $40 million in legal fees. At dispute was a 1961 donation of $35 million, which grew to $900 million, to support Princeton's Woodrow Wilson School of Public and International Affairs.

The heirs argued that the money was intended to prepare students for jobs in the U.S. government. Princeton maintains that the terms allowed the gift to be spent preparing students for a range of public service careers, and that it would set a bad precedent to allow heirs of the donor to interfere.

Tuesday's agreement, which requires a judge's approval, calls for Princeton to pay $40 million over three years to the family for legal fees and, starting with payments in 2012, $50 million plus interest from its Robertson Foundation endowment funds to support a separate foundation outside the university. That foundation would further the mission of preparing students for federal employment.

The Robertson Foundation will dissolve and its assets will be transferred to Princeton, which will use them to fund the foundation's goals "as understood and interpreted solely by Princeton," according to the agreement.

Princeton President Shirley Tilghman, in a letter to the university community, called it "tragic that this lawsuit required the expenditure of tens of millions of dollars of legal fees that could have and should have been spent on educational purposes."

But William Robertson, son of the donors, said the settlement was "a message to nonprofit organizations of all kinds and throughout our country that donors expect them to abide by the terms of the designated gifts."

Princeton's total endowment grew to $16.4 billion as of June 30. The Robertson funds were valued by the university at about $900 million at the time.