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February 27, 2020

Donor Intent Lawsuit Highlights Growing Risk Management Issues in Advancement

By Caitlin Scarano

Caitlin@aluminateus.com

3 minutes

Flash Update

In October, we reported on a lawsuit in which Hillsdale College accused the University of Missouri of failing to honor the terms of a multimillion-dollar bequest from deceased alumnus Sherlock Hibbs. According to the Associated Press, the terms of Hibbs’ bequest “stipulated that Missouri use the money to create chairs and distinguished professorships for professors who follow the teachings of the late economist Ludwig von Mises, whose free market philosophy is associated with Austrian economics that is especially popular with libertarians. Hillsdale was given oversight over Missouri’s use of the money.”

At the end of 2019, the two institutions reached a settlement. In essence, they’ve agreed to “split the baby”—they will divide the endowment, which is currently valued at approximately $9.2 million. In addition, Hillsdale is relinquishing oversight of Hibbs’ gift. As Christian Basi, a University of Missouri spokesperson, explains in a December press release, “We also will use some of the proceeds from the gift to sponsor a biannual symposium on the MU campus that will focus on Austrian economics, which was of particular interest to Mr. Hibbs.”

So, what can institutions and nonprofit organizations learn from this case? Here are our takeaways…

1 – Think very carefully before accepting gifts that allow the donors to influence (even from the grave!) hiring decisions and how faculty teach at your school or organization.
2 – If you haven’t already, review your gift acceptance policy and procedures to ensure they adequately address donor intent issues. …Need an example? Check out Grinnell College’s policy. And here is a contract template for gift acceptance committees.
3 – Before finalizing a major gift, design a long term, sustainable strategy for how your organization can and will adhere to the terms of a gift. Be sure to discuss how turnover and leadership changes at your organization might impact this.
4 – Have you and your staff revisited and discussed the Donor Bill of Rights or the CASE Statement of Ethics recently? It might be a good time to check in.

This scenario may seem like an odd outlier, but we believe it illustrates a broader, growing set of issues in advancement, especially in the age of big data and analytics. This year, one of our key research initiatives is Risk Management in Advancement in 2020. We’ll be bringing you research and webinars on issues such as:

● How to protect the privacy of donors and use data analytics for good
● What advancement departments should do in the age of the GDPR
● What to do when major political divisions impact your school or nonprofit
● How to deal with scandals or controversies that impact major gifts fundraising (check out my recent article on campus controversies and naming rights)
● And what to do when the goals of donors are at odds with other major stakeholders at your organization

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