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Donor Intent vs. Current Realities

February 22, 2011

More than five years of litigation ended Friday when the Louisiana Supreme Court rejected without comment a bid by supporters of Newcomb College -- once a women's coordinate college of Tulane University -- to undo its merger with Tulane's arts and sciences college in the wake of Hurricane Katrina.

The fight between Tulane and the supporters of Newcomb was one of the major legal battles in higher education in recent years over "donor intent" -- and the obligation of colleges to follow the wishes of those who make generous contributions. In this case, Tulane was accused of betraying the wishes of Josephine Newcomb, who gave the university $100,000 in 1886 to establish (and more gifts and a bequest later to support) a college to honor the memory of her late daughter, Sophie Newcomb. The plaintiffs in the case -- including a great-great-great-niece of the donor -- argued that Tulane's actions undercut the faith donors could have in gifts to colleges.

"The message from the Louisiana courts to potential donors is clear: Caveat emptor," said a statement from the Newcomb group. It added that the Supreme Court's refusal to take the case was "a blow to women’s education and a blow to donors and nonprofits throughout the state and the country." (The group said that the lack of federal issues means that the case will not be appealed to the U.S. Supreme Court and is over.)

Tulane never denied that Newcomb wanted to create a college for women -- and that's in fact what the university did when it received the funds. But Tulane maintained that it was not under a legal obligation to keep Newcomb a separate college forever, and that it had the right to adjust its educational programs, given the evolution of society and higher education -- and pressing needs facing the university -- more than a century after the gift was received.

A statement issued by the university about the conclusion of the legal battle noted that 56 percent of the first-year class Tulane is admitting right now for the fall of 2011 is made up of women -- and that the success of women in a coeducational Tulane is based in part on the Newcomb gift. "Women's education continues to flourish at Tulane," the statement said.

Tulane was backed in the case by the American Council on Education and several other national college groups, which filed a brief saying that colleges could be prevented from making necessary academic decisions if courts ordered them to act on nonbinding wishes of long-dead donors. The brief from the college groups said that the Newcomb plaintiffs were trying to elevate language from the original gift that was "precatory" (or advisory) into mandatory requirements with no end.

"[P]recatory language often serves the time-honored role of permitting a donor to express his or her motivations or desires for a gift without hindering the recipient's discretion and ability to achieve its mission in a constantly evolving environment," the brief said. "Donor intent deserves the utmost respect, and it is the province of this court to distinguish between conditional bequests and precatory language.... The notion that a university must account to descendants of a donor in perpetuity, subject to potential revocation, for a condition inferred decades or centuries after the gift will have a devastating impact on higher education."

When Tulane merged Newcomb with the university's arts and sciences college in 2006, the two colleges were already fairly well integrated -- a process that had been going on for several decades, and with much more interaction between male and female students (and the faculty members of the respective colleges) than when the college was founded. When Tulane shut down the college as a separate entity, it created an institute in Sophie Newcomb's name to focus on women -- as a new way to honor the Newcomb gift -- but that arrangement wasn't acceptable to many alumnae and others, who sued.

In 2008, the case reached the Louisiana Supreme Court for the first time, on the question of legal standing to sue. That year, the state's Supreme Court ruled that donors and their heirs have the right to sue colleges and other nonprofit groups that fail to carry out terms of their gifts -- setting up a new round of litigation that ended on Friday.

The closest that the Newcomb supporters came to a win was last year, when it lost an appeals court ruling by a 3-to-2 margin. The majority in the case ruled that the actual legal transfer of funds by Josephine Newcomb to Tulane was, in the end, an unconditional gift, based on the legal language used. The dissent in the case cited letters Josephine Newcomb wrote to Tulane officials at the same time she was making the gifts as reasonable evidence that she believed the money would be used only for a women's college -- and that Tulane officials accepted that view.

Courts have generally backed the rights of colleges to make changes -- even dramatic ones -- that might have never been envisioned by previous generations of students or donors. For example, in 2008, the Virginia Supreme Court rejected a lawsuit challenging the right of Randolph-Macon Woman's College to admit men (which it now does under a new name, Randolph College). But lawsuits over donor intent are nearly always problematic for colleges, given that new donors aren't exactly motivated to give by reports of contributors' wishes being ignored. While never admitting to any wrongdoing, Princeton University in 2008 settled a lawsuit by relatives of a donor who accused the university of ignoring pledges to use a large gift to promote the training of students for careers in government.

Kathryn W. Miree, a consultant to nonprofit groups on development issues who has written extensively about issues of donor intent (and who played no role in the Tulane suit), said that the case illustrated the need for colleges to talk to donors about the long term -- and about conditions they might not be able to imagine. "I'm not sure donors can ever anticipate all the twists and turns that come down the road," she said, but colleges need to help them think through options.

Miree said that she urges colleges and other nonprofit groups to talk to donors about their broad objectives for a gift, not just a specific project that may receive the money at a point in time. "Let's say you create an endowment for a large building to support a program," she said. "Well, someone needs to say that this building has a shelf life and talk about what happens then."

And while people may not like to discuss it, Miree said that it is important to remember that disputes over such questions are likely to come -- as is the case at Tulane -- long after the donor and the gift officer are dead. In the case of a building, if the donor had specified that her interest was really in a certain academic field, the best way to support that field in the future might be something other than a new building. But that's a discussion to have when the gift is being planned, she said.

In the case of the Newcomb gift, "we don't really know whether [Tulane today] would really please or displease her," Miree said of the donor. If Josephine Newcomb cared only about a separate college for women, she might not be happy. "But what if she was trying to elevate education for women?" Miree asked. If so, she might look at the female enrollment at Tulane and be pleased. "It's important to talk to donors about outcomes," she said.

This may be particularly important when gifts are made to help particular groups, she added, noting that Josephine Newcomb could never have imagined women's educational opportunities today. Miree said she tells any donor wanting to help only a specific group that "the only thing you can be sure of is that things will change in ways you can't imagine." (Indeed, long before Tulane merged Newcomb into the rest of the university, it started ignoring another one of the donor's requests -- that the women's college be created to serve white women.)

While colleges and donors can talk through a Plan B for cases where an original purpose is no longer appropriate, they also need trust, Miree said. "My advice is that if the donor doesn't have enough confidence in your university that you will make good changes, they ought to give the gift to someone else," she said.

 

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