Defaulting Donor or Unresponsive Donee?

St. Bonaventure becomes latest institution to be sued by donors, illustrating the growing tensions over gift obligations.
March 20, 2008

The special shovels, faux hard hats, and staged group shots from a groundbreaking ceremony at St. Bonaventure University in 2006 are typical of the way colleges honor donors of building projects. The press release that went out Wednesday -- about the same project -- was anything but typical. The university blasted the donors for defaulting on their pledges, said that naming rights for a library addition would change, and called on the donors to "do the right thing" and pay up.

In interviews Wednesday, St. Bonaventure and lawyers for the one-time donors traded accusations and defenses, and settled nothing. The university portrayed the donors as trying to micromanage the projects to which they gave. The donors have sued the university, demanding information about how the money they did give was used, and raising the possibility of pushing for the return of other gifts. While that suit hasn't received publicity, the university drew attention to it, and pledged to seek the rest of the money that had been pledged.

According to fund raising experts uninvolved with the dispute at hand, the messy exchanges on Wednesday illustrated the increasing likelihood that donors or donees can turn into litigants, and that colleges need to be more careful than ever about how they and donors specify the terms of gifts. And the St. Bonaventure dispute comes at a time of several high-profile suits over gifts and the creation of a national group seeking to encourage donors to stand up for their rights. If the St. Bonaventure case is a harbinger, legal fees associated with some gifts might rival the donations themselves.

Paul and Irene Bogoni, and their family foundation, have given to two areas at the university: a gerontology program and an addition for the library. Most of the controversy centers on the latter, for which the Bogonis pledged $2 million. While the university declined to say how much they didn't pay, the Bogonis' lawyer said that amount is about $900,000. According to the lawsuit, the university failed to provide lots of basic information it had agreed to make available in the gift agreement -- details on the building plan, details on any cost overruns, and so forth. The Bogonis charge that a feasibility study for which they paid was never provided to them, and that their inquiries about changing budgets were never answered.

Paul Bogoni released a statement in which he said: “I just want to see why the project has gone over budget so dramatically. It could have been re-bid and re-designed to stay within budget. Instead the university changed the scope of the project far beyond what we originally intended without first discussing it with us. We have asked for documentation and have received nothing worthwhile.”

Neither side released the actual gift agreements in question. But Emily F. Sinsabaugh, vice president for university relations at St. Bonaventure, said that the university made every effort to answer the donors' questions, and that the dispute arose when "the requests from the Bogonis came outside of the agreements we had signed." As the university and the Bogonis clashed over these exchanges, she said, the donors said that they would stop giving. The announcement from the university Wednesday said that the library expansion would go forward regardless.

Sinsabaugh declined to give examples of the kinds of questions the university was asked. But she said that "we have never been asked to provide that level of detail" by any other donor. And she said that the Bogonis "refused to interact with the president" and tried to deal only with trustees on "day to day decisions of administering their gift."

Why go public with the dispute when most colleges are tight-lipped about disagreements with donors? Sinsabaugh said that the university believed that once the Bogonis sued, they made the matter a public record.

For those without a dog in this fight, what does this disagreement mean?

Frederic J. Fransen is executive director of the Center for Excellence in Higher Education, the new group urging donors to take a tougher line with colleges on how gifts are used. While the center has offered to help people like the Bogonis, he said that his organization has played no role in the case.

At the same time, Fransen said he wasn't surprised to see this kind of dispute. "This is all the more evidence that grant agreements need to be very clear on reporting requirements and obligations on both sides," he said. "If you look at older grant agreements, you may find a lack of specificity that may lead to disputes, while donors today are expecting more than ever before."

He said he was encouraging donors to make gifts in stages, with successive payments based on specific conditions being met. And, Fransen added, "it should be clearly specified what the consequences are if one side of the transaction isn't keeping up their side of the agreement."

Rae Goldsmith, vice president of communications and marketing of the Council for Advancement and Support of Education, said she also did not know the specifics of the St. Bonaventure case, but that it reflected issues that are growing at many institutions. For example, she noted that many colleges that have policies about naming buildings after donors also have specific policies for removing those names in certain cases. (For examples, see these policies from Central Washington University or Mississippi State University.)

Goldsmith said that she believes most colleges go out of their way to satisfy donors and to honor their wishes. Even in cases where a donor may hit a financial hardship and seek to delay a gift, Goldsmith said, colleges tend to stay quiet and work to avoid embarrassing anyone.

But she said that recent publicity about disputes over donor intent is having an impact. "In general we are seeing donors who want to be much more engaged with their gifts, and in making sure their gifts have the impact they intend," she said. "That's not necessarily the bad thing. It's just: What is appropriate and what is inappropriate?"

If donors try to get too involved into daily management matters, a university could be correct to "push back," she said. All of this speaks to the importance of good understanding of gift agreements, she said.

But there are also real issues for donors to consider. Said Goldsmith: "The very process of giving a gift means loss of control."


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